Over $4 Million in Federal Funds to Help Homeless Families in Illinois

Earlier this month, Shaun Donovan, the Secretary for U.S. Housing and Urban Development (HUD), awarded nearly $4.7 million in grants to a total of 42 homeless housing service programs in Illinois.  These funds may provide much needed help to struggling families who were forced out of their homes during the mortgage crisis.

The money comes through HUD’s “Continuum of Care” programs, and HUD indicated that the recent funds will ensure that local homeless assistance programs can continue to operate throughout the year and into next year, as well.

For the HUD press release on the Illinois grant, Donovan said, “we know these modest investments in housing and serving our homeless neighbors not only saves money, but saves lives . . . .  These local programs are on the front lines of the Obama Administration’s efforts to prevent and end homelessness as we know it once and for all.”

What is Continuum of Care?

According to HUD, Continuum of Care is made up of three competitively awarded programs.  Each of them addresses different problems related to homelessness and works in conjunction with other federal agencies to help individual persons and families who have lost their homes.

The three programs include:

·      Supportive Housing Program (SHP): this program helps to develop housing and other related services for homeless persons and families who are transitioning to independent living.  Its funds also provide other resources to homeless persons and families that can help with finding a stable place to live and acquiring new skills to ensure steady employment income.

·      Shelter Plus Care (S + C): this program helps with rental assistance.  When it’s combined with other social services, it “provides supportive housing for homeless people with disabilities and their families.”  It allows for multiple housing options, including group homes and individual living spaces.  It’s also combined with a variety of other supportive services.

·      Single Room Occupancy (SRO): this program helps with Section 8 rental assistance.  It provides funds for the “moderate rehabilitations of buildings” that contain single-room apartments that are designed for individual use.  Through the program, a public housing authority provides the landlords with Section 8 payments when homeless people rent their rehabilitated units.

What Are Continuum of Care Grants?

HUD explains that these grants are awarded on a competitive basis to “local projects to meet the needs of their homeless clients.”  The funding goes toward programs that deal with with street outreach and assessment for helping homeless people and families to find transition and permanent housing.  According to Antonio R. Riley, HUD’s Midwest Regional Administration, “these programs work and we know these grants can mean the difference between homeless persons and families finding stable housing or living on the streets.”  He went on to note that these programs also “provide meaningful and stable platforms of hope for a better life for the homeless,” which “enhances the entire community.”

These funds could have a serious impact on certain Chicago neighborhoods that have been negatively affected by the housing crisis, and they could help a lot of struggling families in our area to find homes.  If you or a loved one have lost your home as a result of the mortgage crisis, an experienced attorney can discuss your options with you today.

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NeighborWorks America Grants to Aid Illinois Foreclosure Counseling

Community Development and the Section 108 Loan Guarantee Program

NeighborWorks America Grants to Aid Illinois Foreclosure Counseling

According to an article from local KSDK News, the Illinois Housing Development Authority recently received two federal grants to aid homeowners in the state who are facing foreclosure.  The grants came from NeighborWorks America, and they total $3 million.

What is NeighborWorks America?

NeighborWorks America seeks to help people across the U.S. to live in affordable homes, and to find ways to improve their lives and strengthen their communities.  The organization set a number of strategic goals that it hopes to meet between 2012-2016, which include:

·      Creating and preserving housing opportunities that are both sustainable and affordable

·      Advancing community development programs and resident involvement in order to achieve a positive community impact.

·      Supporting other NeighborWorks organizations that can help to provide housing and community development expertise, as well as effective business models

·      Strengthening knowledge and skills in our communities related to community development and affordable housing, allowing ground-up or grassroots efforts to thrive

The organization focuses specifically on foreclosure prevention and community development.  NeighborWorks America provides resources to struggling homeowners that include access to foreclosure help, news releases about mortgage scams, and important information about the National Foreclosure Mitigation Counseling (NFMC) Program.

At NeighborWorks America, members of the organization believe that foreclosure counseling can play a big role in preventing foreclosures and aiding struggling borrowers.  They provide foreclosure counseling training in cities across America.  The content covered in these trainings ranges from basic knowledge about foreclosure prevention to advanced certifications in mortgage relief strategies.  The organization’s focus on foreclosure prevention and foreclosure training will play a big role in the use of the $3 million grant money in Illinois.

What Will the Grants Fund?

While the market continues to show signs of recovery, many Illinois homeowners are still at risk of foreclosure.  The funding from NeighborWorks America will provide 10,000 families in our state with access to free foreclosure prevention counseling.  The counseling is through Governor Quinn’s Illinois Foreclosure Prevention Network (IFPN).

Quinn created the IFPN “as a service to Illinois residents to bring together the services and resources of various state agencies and qualified participating non-profit agencies” to guide homeowners through options for staying in their homes.  These services are free.

Specifically, counselors through the IFPN can help borrowers to better understand the foreclosure process and to help with communication with mortgage lenders and servicers.  They can also help with debt counseling so that you can maintain a reasonable budget and make your mortgage payments on time.

The recent grants from NeighborWorks America aren’t the only ones that the organization has provided to consumers in Illinois.  Just last month, NeighborWorks America also provided a grant of nearly $100,000 to HomeStart, a non-profit organization in Northern Illinois that assists consumers with foreclosure problems and other homeownership issues.  Like other programs sponsored by NeighborWorks America, this grant will aid housing and community development initiatives.

An experienced foreclosure defense attorney can answer any questions you might have about the foreclosure process, and can speak to your concerns about staying in your home after you’ve missed mortgage payments.  Contact us today.

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Reestablish your Credit and a New Loan May be Possible Sooner than you Think

One of the many fears for homeowners facing foreclosure or having to short sell their home is the fear that they will not be able to qualify for a home loan for many years after either of those processes.  However, Lew Sichelman points out in an article on obtaining a mortgage after bankruptcy or foreclosure writing for the United Feature Syndicate that this might not always be the case.

Seven years is a time period that jumps out in many consumers’ minds.  Even if you have not dealt with foreclosure or bankruptcy, you heard at some point in your life that you have to wait 7 years before getting financing for a house purchase after bankruptcy or foreclosure.  The rules have changed and Sichelman points out that the new wait time may only be three years for some consumers and even less time for others depending on the situation.

Sichelman explains that you can qualify for a mortgage just 24 months after bankruptcy or foreclosure if you can show that your financial woes were due to “extenuating circumstances” that you had no control over.  As Matt Kovach, product development manager at Envoy Mortgage in Houston, points out these must be “life-changing events that made it impossible” to continue making your payments.  Job loss, serious illness and death qualify as “extenuating circumstances” but divorce, business failure or simply taking on too much debt do not qualify.

That is the first part of the test in obtaining new credit after the required waiting period.  You have to then re-establish a clean credit report to obtain new financing.  Part of this process is showing potential lenders that you learned from your mistakes or “life-changing event” and are now capable of making payments and handling the responsibilities associated with new debt.  Kovach says it quite accurately and succinctly, “Poor credit is not a good indication you’ve learned from your mistakes.”

You may think that the best thing to do is go to a strict cash only policy.  Although this might help you reign in spending, it does not help reestablish credit.  Some lenders might take into consideration cash payments such as rent, utility bills and cellphone payments in building a credit report, but it will be more difficult to qualify.

This blog is not meant to give you a green light to go ahead and declare bankruptcy or foreclosure in hopes of speeding up the process of eventually getting a new loan down the road.  These are major financial decisions that must be discussed with experienced bankruptcy or foreclosure attorneys in order to determine the best financial path for your specific situation.  If you cannot point to “extenuating circumstances” then you might be looking at a longer waiting period which might mean you need to reexamine your current situation to determine what to do.

Government backed loans such as VA and FHA loans typically have shorter waiting periods.  The VA’s rules do not address short sales so you could potentially short sell your home and obtain a VA backed loan practically right away.  However as pointed out earlier, you must re-establish favorable credit to qualify.

FHA loans require a three year waiting period for you if you went through a short sale, foreclosure or deed in lieu of foreclosure, but “extenuating circumstances” could help shorten the waiting period.

Various lenders and government backed loan issuers have more detailed guidelines on how to reestablish credit so you can shorten your waiting period.  It is important to keep this in mind and remember that you do not need to give up on the American Dream of owning your own home simply because you experienced a financial hardship that led to a derogatory mark on your credit history.

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Is my Earnest Money Deposit Gone?

The overwhelming majority of real estate transactions will entail the buyer depositing earnest money into the escrow agent’s account to hold while the home is under contract.  The escrow agent is typically the real estate attorney who is the third party conducting the closing so it does not have an interest in the money.  Individuals unfamiliar with the home buying process might mistakenly believe that the earnest money is turned over to the seller to hold.  This is not the case.  Buyers might be hesitant to deposit earnest money due to the fear that once the money is deposited, it is gone for good.  This is also false.  Earnest Money may actually work in the buyer’s favor and help the buyer’s chances for convincing the seller to go through with the sale.  The money is held in the escrow account and what happens to it depends on what happens with the sale of the property.

In a successful purchase and sale situation, the earnest money is applied to the purchase price.  The earnest money could also end up in the seller’s hands even if the sale does not go through.  It could also end up back with the buyer if the contract is cancelled.  This last situation is the focus of today’s blog post.

As discussed in a previous post about financing and a later post about inspections, certain contingencies must be satisfied for a sale to close.  A seller will most likely be reluctant to take a property off of the market and stop advertising it for sale unless he knows the buyer is serious about going through with the purchase.  The earnest money is the opportunity for the buyer to put the seller’s concerns to rest.  The amount of the deposit might be a percentage of the sales price or it might simply be a dollar amount that is substantial enough to indicate the buyer’s intentions to go through with the purchase once certain conditions are met.  Real estate contracts are designed so if the buyer makes a good faith effort to purchase the property, but due to insufficient inspection results or inability to secure financing and is unable to go through with the purchase, the buyer can legally demand and receive all earnest money deposits back.

The buyer must be careful to follow the guidelines within the contract if he is to receive the deposit back.  If the buyer is going to cancel due to something discovered through the property inspections, he must do so within the inspection time period and must provide inspection reports if so required.  As long as he does so, the escrow agent is legally required to return the deposit.  With a financing contingency, the buyer must inform the seller within the financing period in order to receive the deposit back.    

Just because a buyer does not want to go through with the purchase it does not necessarily mean he gets his deposit back.  Once certain dates have passed and contingencies released, the earnest money goes “hard” or is non-refundable.  At this point, the earnest money will end up with the seller whether the sale goes through or not.    

There is no shortage of lawsuits surrounding earnest money deposits.  Buyers and sellers should be wary of how purchase contracts handle situations where the earnest money is refundable versus non-refundable.  Earnest money deposits are intended to show good faith on the part of the buyer to honor his side of the contract and to convince the seller to let him have some time to try and make the purchase work.  Buyers need to understand the contractual obligations outlined in a real estate contract.  Sellers need some recourse in the event that a buyer tries to cancel the contract absent a valid contractual reason.  The buyer may not be able to perform and go through with the purchase so demanding a buyer close will not work.  The earnest money is the seller’s best chance for some form of remedy.  It might not prevent a lawsuit, but a seller might be more willing to let a buyer walk away from a deal if he at least has the deposit to help soften the blow.

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Contract for Sale and Purchase: Financing Contingency

Real Estate contracts can be long intimidating documents filled with language that most people cannot or would prefer not to decipher.  It is a legally binding agreement with a host of obligations built into the provisions that you as a buyer or seller need to understand before signing.  There is an important clause found in every real estate contract that states, “This is intended to be a legally binding contract.  If not fully understood, seek the advice of an attorney before signing.”  We encourage parties to a real estate transaction to seek the advice of an experienced real estate attorney, but we want to help explain a key element of every contract today.

Contingencies

When the buyer and the seller agree to the terms of the transaction and sign the contract, the deal is almost always far from over.  Real estate agents will oftentimes refer to this phase as “contingent.”  A buyer will almost always have at least one contingency built into the contract so that despite the fact he has signed a contract, he can still cancel the contract without losing his earnest money.  One caveat being that in certain situations, a seller might require a buyer to deposit earnest money that is non-refundable for one reason or another.  In this situation, the buyer might still have the right to cancel the contract if a particular contingency is not satisfied, but the earnest money would be lost.  There are several contingencies that are common to most contracts, but today we are focusing on the financing contingency.

Financing

Different financing contingencies might have different specifics, but the general concept is that the buyer is only obligated to go through with the purchase if he is able to obtain the necessary financing to make the purchase.  Many contracts have blanks so that the buyer will fill in the type of financing he hopes to obtain along with the terms of the loan.  Other contracts might simply say that the buyer hopes to obtain a loan for the purchase according to the prevailing rates at the time he or she applies for financing.  We have even seen contracts where the buyer simply says he is financing the property and lists no other specifics giving him the option to pursue any loan possible to close the deal.

In order to get financing approval from a lender, the buyer will have to show that he is financially able to perform under the terms of the loan and the property must meet certain requirements to prove it is a sound investment on the lender’s part.  The buyer must make a diligent effort to obtain financing.  The property must appraise for the sales price, otherwise the lender will refuse to loan the full amount needed.  If these two requirements are not met and the loan is denied, then as long as the buyer has complied with the time limits and other provisions of the financing contingency, he may be able to cancel the contract and get back any earnest money.  This does not mean that the deal has to die.  If the appraisal comes in lower than sales price, the buyer and seller can try and reduce the sales price to allow for financing approval.  The buyer could also agree to pay a larger part of the purchase in cash to compensate for the lower loan amount.  These are not required steps, but could work as options if both parties are determined to get the deal to close.      

A financing contingency can be a turn-off for some sellers.  An overpriced property has little chance of appraising for the sales price if no other comparable sales in the area support such a high price.  The seller might be reluctant to agree to a contract contingent on financing because the property is not being marketed for sale while the buyer is trying to get the financing together.  The seller might miss out on a cash buyer in this time period.  Of course the seller must make a decision to either sell for a lower price so that the buyer can get financing approval, or hold out for a higher offer that must be cash in order to close.

Financing contingencies are important for many reasons including the fact that real estate loans were such a huge factor in the economic downturn over the last couple of years.  Real estate financing has become a hot topic for debate as the housing market finally starts to improve.  Loans are still not as easy to come by for many buyers as in previous years, but that is starting to change.  If both sides of the transaction have done their homework, then there should not be a question on whether or not financing will be approved.

Many financing questions are best directed to the lenders as legal questions are best directed towards an attorney.  It is important to at least understand how different contractual provisions work either for or against you.  In future blogs we will address other contract contingencies such as inspections, zoning for specific use and other sales occurring first.

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Short Sales Popularity Continues to Rise

Pre-foreclosure sales, or short sales, are on the rise according to new national data released recently by RealtyTrac.   A short sale is also referred to as a pre-foreclosure sale because it requires a lender’s approval before the seller (homeowner) can sell a house for less than what the seller owes on the mortgage.

Short Sales – No Sign of Slowing
According to the Chief Executive Officer of RealtyTrac (an online market for distressed property), lenders are approving more competitively priced short sales, which lead to more successful short sale transactions. This may be good news for homeowners looking for a plausible solution to get out of their home without strings attached.

In a recent foreclosure sales report, it states that sales of homes that were in some stage of foreclosure or bank owned accounted for approximately 26% of all US residential sales during the first quarter of the year. This figure is up from the fourth quarter of last year when only 22% of all sales were such, and the first quarter of 2011 when they were 25%. According to the report from RealtyTrac, first quarter pre-foreclosure sales were at their highest level since the first quarter of 2009 and pre-foreclosure sales reached 12% of all sales during the first quarter, up from 10% of all sales in the prior quarter and 9% of all sales in the first quarter of 2011.

Lenders may be working off a large inventory of pre-foreclosure homes, making it more advantageous for a homeowner in distress to contact the banks and work on the short sale process. It’s all part of national trend.

“Lenders are approving more aggressively-priced short sales, which in turn is resulting in more successful short sale transactions,” said notes the CEO of RealtyTrac. Banks are becoming more amenable to short sales as the housing slump drags on through its fifth year, as shown by the statistics. Homeowners are also becoming more familiar with short sales and contacting our area  Oak Park real estate lawyers to get assistance with this process, instead of waiting for the sheriff to show up with an order to vacate the property. Another reason why short sales are on the rise is because real estate agents may be getting better at selling them.

Credit Realities with a Short Sale
One of many reasons struggling homeowners pursue a short sale involves the credit benefit.  For example, FICO, the credit scoring company, notes someone with a good credit score, say 720, may see it drop to 570 to 590 after a foreclosure. A short sale, without personal recourse against the seller, will drop it to 605 to 625. But a short sale without forgiveness has the same effect as a foreclosure.

Of course, a less serious impact on one’s credit is just one of many reasons that homeowners stand to benefit from these sales.  In our area, be sure to get in touch with our Moorestown short sale attorney to learn more.

The Right of Redemption—or lack thereof—in Illinois

Most US states have a statutory condition that allows for the repossession of property after a foreclosure has occurred.  In these states, the redemption comes at a price; in general terms, if the individual is able to accumulate the finances to repay the debt in a certain time, he or she is able to reclaim that property.  Yet, our Oak Park real estate lawyers often explain how Illinois does not have this statutory “right of redemption” which makes the foreclosure process all the more difficult and precarious. Equitable Right of Redemption

Instead, the state of Illinois has what is known as an “equitable right of redemption.”  This entitlement is quite similar to its statutory cousin, but is a pre-foreclosure measure.  A mortgagor in default may be able to exercise this right over the period of seven months after the date of service or the first publication date, or three months after the date of entry of judgment of foreclosure—whichever is later.  Moreover, these time spans can even be shortened.  When the court deems a property abandoned, the redemption period is cut down to 30 days after the date of judgment for foreclosure.  All foreclosure sales cannot occur until the redemption period expires.

Waiving Redemption Rights

Homeowners in Illinois have the option to waive their right of redemption, only if the lender agrees to waive his or her own right to a deficiency judgment.  A deficiency judgment is a decree against the borrower or debtor whose foreclosure sale did not produce sufficient funds to pay the mortgage in full.  If a deficiency judgment is granted, the lender has permission to collect the required money by any legal means, including levying assets and garnishing wages.  If such finances to reclaim the home are unattainable, it would be wise to consider waiving this right in order to escape a future deficiency judgment.  In contractual terms, the homeowner and lender must file written consent waiving their rights.

Applying Your Right of Redemption

If a homeowner wishes to repossess his or her property, the state of Illinois requires individuals to file a notice of intent to redeem with the court; this notice must be filed five days before exercising the right.  Furthermore, persons must provide necessary proof of adequate funds.  In total, the redemption price includes the amount of the loan plus attorney fees, court costs, outstanding insurance and taxes and other related fees.  The exact amount owed is specified in the foreclosure judgment.  Payment should be made out directly to the clerk court.

The Snares of Foreclosure and Your Relief

Redemption issues in the foreclosure realm can be treacherous, particularly in the state of Illinois.  For one, in respect to waiving redemption rights, it is an important as a homeowner that you are protected from deficiency judgment.  In addition, exercising your right of redemption is controlled by specific measures and difficult vernacular.  The burden of negotiating with lenders should not all be on your shoulders.  The highly experienced Chicago, Oak Park, and River Forest real estate lawyers at the Emerson Law Firm can provide a helping hand to overcome these obstacles.  Redemption troubles are just one of the many areas in which these attorneys can provide you and your family with these difficult issues.

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Foreclosure Defense Attorneys Understand the Problem of Robo-Signed Mortgages

Our Oak Park foreclosure attorneys know that often the first step in any legal defensive effort on the part of distressed homeowners is to ensure that their banks followed proper procedure in the mortgage process.  Legal rules and regulations regarding the creation of mortgages are in place specifically to ensure that the potential foreclosure process is fair and reasonable.  There is simply no excuse for banks in our area to cut corners or violate protocols in this process.  When they do so, homeowners often have strong Oak Park foreclosure defense options.  

One common way that banks have been cutting corners in potential violation of the law involve the use of “robo-signing.”  As a Delaware Online story yesterday explained, judges across the country are blocking foreclosure because of these issues.  Officials report that illegal or suspect mortgage paperwork has been found throughout the country, including in our area.  In fact, some county recorder employees have found that deficient mortgage papers may date back to well over a decade, into the 1990s.  Many of those who have looked into their Chicago foreclosure defense options have likely read about the temporary halt that the nation’s largest lenders enacted on foreclosures last year.  Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and others all delayed the process because of these concerns about robo-signing. 

Robo-signing is often a catch-all phrase that refers to a variety of often unlawful practices.  The most common of which include problems caused by banks that hired entry-level employees to sign hundreds of mortgage documents a day.  Many of these individuals forged the signatures of executives who were needed to sign certain items. At other times, the executives themselves signed the document without verifying their accuracy—a potentially illegal process.  On other occasions notaries stamped the documents even though the signer of the document was not present when the papers were notarized, which is a legal requirement.

Initially, the banks claimed that these faulty signatures were only found in affidavits that banks filed as part of the house buying process, used to prove that the banks have a foreclosure right. These companies have claimed that they were overwhelmed with paperwork and used the signature process to cut corners.  However, it is now being learned that the robo-signature problem may extend to all sorts of mortgage documents, not just the affidavits.  In some areas, as many as 80-100% of home ownership documents include questionable signatures.    

For example, recently an Illinois county pulled 60 documents to check for suspect signatures and found that all 60 were “signed” by those who have already been identified as robo-signers.  In total, at least a dozen county officials in our state have sent findings to the Illinois Attorney General’s office regarding these troubling robo-signing issues. 

News about these mortgage paperwork problems should remind to all local homeowners struggling to keep their homes that help is available.  Our Chicago foreclosure lawyers at the Emerson Law Firm continue to help residents in our area with a wide variety of foreclosure issues.  We encourage all residents in Chicagoland to take the time to visit with an Illinois foreclosure defense attorney to share your story and see what options are available.

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Chicago Foreclosure Plan Significantly Underfunded

Illinois Foreclosure Home Sales and Discounts Increase

Chicago Foreclosure Plan Significantly Underfunded

Like many other cities across the nation, Chicago is experiencing a foreclosure crisis.  Early in the summer American families were continuing to deal with financial difficulties as increases in mortgage foreclosures took place.  Our Oak Park foreclosure attorneys know that distressed homeowners are concerned about losing their homes, but are hoping to find some relief from the daily struggle to make ends meet. 

One option that lawmakers expected would bring relief was the federal Neighborhood Stabilization Program (NSP).  Under NSP, a recent article in the Chicago Reader reports, the city receives federal funds to partner with local developers to restore and resell foreclosed homes.  This year Chicago will only receive $16 million dollars to help alleviate its foreclosure crisis, a number that strikes many aldermen (elected members of the city council) as being far too little.  In 2009, Chicago received more than three times that amount—$55 million—from the U.S. Department of Housing and Urban Development.

Some acknowledge that Chicago is receiving a lot of funding in comparison to other large cities.  The real problem is that $16 million is just not enough to address Chicago’s ballooning foreclosure numbers.  The Chicagoland inventory of foreclosed homes currently exceeds that of Los Angeles and Miami, two cites in which the foreclosure crisis has been especially acute.  New York is the only major metropolitan area behind Chicago in the resale of foreclosed properties.  Experts state that banks and realtors in the Chicago area have not been able to resell foreclosed homes as quickly as their counterparts in other large cities because of strict state laws that make it difficult for banks to force borrowers who have defaulted out of their homes.  Chicago’s inability to resell foreclosed properties has a lasting impact on the larger city economy, as well as on local neighborhoods. 

The 2011 funding for the NSP comes from the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which provided an additional $1 billion dollars for the NSP that was originally established under the Housing and Economic Recovery Act of 2008.  The U.S. Department of Housing and Urban Development awards grants to states and local governments to mitigate the negative impact of the economic crisis and housing market collapse.  The goal is to stabilize and revitalize the communities and areas that have been hit the hardest by the economic repression. 

According to Alderman Ray Suarez, the bottom line is that $16 million is not enough to stabilize Chicago neighborhoods.  However, circumstances are not as hopeless as some homeowners may believe, even with the economic decline and the underfunding of the NSP.  The city is currently on track to restore approximately 2,000 to 2,500 units this year.  While the NSP won’t cover the entire city or address all Chicago foreclosures, it will help. 

Furthermore, Chicago residents have many options at their disposal.  Our Oak Park foreclosure defense firm knows how to protect homeowners’ rights.  We understand that residents are concerned about losing their homes and about the possibility of other related financial liabilities.  Recent changes to Illinois foreclosure law, including stricter deadlines to take advantage of essential legal rights, make it more important than ever to investigate all of your resources and to contact a legal professional if you are facing foreclosure in the Chicago area. 

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Illinois Foreclosure Home Sales and Discounts Increase

The Chicago Sun-Times reported yesterday on new data from RealtyTrac which found that price discounts for Chicagoland homes sold while in some stage of foreclosure reached near all time lows.  These homes in foreclosure made up 37.6% of sales in the Chicago metropolitan area, which includes Oak Park, River Forest, and surrounding communities.  The average discount price for these sales was nearly 50%.  Our Oak Park foreclosure lawyers understand that local community members may be interested in these sales figures as they consider their options while in foreclosure.

The raw figures indicate that over 8,600 homes in foreclosure were sold in our area in the last quarter.  That is up from last quarter but down nearly 8% from this time last year.  The average sale price of a home in foreclosure was slightly over $135,000, which is 50% less than the average sale price of homes not in foreclosure.  Chicagoland had more foreclosure sales and steeper discounts when compared to the rest of the state.  Similarly, nationwide only 31% of sales were of foreclosed homes, and the average discount in those cases was only 32.1%.  This means that foreclosure sales seem to be more prevalent in our area than in other parts of the country.

These figures indicate that there are bargains available for new homebuyers and potential challenges for those looking to sell while not in foreclosure.  For residents in our area facing an Oak Park foreclosure, this data suggests that lenders may be becoming more willing to approve a short sale. 

When working with clients in our Chicagoland foreclosure defense practice, we often learn about families whose homes are underwater with mortgage obligations much higher than the current value of the home.  In these situations it is often difficult for distressed homeowners to recover, because the only way they can sell the home is if it is for less than what they owe.  When a sale takes place for less than the mortgage debt it is known as a short sale.  Real estate experts believe that the recent increase in pre-foreclosure sales, steeper discounts, and shorter average selling times mean that the housing market is starting to focus on more efficiently selling distressed homes.  This may result in a more streamlined short sale process. 

All of these changes have effects on the specific options available to area residents who are struggling with their mortgage obligations. Short sales usually require approval from lenders and many residents are often unsure whether these sales are their best option.  Our attorneys have years of experience working with families in these exact situations.  We have come to understand that many distressed homeowners have more options available to them than they aware.  However, the state law in this area is frequently changing, and delay in seeking professional legal help could mean the difference between having a strong foreclosure defense under the law and waiving the right to make certain arguments.  If you are facing foreclosure in Oak Park, River Forest, or throughout the Chicago area, please get in touch with an Illinois foreclosure defense lawyer to learn about what legal options are available to you.

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Bankruptcy Filing Numbers Drop, But Financial Struggles Continue

In tough economic times it is not uncommon for more and more individuals and families to find difficulty meeting expenses.  Whether it is the loss of a job or growing payments on credit card or mortgage debt, the real possibility of not being able to meet financial obligations is disheartening.  Most people have not contemplated what their course of action would be if they could no longer make the minimum payments on their debts.  Unfortunately, as that very situation becomes more common some believe that filing for bankruptcy comes with an unjustifiable stigma by those it could help most.   

A recent story in the Chicago Tribune reported that U.S. consumer bankruptcy filings fell 18 percent between July 2010 and July 2011. While these figures from the National Bankruptcy Research Center may sound like the positive signs of a rebounding economy, our Oak Park bankruptcy lawyers know that there remains a strong demand for legal help in these matters.  Somewhat discouragingly the Labor Department recently announced that unemployment rates remain near 9.2%.  When the unemployment figure takes into account individuals who are merely working part-time jobs for economic reasons, it rises to 16.2 percent, making it likely that Illinois bankruptcy filings will not be sharply declining anytime soon.

In what is perhaps a reflection of a nation tightening its belt, the Commerce Department cited a 0.2 percent decline in consumer spending in June.  Even if that trend were to continue it does not mean bankruptcy numbers will immediately relent.  American Bankruptcy Institute Executive Director Samuel Gerdano has stated that “there is typically a 12-18 month lag between declines in consumer spending and bankruptcy levels.”

With nearly a sixth of the country unemployed or underemployed and no let up in bankruptcy rates expected in the near future it is likely that more individuals will be considering this process as a way to obtain relief from overwhelming debts.  To the uninitiated bankruptcy may seem like a willful destruction of your finances, requiring the filer to liquidate all of their assets and possessions.  That is simply not the case.

While Illinois bankruptcy filings cannot eliminate debt from things like child support, alimony, certain types of student loans or recent back taxes, it does eliminate most other kinds of debt and can allow the filer a much desired opportunity to get their finances back on track.  Additionally, bankruptcy does not require the person filing to impoverish themselves and forfeit benefits they may have spent decades earning.  Payments from pensions, social security, retirement plans and workers’ compensation are often protected as may be exemptions towards a residence, cars and personal property.

Our Oak Park bankruptcy lawyers know that in some circumstances filing bankruptcy can help to clear up one’s finances before a situation is exacerbated further.  Even the most indebted person can regain a modicum of control over their financial future through the benefits of filing bankruptcy. Anyone facing serious financial hardship would be well advised to consult a bankruptcy professional to learn if filing might be in their best interest.

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Changes to Illinois Mortgage Foreclosure Act Curtails Important Foreclosure Defense Strategy

The Illinois General Assembly recently passed an amendment to the Mortgage Foreclosure Act that will severely impair homeowners in their Illinois foreclosure defense cases.  The amendment sets a deadline for filing a motion to dismiss based on an objection to the court’s jurisdiction over the defendant in a foreclosure action at 60 days after a homeowner merely appears in court or files an appearance in court. 

A homeowner may appear in court for a number of reasons, even for something as minor as notifying a judge that he or she is applying for a loan modification.  Loan modifications are commonly sought by those seeking more flexible payments choices to meeting their financial obligations.  These modifications can often help homeowners meet their payments, avoid foreclosure, and keep their homes.  However, the recent amendment will put homeowners at risk because it significantly curtails the deadline by which a homeowner can file for a motion to dismiss a lender’s case after essentially appearing before a judge for any reason. 

Our Oak Park foreclosure attorneys know that the motion to dismiss is a powerful defensive tool in litigation.  If granted by the judge, it ends that particular case completely and often forces the plaintiff-bank to reevaluate the legal framework under which they filed the act. The recent changes to the Mortgage Foreclosure Act are extremely troubling because homeowners who are not represented by an attorney may not be aware of all of their rights.  Homeowners who attempt to work with the bank early on in the process in order to avoid losing their homes may never file a motion to dismiss and may not realize they are giving up an important right by merely going before a judge and explaining their situation.  If the case later progresses and the homeowner is not able to work with the bank, the homeowner who has already appeared in court may have lost his or her right to file a motion to dismiss based on personal jurisdiction forever.  For example, this will frequently be the case in situations where the homeowner tried to obtain a loan modification and could not get one or the bank was not honest with the homeowner about the chances of modification.

Especially in these tough economic times when many families are struggling to make ends meet, foreclosure can occur for many reasons.  Homeowners should not consider a situation hopeless, because there are many foreclosure defense options at their disposal, including seeking out professionals who are experienced and well versed in Chicago foreclosure law.  Changes to Illinois foreclosure law make it imperative that all residents take steps right away to ensure that they have as much up-to-date information about foreclosure defense as possible so they can best protect their rights.

Protecting the rights of homeowners is the main goal of our Oak Park foreclosure lawyers. Properly defending a foreclosure action is essential because failing to do so can risk homeowners the loss of their home, a personal judgment for the debt, and the loss of future credit, since a foreclosure judgment appears on credit reports. If you or someone you know is going through this process, please contact our attorneys at Emerson Law Firm to learn about your rights and take advantage of your legal options.

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Alleged Bank Fraud and Fabrication May Have Ramifications on Chicago-Area Foreclosures

An Oak Park foreclosure lawyer needs to consider all possible defenses when acting as a zealous advocate for their clients.  Often this requires keeping breast of legal developments across the country that affect bank mortgage and foreclosure practices.  Foreclosure attorneys know that even actions in other parts of the country may have ramifications for local homeowners. 

For example, this weekend the Huffington Post reported on strong statements made by the New York Attorney General that alleges that the Bank of New York Mellon engaged in fraud in the mortgage bond process.   The state legal chief is asking a judge to reject a proposed settlement between that bank and Bank of America because of what he alleges to be knowing, repeated, and consistent misleading of investors about the mortgage bond creation process. 

Bank of America had reached a settlement with many investors after questions arose about the institution’s improper securitization of mortgages.  BNY Mellon was acting as a trustee for those investors.  However, the state attorney general is claiming that BNY Mellon violated its fiduciary duty as a trustee by committing fraud and misrepresenting information about the mortgages to investors.  Therefore, the state official is requesting that the judge reject a proposed $8.5 billion settlement between Bank of America and BNY Mellon.  The settlement would represent only 4 cents on the dollar of the current $220 billion owed to those investors.

The proposed settlement was connected to a larger inquiry involving whether the law was followed when these large banks bundled mortgages and re-sold them to investors as mortgage-backed securities. 

Many local residents may have read about these documentation problems.  To protect homeowners and ensure fairness in the mortgage process, the law requires banks and others involved in the process to properly assemble and maintain important loan documents.  Those documents are required to turn a mortgage on a property into a security that allows the purchaser to foreclosure upon the home if the owner defaults.  When those documents are absent, the bank may not have the legal right to foreclose.  For some area residents the missing documentation is an important component of their Chicago foreclosure defense. 

Investigators have repeatedly found that many banks engaged in sloppy practices during the housing bubble.  In a rush to complete as many sales as possible and quickly bundle mortgages, companies often failed to properly follow the law when turning the mortgages into securities.  As one bankruptcy professor explained to a Congressional committee last November, “If mortgages were not properly transferred in the securitization process, then mortgage-backed securities would in fact not be backed by any mortgages whatsoever.” 

Distressingly, some unethical institutions may have attempted to get around the documentation problem by illegal means.  Besides challenging the settlement offer, the New York attorney general has also accused Bank of America of fabricating missing documents when foreclosing on homeowners who defaulted on their mortgages.

Our Oak Park foreclosure attorney knows that banks are not above the law.  Unfortunately, negligent banking practices, missing paperwork, and forged documents are all-too-common tactics used by lenders seeking to unfairly foreclose on area homes.  That is why it is vital for all residents in this situation to seek out professional help to understand how new information about problematic bank practices may affect their own case.     

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