How Does a Deficiency Judgment In Illinois Work?

The Illinois foreclosure process can be complex and have long-lasting financial repercussions. In the state, lenders can also get a deficiency judgment against defaulting borrowers to acquire an outstanding balance of a loan post-foreclosure. At this point, borrowers should consider hiring an experienced and determined Warrenville foreclosure defense attorney.

What Is A Deficiency Judgment?

A lender can ask the court to pass a deficiency judgment if they want to pursue an outstanding balance on a loan after a property is foreclosed. The debt and other charges are supposed to be paid from the proceeds. If the amount you get from the proceeds cannot cover the debt, you will still need to pay the remaining balance as per the deficiency judgment.

Types of Deficiency Judgments

There are two types of deficiency judgments you can face:

In Personam

An in personam deficiency judgment is issued against borrowers. In this case, they are personally liable for the deficiency, which lenders can collect through their wages, via their bank account, or by securing non-exempt assets.

In Rem

An in rem deficiency judgment is passed on the property itself i.e. the borrower redeems the property by paying the outstanding balance to the bank with additional fees and interest. In this case, the lender can place a lien on the property for any remaining balance on the debt post redemption.

Let’s place both deficiency judgments in perspective with an example. Say you owe over $500,000, and your property sells for $300,000. In this case, $200,000 is the deficient amount. If the lender files a lawsuit against you and gets an in rem or an in personam deficiency judgment, you are legally obligated to pay them back as per both judgments. If you fail to do so by closing your bank account or refusing to pay, the lender may sell the judgment to a collection agency.

The best course of action if you receive an in personam deficiency judgment is to file for bankruptcy. For example, you can eliminate the judgment by filing for Chapter 7 bankruptcy. If you file for Chapter 13, on the other hand, you may have to repay a part of the debt via a long-term payment plan. In either case, you need an experienced Warrenville foreclosure defense attorney in your corner.

Get In Touch With Covert Marrero Covert For A Consultation Today!

If you have received a foreclosure notice, we understand how stressed you must be. Receiving one can be one of the most traumatizing events you can face, especially if you have a family to support. The process can be pretty complex, and if you also receive a deficiency judgment, you face an uphill battle without an attorney.

From ensuring your paperwork is filed correctly to formulating practical strategies tailored to your needs, the lawyers at Covert Marrero Covert LLP can prove invaluable. We understand that you have to act quickly after receiving the notices and can work out a payment schedule with the lender on your behalf. Get in touch with us for more options from an experienced Warrenville foreclosure defense attorney today! We only have your best interests at heart.

Is It A Good Time For A Home Loan Modification?

While the Covid-19 pandemic is ending, homeowners are still falling behind on mortgage payments as they build back their finances. Foreclosures hit record low rates in 2021 due to government relief efforts, but will that trend end as the housing market normalizes? A home loan modification is a good idea for homeowners who face foreclosures down the road despite these relief programs.

What Is A Home Loan Modification?

A home loan modification is ideal for homeowners who want to leave forbearance but are not eligible for refinancing. If your financial outlook is not going to change anytime soon, this is a good option.

Your lender will either reduce your rate or increase the loan term to make your mortgage affordable and manageable by modifying your loan.

President Joe Biden’s Mortgage Relief Plan

If you opted for VA, FHA, or USDA loans, you might even be eligible for President Biden’s mortgage stimulus program. It allows homeowners to reduce their payments by almost 25% via a home loan modification.

This is how the program works – homeowners who opted for government-backed mortgages and were unable to make their monthly payments during the pandemic receive enhanced aid. The option is especially beneficial for those who cannot pay their taxes, are searching for employment, re-training, or face any other hardship.

Loan modification options differ as per the loan program a homeowner participates in:

Loan Relief for FHA Loans

With FHA loans, homeowners will be able to lower their monthly interest and principal payments by a whopping 25%. These changes also include increasing the loan term by 360 months per the current market rate.

Loan Relief for USDA Loans

Borrowers who opted for USDA loans will be able to reduce their monthly payments by up to 29 percent via interest rate reductions, term extensions, or by covering past mortgage payments if they have them.

Loan Relief for VA Loans

Similarly, homeowners who opted for VA loans can also get a 20% payment reduction on their mortgages and larger ones. The loan terms for this kind of loan may also be extended to 480 months, reducing overall mortgage payments significantly. On the other hand, it may increase the interest rates that have to be paid over the life of the loan.

Home Loan Modifications in Illinois

Illinois is creating a mortgage relief program called the Illinois Homeowner Assistance Fund, effective from April 2022 onwards. Under the program, eligible households will be able to apply for $30,000 in free aid that can help them pay off property taxes or reduce overall payments, among others.

Homeowners who live in communities that have been hit hard by the pandemic will be prioritized at no cost. To qualify, homeowners must prove that they have been suffering financially because of the pandemic on or after January 2020. Plus, they must also own or live in their home as a primary residence, be at least 30 days late on mortgage payments or other expenses, and have a total household income of less than 150 percent of the area median income.

Get a Home Loan Modification Easily With help from Covert Marrero Covert

Having a Warrenville home loan modification attorney in your corner is a good idea. Contact our home loan modification attorneys at Covert Marrero Covert LLP for on and off-site appointments. We will streamline the process for you.

What Will Rising Interest Rates do to the Real Estate Market?

Rising real estate interest rates impact sellers and buyers in the market. Hypothetically, house prices and property value are directly proportional to mortgage rates. However, the phenomenon is far from clear-cut. An Illinois real estate attorney will tell you that the economy’s health ultimately determines what rises and what falls.

The Link between Economy Health and Interest Rates

Rising mortgage rates will not affect house prices and property value much if the economy improves fast. So if, say, mortgage rates increase by a single point and increase monthly payments, a strong economy will allow employers to increase salaries to compensate for the increase in interest rate.

A robust economy acts as a foundation for job and salary growth. In this case, rising interest rates should not harm the real estate market. However, it seems home buyers and investors can expect increased interest rates this year. Here are some of the things they can expect if or when that happens:

A Reduction in Buyer Demand

Buyers may pull back slightly if interest rates increase to the point that homes become less affordable. If that happens, you can expect fewer bidding wars for properties on the market. As such, interested buyers may not have to resort to risky strategies that they were forced to use last year when interest rates were at the lowest they had been since 1971. A whopping 72% of buyers found themselves in a brutal bidding war.

Refinancing May Slow Down

Last year, rates were low enough that buyers had no qualms getting loans for refinancing that ultimately amounted to $1.6 trillion. Lenders were swamped with refinancing jobs, and real estate owners across the country were able to reduce their monthly payments and long-term interest costs significantly.

However, if interest rates increase this year, refinancing will also slow down, even if the former increases by a small margin. The refinancing process comes with additional costs and stress. Even a slight increase in interest rates may discourage investors and homeowners from going through the hassle of refinancing. It will also hurt their savings.

Price Growth Will Slow Down

The pandemic had one huge benefit for real estate investors and buyers who wanted new space and a fresh new perspective to overcome their stress. It led to rock bottom interest rates and thus highly affordable home prices.

Those trends have long passed, so property prices are expected to grow in 2022. Experts believe those may remain 2 to 6 percent most of the year and manageable.

Contact Covert Marrero Covert for Real Estate Advice

Whether you are a first-time home buyer or an experienced real estate investor, hire a dedicated Illinois real estate attorney from Covert Marrero Covert to enhance your portfolio. Besides handling everything involved in property sales, we can also handle short sales, negotiate with the mortgage company on your behalf and ensure you walk away with complete peace of mind. Get in touch with us for a consultation today before interest rates skyrocket! Don’t wait for those rates to rise before making important investment decisions.

What Are The Benefits Of Buying A Short Sale In Illinois?

If you are in the market for a new home, but money is tight, consider a short-sale property. These properties are sold for less than market value and less than the amount owed on their mortgage. Banks and lenders agree to short sales to recover some of the loans owed to them.

Top Benefits of Buying a Short Sale in Illinois

Here are some of the main benefits you can enjoy with a short sale:

Get A Home Below Market Price

Short sales can give you more value for your money, and you will also have some leftovers. These are never offered at market value so that you can get them at a great discount. Your Illinois short sale attorney can determine the true value of the property and help you reach an agreement that covers legal costs and repairs.

Get an Empty Unit

If the property has a tenant, your Illinois short sale attorney can ensure the ownership transfer is transparent and legal before the short sale. This includes making sure the tenant is out of the house at closing. The worst thing you can do is rent it back to the previous owner.

They already have bad credit. After getting a short sale, you can work with your realtor to develop a marketing plan for your new empty unit before you put it up for rent. Bring it up to standards first. You will have sufficient money left over to do that and more to make the property attractive to tenants.

Cooperative Home Owners

Homeowners whose property is in foreclosure are not as cooperative as those who put theirs up for short sales. In some cases, buyers may have to force the former to evict the premises, and the previous owner may also damage the property before they leave.

In comparison, most sellers are eager to complete a short sale if it means they won’t have to pay the outstanding mortgage. Short sales don’t hurt their credit as much as a foreclosure can. They can buy a new property later easily. This amicable relationship between you and the seller can speed up the short sale process so you can move into or use the property as soon as possible.

Contact Covert Marrero Covert for a Legal Consultation

If you are looking for a dedicated and passionate Illinois short sale attorney, look no further than Covert Marrero Covert LLP. Our lawyers have extensive experience helping clients buy properties on a short sale and sellers who have fallen behind on their mortgage payments. We leave no stone unturned to ensure you get the best deal. This includes a perusal of the paperwork for errors that can otherwise lead to costly mistakes. This includes legal liabilities you may not be able to handle later.

Get in touch with us for a free consultation today. We are not afraid to go to court if it means you get the best deal and are treated fairly during the short sale process. Remember, the selling agent will also be working with the bank. They may try to short-change you if they think they can get away with it. Our Illinois short sale attorneys can prevent that from happening and take legal action if necessary.

Chapter 7 Bankruptcy vs. Chapter 13

Declaring bankruptcy can be one of the hardest decisions you can make. Besides the emotional blow, it can have a long-term and negative impact on your credit and future finances. If you choose to declare bankruptcy, make sure you have experienced Illinois bankruptcy attorneys that can help you through the complex legal process.

Chapter 7 Bankruptcy vs. Chapter 13 Bankruptcy

The first thing they will do is ask you to choose between Chapter 7 and Chapter 13 bankruptcy.

What is Chapter 7 Bankruptcy?

If you file for Chapter 7 bankruptcy, creditors cannot contact you, and you can get your discharge within three to four months of filing. While you may have to sell off some property to pay unsecured creditors, you will not have to give up all your personal belongings.

There is no limit to the debt you should have to be eligible for this type of filing, but only people who have unsecured debts, no regular income that can cover living expenses, no non-dischargeable debts (such as alimony and spousal support), and who cannot commit to a repayment plan anytime soon can file for Chapter 7 bankruptcy. You can go for alternatives but do so only if you have a bankruptcy attorney in your corner.

What is Chapter 13 Bankruptcy?

If you have disposable income and not a lot of debt, Illinois bankruptcy attorneys recommend that you file for Chapter 13 bankruptcy. It involves a repayment plan involving amounts you can afford to pay.

Even if your creditors object to the terms, they cannot do anything once the bankruptcy court approves your filing. Unlike Chapter 7 bankruptcy, you can get the interest rate reduced and even the balance you owe on a car loan if you file for Chapter 13.

You do not have to give up non-exempt properties since creditors are compensated in a Chapter 13 bankruptcy. Once you repay debts in a three to five-year repayment plan, any unpaid debt is eliminated under this bankruptcy filing.

Which One Is Better?

Most people opt for Chapter 7 bankruptcy since it is more cost-efficient and cheaper than Chapter 13. They do that after taking a ‘means test’, which evaluates the size of their family, expenses, and income.

However, while Chapter 7 bankruptcy eliminates eligible debts such as loans and credit card expenses, you still have to pay your taxes and student loans. Plus, it does not protect assets from foreclosure or repossession.

Contact Covert Marrero Covert for Bankruptcy Filing

Whether you want to file for Chapter 7 or 13 bankruptcy, you need attorneys in your corner who can handle both. Book a consultation with bankruptcy attorneys at Covert Marrero Covert for a consultation today. We have worked with several clients in this regard and can aid you in all of your legal issues.

Contact us at our offices in Schaumburg, Naperville, Warrenville, and Illinois. We can also arrange an appointment at a convenient place for you if you want. All of our attorneys are compassionate by nature and will ensure you get the best solutions to your financial issues.