FORECLOSURE PROCESS

You’re protected by law under the Illinois Statute of Civil Procedure for Mortgage Foreclosure: Article XV

This page is particularly important because a lot of homeowners believe that they have very little time to remain in their home once they receive the court documents to foreclose their mortgage. The only way that a lender can accelerate the foreclosure process on your home is if you abandon the property or if the property value falls under 90% of the mortgage balance. This last point is a joke because almost 69% of the homes in foreclosure have a property value under 90% of the mortgage balance. The good news is that this measure has never been used, to our knowlege, as a motion to accelerate a foreclosure on a home, particularly one that is occupied.   

The law in Illinois clearly states that a homeowner has 210 days from the date of their original court summons before a judgment of foreclosure is entered, unless the homeowner abandoned the property. If this is the case then you should contact us ASAP so we can discuss your account with the lender before they accelerate the foreclosure on your home. A lender or servicer can not initiate foreclosure proceedings until the borrower is 90 days delinquent in their mortgage. Even if your lender or servicer waited 5 months to serve you with court papers you still have 210 days from the date of the original court summons before your home goes to a sheriff sale. The foreclosure doesn’t do the damage, it’s the sheriff sale!

The above information is very important because if you’re being reviewed for a Loan Modification you need to know that the foreclosure process on your home will not be terminated during this time. Just as important to remember, Illinois Law also allows a lender to file a “Deficiency Judgment” against borrowers that can be initiated within a 7 year period, collected through wage garnishment and/or tax returns. The deficiency amount is the difference of what the lender collected through a foreclosure sale minus the balance on your note when you went into foreclosure. As an example: if the balance on your mortgage was $250,000 and the bank had a net of $200,000 at a foreclosure sale, you would owe the bank $50,000 dollars plus their court cost and legal fees, usually an additional $8,000 dollars. The net also pertains to all of the closing cost the lender absorbed to close the REO transaction (Real Estate Owned).You will be at risk of a wage garnishment and/or tax liabilities if you are now employed or intend to be employed anytime in the next 7 years.

Most Loan Modifications take time and this time is detrimental if it's not properly monitored by the applicant. I can't stress to you enough how important it is to get a timely reply from your lender regarding your modification. You can figure out the projected sheriff sale date on your home by adding 210 days (7 months) from the date of your original court summons. Mark down this date after figuring it out and know that you need an answer within 90 days of the sheriff sale. If you don't have an answer by that time then you should contact us about the possibility of short-selling your home. This is the only viable option to keep a foreclosure off your credit report and could also keep you in your home past the sheriff sale date if we receive an offer on your property .... and we will receive an offer on your property.

WHAT ABOUT CHAPTER 7 BANKRUPTCY?

Yes, a Chapter 7 Bankruptcy will dismiss the deficiency amount in a foreclosure situation but not the foreclosure itself. The bankruptcy coupled with the foreclosure will cripple your credit for the next 10 years, making it very tough, if not impossible, to obtain a simple line of unsecured credit without the harsh penalty of a hefty interest rate. It's a huge mistake if your only filing the Chapter 7 to get rid of the possible "Deficiency Judgment". The "Deficiency Judgment" can be eliminated by the short-sale closing of your home, and in fact most debts will be forgiven. It might not mean anything to you now but you'll realize how important this is in the very near future when the bankruptcy and foreclosure impacts your life style.

THERE ARE TWO THINGS YOU SHOULD NEVER DO:

·   Never pay a third party to negotiate your modification. A third party can’t do any more than you can with regards to your modification, not even an attorney. Report this to Illinois Attorney General Lisa Madigan if this is the case.

·   Never give your home back to the bank without a fight. This fight includes your Loan Modification request or a short-sale if your modification is denied.

With the risk of sounding redundant, please keep an eye on your “Projected Sheriff Sale Date” if you’re mortgage is still being review for a Loan Modification. The "Projected Sheriff Sale Date" can be calculated by adding 210 days (7 months) to the date of your original court summons. The point of failure to short-sale comes after a lengthy modification review process that is denied within 45 days of the scheduled sheriff sale. This usually isn't enough time to get a contract on your property. Don’t let your lender drag this process out, keep pressing them for a timely response.

Please contact us for any addition information or to clarify any information unclear to you on this page. Send your inquiries to lthrowdklein@comcast.net.

Call Lee @ 708.253.8996                      or                 Denise @ 708.906.4961