Monday, March 23, 2020

Foreclosures Suspended Due to Coronavirus

If you are struggling to make mortgage payments amidst the coronavirus crisis, you should know that you are not alone. Many homeowners are struggling with business closures and job loss, making it difficult and even impossible to pay monthly mortgage payments. For many homeowners who were already struggling, the coronavirus outbreak is exacerbating financial problems that already existed. According to a recent report in CNN, the federal government will put a hold on certain foreclosure activity due to coronavirus until the end of April.

Single-Family Homes and Foreclosure Halt Until End of April
If you have a mortgage on a single-family home and that mortgage is a Federal Housing Administration-insured mortgage, you will not be at risk of foreclosure until the end of April. According to the report, Trump indicated that “the Department of Housing and Urban Development is providing immediate relief to renters and homeowners by suspending all foreclosures and evictions until the end of April.”

HUD Secretary Ben Carson explained that the temporary suspension of foreclosure activity “will allow households who have an FHA-insured mortgage to meet the challenges of COVID-19 without fear of losing their homes, and help steady market concerns.”

Ways of Avoiding Foreclosure
While homeowners who are struggling to make monthly mortgage payments can have some relief from the news that foreclosure activity on FHA-insured mortgages will be put on hold until the end of April, it is still important to think about ways to stop foreclosure from that point onward. Temporary relief is important for homeowners, but anyone who is struggling to make mortgage payments and is at risk of losing their home should work with a foreclosure defense attorney to make a longer-term plan. An article in Bankrate cites the following ways that struggling homeowners can stop a foreclosure:
  • Contact the lender to find out about your options: While homeowners often assume that the lender will not provide any relief—and this certainly may be true in a number of cases—it is important to keep in mind that lenders do not want to go through a foreclosure process if they can find a way to be repaid by working with the homeowner. If a lender thinks a homeowner may be able to get back on track with mortgage payments through refinancing or a loan modification, for example, the lender may offer these or other options for loss mitigation.
  • Loan modification: Like we mentioned above, a mortgage lender or servicer often has the ability to provide homeowners with a loan modification to lower monthly mortgage payments. A modification can involve lowering the interest rate or shifting the terms of the loan.
  • Deed-in-lieu of foreclosure: This is not an option that allows a homeowner to stay in the home, but it can prevent a foreclosure. With a deed-in-lieu of foreclosure, the homeowner gives the property back to the lender to avoid the foreclosure.
  • Short sale: This is also an option that requires the homeowner to leave the home, but it can prevent a foreclosure from affecting the homeowner’s credit. With a short sale, the lender allows the homeowner to sell the house for an amount that is less than what they owe on the mortgage, and the lender agrees to forgive the remaining amount.
  • File for Chapter 13 bankruptcy: This is an option that allows a homeowner to stay in the home and to catch up on mortgage payments. With a reorganization bankruptcy, the automatic stay will stop the foreclosure from happening and will allow the homeowner to create a repayment plan for repaying the lender.
Contact an Oak Park Foreclosure Defense Lawyer
If you have questions about preventing foreclosure, an Oak Park foreclosure defense attorney can assist you today. Contact the Emerson Law Firm for more information.

See Related Blog Posts:

Five Things to Know About Foreclosure in Illinois

How the Foreclosure Crisis Continues to Affect Single-Family Homes

Friday, February 28, 2020

Five Things to Know About Foreclosure in Illinois

If you are struggling to make payments on your mortgage, it is important to know that you are not alone. Even though Oak Park residents are no longer in the midst of a foreclosure crisis as many were a decade ago, homeowners are still having difficulty making monthly mortgage payments and trying to figure out how best to manage consumer debt. The following are five things to know about foreclosure in Illinois, including ways to avoid foreclosure.

1. Refinancing Your Loan is One Option to Prevent Foreclosure While Remaining in Your Home
Refinancing is a common route for avoiding foreclosure. As a HUD fact sheet explains, a homeowner who is late on mortgage payments should learn more about assistance options, including refinancing the mortgage to a rate and length that the homeowner can afford.

2. Short Sales can Allow a Homeowner to Avoid Foreclosure, but the Homeowner Will Lose the Property
A short sale can also allow a homeowner to avoid foreclosure, but the homeowner will need to sell the house. This option also requires the lender to agree to the sale, since the lender will need to forgive any portion of the mortgage debt that it does not recoup in the sale.

3. Chapter 13 Bankruptcy is a Useful Tool to Prevent Foreclosure and to Keep Your House
Filing for chapter 13 bankruptcy is a particularly helpful way of avoiding foreclosure. Chapter 13 bankruptcy can stop a foreclosure process through the automatic stay, and it can allow a homeowner to get back on track with mortgage payments in order to keep the home.

4. Fewer Lenders are Foreclosing on Homes in Most Places, but Illinois Foreclosure Starts Are Up
Recent data suggests that the rate of foreclosure starts in many states is down as of January 2020, but that information is not true for a number of states, and Illinois is one of them. According to an article in Mortgage Orb, Illinois is one of 19 states in which the rate of foreclosure starts actually increased in January 2020 in comparison to foreclosure start rates a year prior.

Illinois did not have the highest increase of all states in the U.S.—those spots went to California, Tennessee, and Georgia, with foreclosure start rate increases of 27%, 21%, and 14%, respectively. However, Illinois ranked 4th in terms of an increase in its foreclosure start rate, with a 9% increase from January 2019 to January 2020. In other words, banks initiated more foreclosures in January of this year than they did just one year before.

5. Illinois is a Judicial Foreclosure State
If your home does go into foreclosure, it is important to know that Illinois is what is known as a judicial foreclosure state. This means that, in order for a lender to foreclose on a property, it needs to file a lawsuit against the homeowner, and the homeowner has to be served. Homeowners should know that they do have rights during the foreclosure process, including once they have been served with a complaint. The homeowner will have a specific time to file an answer, and a lawyer still may be able to help that homeowner avoid foreclosure.

Contact an Oak Park Foreclosure Defense Attorney
Do you need help avoiding foreclosure? A dedicated Oak Park foreclosure defense lawyer can help you. Contact the Emerson Law Firm today to learn about our services.

See Related Blog Posts:

How the Foreclosure Crisis Continues to Affect Single-Family Homes

How Are Foreclosure Activity and Consumer Confidence Related?