My Home is Going Into Foreclosure: Should I Consider a Short Sale or Deed in Lieu of Foreclosure?

When you are significantly behind on your mortgage payments, you may receive notice from the bank that your home is going into foreclosure. For many consumers who are struggling with mortgage debt, it is more important to avoid having the lender foreclose on the property than to remain in the property. Accordingly, in these situations, a homeowner might be considering two options for avoiding foreclosure — a short sale or a deed in lieu of foreclosure. You might have read about these options, but you may not be certain if either one is the right choice for you. While it is critical to work with a foreclosure defense attorney in Oak Park on any action you plan to take to avoid foreclosure, you can learn more about these options in the meantime.

Short Sales or Deeds in Lieu of Foreclosure Can Allow You to Avoid Foreclosure

Both short sales and deeds in lieu of foreclosure, the latter of which is often described simply as a “deed in lieu,” are options for avoiding foreclosure. As such, if your goal is to avoid foreclosure, either of these are possibilities that could be in your best interest. However, it is important to know that these options are distinct from one another and involve different processes.

If you are considering a short sale or a deed in lieu to avoid a foreclosure under Illinois law, you should know that short sales and deeds in lieu will still affect your credit. While neither short sales or deeds in lieu will impact your credit as significantly as a foreclosure, you will still see a noticeable dip in your credit score. So, should you choose a short sale or a deed in lieu? Our Oak Park foreclosure defense attorneys can provide you with details about each of these processes.

What is a Short Sale?

A short sale is a sale of your home in which you sell it to a third-party buyer (e.g., another consumer, someone who wants to use the property for rental income, or somebody who plans to do something else with the property), but you sell the home for less than the total amount you owe on your mortgage. For example, if you still owe $200,000 on your mortgage, you might sell the house for $150,000 in order to avoid foreclosure. However, the bank must agree to the short sale before you can complete the transaction. After the bank agrees to the short sale, you will typically need to submit an application for loss mitigation.

It is important to work with a lawyer who can ensure that the bank has agreed to the short sale and has also agreed to forgive the remaining debt not covered by the short sale proceeds. However, you should be aware that any forgiven debt will likely count as taxable income, and you will be responsible for paying taxes on that amount the same way you would any other income.

What is a Deed in Lieu?

With a deed in lieu, rather than selling your house to repay some of the amount you still owe, you agree to transfer the title of your home to the bank. Like a short sale, you will need to get the bank’s approval for a deed in lieu before it can happen. However, you can still be responsible for the difference between the amount owed on your mortgage and the fair market value of your home.

Contact Our Foreclosure Defense Lawyers in Oak Park

If you have questions about avoiding foreclosure through a short sale or deed in lieu, our Oak Park foreclosure defense attorneys can help. Contact the Emerson Law Firm today.



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Long-Term Effects of Foreclosure

Nobody who owns a home wants to risk losing it due to foreclosure. Indeed, if you are struggling to make your mortgage payments, you should get in touch with an Oak Park foreclosure defense attorney as soon as possible to find out about options for keeping your home. If you are still employed, you could be eligible to file for Chapter 13 bankruptcy, which ultimately can allow you to prevent a foreclosure from moving forward and to get back on track with mortgage payments. If you can, avoiding foreclosure is in your best interest. According to a recent study conducted by Stanford University economist Rebecca Diamond, “foreclosures can have devastating, long-term impacts.” To be sure, the long-term effects of a foreclosure can go far beyond the loss of a home.

Homeowners Who Go Through Foreclosure are Less Likely to Own Future Homes
What are some of the long-term impacts of foreclosure? According to the study, one of the most common is that homeowners who go through a foreclosure and lose their homes are less likely to own another home in the future. It is not simply out of a desire to avoid purchasing a home, but rather as a result of longer term financial difficulties. Indeed, “their living arrangements become less secure, and they default on other debts more often.”

Tenants can be Impacted
While we often think about foreclosure as involving residential homeowners who are using the property as a primary residence, landlords can also face foreclosure, and tenants can be negatively impacted. Although foreclosure does not result in a landlord losing his or her home, it can lead to tenant evictions, and tenants having difficulty finding another place to live on somewhat short notice.

On the whole, however, landlords who go through a foreclosure, and tenants who are also impacted, are both far less affected by foreclosure than homeowners who lose their primary residence. In the cases of primary residence foreclosures, those homeowners tend to have long-term financial problems after the foreclosure process is completed.

Considering Homeowners “On the Margins”
Given the economic difficulties that many people are currently facing due to the COVID-19 pandemic, the study emphasizes that it is also necessary to consider homeowners who are currently “on the margins.” These are the homeowners who are behind on mortgage payments and are at serious risk of foreclosure, but for whom foreclosure may not be imminent. With these types of homeowners, it is important to think through a variety of foreclosure defense options that can allow them to remain in their homes, and to avoid ending up in the long-term risk category of so many homeowners who do end up having their properties foreclosed.

Contact an Oak Park Foreclosure Defense Attorney
If you need help avoiding foreclosure, or if you have questions about how Chapter 13 bankruptcy may be able to prevent foreclosure, you should seek advice from an experienced Oak Park foreclosure defense lawyer. One of the advocates at our firm can speak with you today about your options. Contact the Emerson Law Firm to learn more about the services we provide to clients throughout the Chicago area.



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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.


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How the Foreclosure Crisis Continues to Affect Single-Family Homes

Could Illinois Benefit from Fast-Track Foreclosure Laws?

Despite the fact that the foreclosure crisis is largely over, many homes remain in foreclosure in the Chicago area, and many families are still at risk of losing their homes due to the inability to make monthly mortgage payments. An article in Chicago Now indicates that Chicago foreclosures have reached a record low—including homes that are newly entering foreclosure as well as those that are part of the shadow inventory. However, the total number of homes in the Chicago area at some stage of the foreclosure process was already higher than in many other major urban areas.

While foreclosure numbers appear to be declining, is it time for Illinois to consider foreclosure fast-tracking laws? According to a recent article in DSNews.com, a fast-track foreclosure law could be a “much-needed remedy” for Chicago and for Illinois more generally.

What are Fast-Track Foreclosure Laws?

Currently, according to the article, only two states have what are known as fast-track foreclosure laws: Ohio and Maryland. However, a handful of additional states, including Illinois, are considering implementing similar laws to speed up the foreclosure process. So, what are fast-track foreclosure laws? In short, they are designed to speed up the foreclosure process and to prevent a growing number of homes from making up a shadow inventory. Yet fast-track laws can vary from state to state.

In Ohio, for instance, the fast-track foreclosure law “authorizes an expedited foreclosure action against vacant and abandoned single-family residential properties, allows the bank or servicer to enter and secure such properties, and criminalizes the damaging or diminishing of property in any way by a homeowner from the time they are notified of an impending foreclosure action.” In addition, the Ohio law prevents an owner from reacquiring a mortgage for a vacant or abandoned residential property once the property has been sold.

While the Ohio law has specific elements that would not need to be adopted by every state implementing fast-track laws, it sets similar goals to other states (even if those states do not yet have fast-track laws in place) to prevent the foreclosure process from lingering, sometimes for years, and leading to blighted neighborhoods and decreasing home values. With fast-track laws, the goal is for homes that enter the foreclosure process to become occupied against as quickly as possible, and for those homes to be maintained—such that they can be readily sold—during the foreclosure process.

Will Illinois Adopt a Fast-Track Foreclosure Law?

According to some commentators, Illinois is close to having a fast-track foreclosure law of its own. Not only could such a law help to keep home values up, but it could also improve the mental health of those affected by foreclosure. Whether your home has entered the foreclosure process or you are living in a community that has been saliently impacted by foreclosures (and now, vacant homes), the National Institutes of Health notes that “foreclosures adversely affect health and mental health on both the individual and community levels.”

If you have questions about foreclosure laws in Illinois, or if you need help avoiding foreclosure, an experienced Oak Park foreclosure defense lawyer can assist you. Contact the Emerson Law Firm to learn more about how we can help.

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Sandra Emerson Discusses Senate Bill Addressing Foreclosure Process

A recent state Senate bill aims to fast-track aspects of the mortgage foreclosure process, according to a recent article in the Chicago Daily Law Bulletin. However, many foreclosure defense lawyers and consumer protection advocates in Illinois are concerned about whether the Senate bill actually might not have the best interests of debtors in mind. Some commentators have voiced worries that the proposed legislation “would unfairly advantage bank lenders.” Sandra Emerson was quoted in the article, emphasizing that the bill may require more of homeowners than is fair.

What else do you need to know about the Senate bill, and what else does Sandra Emerson have to say about the potential harms it could pose for homeowners in the Chicago area?

Learning More About Senate Bill 192

The proposed legislation, Senate Bill 192, aims to make revisions to Section 15-1506 of the Code of Civil Procedure. More specifically, the bill would amend the mortgage foreclosure article of this part of the law, and it would make two primary changes:

• When there is a foreclosure trial, once the mortgage lender presents the mortgage in the current case and the mortgage note, it establishes a prima facie case for foreclosure; and
• The initial burden of proof would shift from the lender to the borrower as soon as the mortgage lender establishes a foreclosure case.

What is a prima facie case? In brief, it is one that is sufficient to establish that the party presenting evidence has enough in its favor to move forward with the case. As you might be able to guess, these proposed amendments to Illinois law could make it more difficult for homeowners to defend against foreclosure, while also making it easier, potentially, for banks to be able to move forward with foreclosure cases against struggling debtors.

Foreclosure Defense Advocates in Illinois Speak Out Against Proposed Legislation

In response to the proposed new law, many Illinois foreclosure defense advocates emphasize that such amendments to the law suggested by SB 192 could deny mortgage borrowers of due process. Sandra Emerson emphasized that the Senate bill has the potential to do serious harm to borrowers who want to build a successful foreclosure defense in order to remain in their homes. Given that mortgage servicers make errors, it can be difficult for a borrower to dispute the amount owed early in the case, and the banks could move forward, potentially unfairly, with a foreclosure case. As she explained, “What we’ve noticed is that a lot of mortgage companies make mistakes, very serious errors in accounting.”

Moreover, as Emerson clarified, shifting the burden of proof to the homeowner makes it very difficult on the homeowner: “That’s really hard for anybody to do . . . .  You don’t have any way to prove what is actually owed, because the bank has the information you need to do that.” As Emerson highlighted, the way in which the bill has been written (including the shift in the burden of proof) would favor the banks while making it so that “someone who is a layperson isn’t going to understand the potential impact that this law would have.”

Contact an Oak Park Foreclosure Defense Lawyer

If you are facing foreclosure, it is more important than ever to discuss your case with an Oak Park foreclosure defense attorney. An advocate at the Emerson Law Firm can speak with you today. Contact us to learn more about how we can help.

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Mortgage Relief Programs Set to Expire

If you live in Oak Park and are at risk of foreclosure, you should be considering the mortgage relief programs that could be available to you since two significant federal programs will soon be expiring. According to a recent report from NBC 5 News Chicago, opportunities to obtain relief from the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) will expire on December 31, 2016. Although the economy is recovering and home sales in Illinois are bouncing back, many families in the region continue to experience debt problems and continue to have difficulty making monthly mortgage payments. You should know that there are options to avoid foreclosure, and an experienced foreclosure defense lawyer in Oak Park can discuss those options with you.

In the meantime, if you might be eligible for relief under HAMP or HARP, you should learn more about these programs before their looming expiration date.

Federal Programs Already Have Helped Thousands of Families

According to the report, both HAMP and HARP already have helped thousands of homeowners in the Chicago area alone who have faced foreclosure. What have these programs been able to do? As their names suggest, they allow struggling homeowners to modify their mortgages or to refinance their home loans, lowering monthly mortgage payments in the process to an amount that homeowners can afford.

But these programs were not designed to last forever, and Chicago-area residents will need to act quickly if they want to take advantage of the benefits of HAMP or HARP. As NBC News explains, both of these federal programs were developed “during the height of the country’s foreclosure crisis,” and since we have largely emerged from that crisis as a nation, the programs are set to conclude.

Thousands of Chicago-Area Homeowners Remain Eligible

Despite the fact that the foreclosure crisis largely has come to an end, thousands of homeowners in the Chicago area remain eligible for HAMP and/or HARP. As the article explains, the Neighborhood Housing Services of Chicago (NHS) has identified 27,639 homeowners in the area who are eligible for HAMP and/or HARP. According to Karen Woods, the NHS director of homeownership services, “it’s important that homeowners not delay in seeking assistance through these federal programs.” As a non-profit counseling organization, NHS “works with businesses, government, and residents to revitalize Chicago’s low-to-moderate-income neighborhoods.”

If you are struggling to pay your mortgage, which program is likely right for you? According to an article in HSH.com, HAMP is primarily for homeowners who are currently in danger of defaulting on their loans. However, homeowners are only eligible for this program if their current mortgage payment equals more than 31% of the monthly gross income—HAMP helps homeowners by adjusting mortgage terms so that the monthly payment falls below this amount. Differently HARP can help all homeowners “no matter how far underwater” to refinance their mortgages.

Contact a Foreclosure Defense Attorney in Oak Park

If you are having difficulty making monthly mortgage payments and are currently at risk of foreclosure, you should understand the options that are available to you. An experienced foreclosure defense attorney in Oak Park can discuss those options with you today. Contact the Emerson Law Firm for more information about how we can assist you.

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New Illinois Bill Protects Renters From Foreclosure

While foreclosures continue to plague many urban areas across America, Illinois Governor Pat Quinn recently signed a bill that will protect renters from being forced out of their homes if those properties go into foreclosure.  According to DSNews.com, the new law, Senate Bill 56 was sponsored by Senator Jacqueline Collins and Representative Kelly Cassidy, both of Chicago.  It will take effect in just under ninety days now.  This bill will increase the protection associated with the Illinois Protecting Tenants in Foreclosure Act (PTFA), a law that’s set to expire in 2014.

Do you have questions about your rights during the foreclosure process?  The experienced attorneys at the Emerson Law Firm can answer your questions today.

Protecting Tenants in Foreclosure Act

The Protecting Tenants in Foreclosure Act originally went into effect in May 2009.  The Act is actually part of the Helping Families Save Their Homes Act of 2009.  It had been set to expire at the end of 2012, but the Dodd-Frank Wall Street Reform and Consumer Protection Act extended the act until the end of 2014.

Under the act, the purchaser of any foreclosed property has to provide tenants with at least 90 days notice before they can force those renters out of the property.  And further, unless certain conditions are met, the purchaser of a foreclosed home has to allow a tenant to run out the course of her lease on the property.

Although the PTFA won’t expire until the end of 2014, that expiration date might arrive before the foreclosure crisis has truly come to an end.  The new Illinois law will continue protecting Illinois families who rent homes that end up in foreclosure.

Renters Need Adequate Time to Make a Safe Move

According to the news release about the new bill from the Illinois Government News Network (IGNN), renters who inhabit foreclosed property need to have adequate time to make a safe move, and the new bill affords them just that.

Governor Quinn spoke about the bill, remarking that “the foreclosure crisis has been devastating to homeowners as well as many families living in rental homes who are at risk of losing their home due to no fault of their own.”  Indeed, families who rent may run nearly as high a risk as homeowners who have difficulty making their monthly mortgage payments.  That’s where the new law comes in.  According to Governor Quinn, “as families in our communities continue to recover from the worst recession since the Great Depression, this law will ensure renters are protected from sudden forced moves that can be costly and disruptive to their lives.”

In fact, statistics related to Senate Bill 56 reveal that about forty percent of families who are negatively affected by foreclosure are actually renters who have no idea that their landlord isn’t making the monthly mortgage payments on their home.

Speaking about the bill, Senator Collins indicated that “a consistent commitment to housing rights protects tenants as well as homeowners.”  Describing the impetus for sponsoring the bill, she said that “no one should be evicted on short notice and lose access to a safe place to live because of the financial circumstances of the landlord.”

In short, the Senate Bill 56 will ensure that renters are protected from foreclosure beyond the end of 2014.  If you have questions about the impact of the new bill or if you’re having difficulty making your monthly mortgage payments, an experienced foreclosure defense attorney can help.  Contact us today to discuss your case.

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Housing Market On the Rise in the Chicago Area?

We all know about the housing market crash and the devastating number of foreclosure filings across the country.  We’ve also reported on news that the real estate market has begun to show strong signs of recovery.  It’s clear that we haven’t reached a point at which foreclosures aren’t a problem.  Indeed, many families in Illinois continue to have difficulty making monthly mortgage payments, putting them at risk of foreclosure.  However, some commentators have begun to look ahead, speculating about the rising real estate market in Chicago and the Midwest.

A recent article in the Chicago Tribune suggests that housing recovery in the Chicago area might look a little bit different than we might imagine.  Rather than return to “the olden days of the housing boom” in which builders were eagerly “throwing up McMansions in the distant suburbs,” researchers suggest that new building and buying trends may fall closer to the city center.  According to Lance Remella, a researcher at John Burns Real Estate Consulting who tracks the housing markets in Chicago and the Midwest, “the race is on for land in nearer-in locations.”  As a result, buyers might have to pay higher prices than they’d expect.

The intricacies of the housing market can be daunting for first-time buyers and for families who are having trouble making their mortgage payments.  If you have concerns related to real estate and avoiding foreclosure in the Chicago area, the experienced attorneys at the Emerson Law Firm can answer your questions today.   

More Jobs, More Real Estate Buying

While many commentators worry that employment numbers remain low and foreclosures continue to occur, Ramella insists that there are “enough jobs to indicate better days ahead.”  Even though the jobs in Chicago aren’t growing at the same pace as some other states, it’s still increasing by 1.5 percent, and according to Ramella, the Chicago area has “added 60,000 jobs—which isn’t setting the world on fire, but it’s a slow, steady growth.”

Indeed, commentators expect the job growth rate to continue to increase in the Chicago area, with 1.6 percent by the end of 2013, 1.9 percent by the end of 2014, and 2.1 percent through 2015.

If Ramella is correct, then the number of jobs added in the next couple of years means that the Chicago real estate market will be “completely undersupplied with new housing.”  By the end of 2015, foreclosure rates are expected to drop, and more families who once experienced difficulty making mortgage payments might be able to invest again in homeownership.

And although household income growths aren’t likely to get anywhere near “back to normal” until 2016 according to market researchers, household incomes continue to increase as the market rebounds.

In fact, by the end of 2013, researchers predict that the “price appreciation for resale homes will increase by about 4 percent.”  According to Ramella, prices will increase by 11 percent in 2014, which means that metropolitan Chicago will “see double-digit appreciation coming for the next two years.”

The housing crisis isn’t over, but the continued news about the recovering market suggests that we may see a return to normalcy within the next several years.  However, many families in the Chicago area continue to struggle with monthly mortgage payments and fears about foreclosure.  An experienced lawyer can answer your questions when it comes to avoiding foreclosure or the intricacies of the housing market in our area.  Contact us today for more information.

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