Foreclosure Defense Tips that You Should Know

Facing a foreclosure in Illinois can be a daunting task without the help of an experienced foreclosure attorney. Although it is best to avoid foreclosure situations, here are a few tips that you should know in case you need to exercise foreclosure defense to get out of sticky situations:

Accept Documentation

Some people commit the mistake of not being vigilant about receiving notices and reach a position when it is too late to mount a defense. The first tip is to be always attentive, especially when you have even missed a single repayment. Contact your lender proactively and ask them if something can be done to remedy the situation before the 90-day period is achieved. Remember, you have this period where you can submit the missing payment and avoid problems.

The lender starts by sending you an initial notice for complying with the mortgage terms. You then reach a notice that initiates the foreclosure process. Accepting these notices on time give you the best chance of seeking an experienced foreclosure lawyer and preparing a strong defense. This certainly helps you with other tips as well.

Discuss with Lender

Discussing the foreclosure situation directly with the lender may help you in most foreclosure situations. Remember, the lender must wait for 120 days of delinquent behavior before filing for foreclosure. You can quickly discuss an earlier notice from your lender and find out you still have some time to remedy the situation by working out an agreement with the bank. In most cases, the bank keeps sending you notices to inform you of the missing payments.

Seek a Lawyer

The most important tip is to seek an experienced foreclosure lawyer immediately for preparing a defense. You should help your lawyer with all the documentation and the communication that you may have had with the lender’s representative. Since skilled attorneys are aware of the state regulations and the laws that govern foreclosure, they can prepare a suitable defense according to your particular situation.

You should ask your foreclosure lawyer any questions that you have in mind and they will have the answers ready for you. They allow you to relax and make up your mind how you want to get out of a foreclosure situation. Sometimes, holding onto a large mortgage may not be the right option, in which the next point may be advised by your lawyer.

Short Sale

A short sale is when you sell your house at a value lower than your mortgage with the permission of your lender. This is often the best solution for both sides, but you should only go for it if you have hired a foreclosure lawyer and have worked out the finer details of the process. This is important, since it will allow you to stay away from any surprises that may destroy your capacity to save your remaining assets. Typically, you still owe the remaining money to the lender but it is often waived off, based on your monetary situation.

Always remember that you must act swiftly for the best foreclosure defense. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today and let our foreclosure defense attorney help with your case.

Short Sale – A Necessary Defense to Stay Away from Foreclosure

It may not be ideal to lose your home, but it is always better to lose your home while it still has some value and can help you get rid of the impending debt. A short sale is an important term in the real estate industry. It is a way of avoiding foreclosure, by selling the property earlier, and often at a lower value. This only works out if the lender agrees to it, as you must present financial circumstances that help the lender realize that it is the best solution. Here, we describe some benefits of a short sale that you can get by seeking the advice of an experienced real estate attorney.

Benefits of Short Sale

A short sale happens when the lender allows the owner to sell the home at a value smaller than the debt incurred on the property. It has the following advantages over a foreclosure:

Protecting Credit Record

Although a money lender can initiate legal proceedings to recover the amount lost in a short sale, most banks will settle with the delinquent borrower. This is especially true in instances where the borrower has clearly shown financial hardships, such as a divorce or loss of income due to a failed business or lost job.

Best Result for Lender

A short sale is also a great option for a lender as well, as they receive compensation for failed debts. A foreclosure is costly and may not always bring the price that the borrower owed the lender. The process to foreclosure requires that the lender sends you several notices, prepares legal representation and then wait for you to respond in the court. It is advised that you obtain legal representation for assistance with this benefit, by showing the relevant financial details to your lender.

Controlled Process

The foreclosure process can be hectic for you as a homeowner. You receive mail and documents almost every day and it is easy to make mistakes. On the other hand, a short sale is a controlled process. You can seek the help of a real estate attorney and ensure that you identify a smooth ground with your lender. A short sale also requires documentation, but the involved processes are much simpler and work like a typical house sale.

Be Relaxed

Not being able to pay back a loan produces depression and anxiety. Staying away from a lengthy legal process will help you channel your energies and try to change your current financial situation. A short sale allows you to swiftly reach an agreement with your lender and a chance to move on during a tough financial time. This means that you must seek the support of an experienced real estate lawyer to help you prepare a short sale.

Good for Agents

Real estate agents love to help homeowners who want to proceed with a short sale. Many realtors specialize in helping clients buy and sell short sale homes. This means that they will be willing to work with you to increase their branding in the area.

The ideal legal help will ensure that you achieve success as a homeowner in trouble. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today and let our short sale attorney help with your case.

Defaulting on a Second Mortgage: What You Should Know

When purchasing a home, people often take out more than one mortgage loan to accommodate other expenses. These loans can be used for covering the initial purchase of the property, carrying out a home remodel or renovation project, going on a vacation, or even paying for college fees. However, just like a primary mortgage loan, if you default on the payments of the second mortgage, you are likely to face a foreclosure. Whether the first or second lender initiates the process typically depends on the current value of your home.

Understanding a Second Mortgage

When you take out a second mortgage loan, you are required to sign two documents: a mortgage and a promissory note. The latter document serves as a promise in writing, ensuring that you will pay back the loan, while the former gives a security interest in the property to the lender. Some common examples of second mortgages are Home Equity Lines of Credit (HELOCs) and home equity loans.

The term second mortgage does not only mean that it is a loan taken out after a first or senior loan, but it also determines priority. Priority is a concept used for determining which obligation should be paid first after the foreclosure. For this, the date on which the mortgage was recorded in the county recorder’s office is of utmost importance. The mortgage with the earlier date will get higher priority, regardless of whether it is the first or second loan. Once the first mortgage is paid in full, the remaining balance from the foreclosure sale will go into settling the second mortgage debt.

When the First Mortgage is Paid, but not the Second

When you are unable to make payments on your first mortgage, it is highly likely that your lender will proceed to foreclosure, unless you negotiate a deal. However, when it comes to a second mortgage, the junior lender may or may not initiate a foreclosure.

Homes with Equity

As mentioned before, the current value of the property is a predominating factor that lenders evaluate before taking the foreclosure decision. This is because they need to ensure whether the foreclosure sale will be enough to cover for the first mortgage and leave enough money to cover the debt of the second. If there will be enough equity for the second lender to recover full or sufficient amount of the money it loaned you, they are likely to proceed with the foreclosure process.

Homes with Negative Equity

If your home is worth less than what you owe to mortgage lenders, your property will have negative equity. Such homes are generally referred to as upside-down or underwater property. In such a case, the second lender is unlikely to go for foreclosure. However, if you are unable to pay the first lender as well and they initiate a foreclosure, the second lender may file a lawsuit against you to recover the unpaid amount.

It can become quite difficult to manage more than one mortgage, especially when you begin to default on the first. However, all hope is not lost – you can still save your home by working with an experienced foreclosure defense attorney who can help you determine the best way to avoid foreclosure. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today.

Situations that Makes You Eligible for a Short Sale

Difficult times create financial problems for most homeowners, and in such circumstances, a short sale may seem to be the most viable option at their disposal. If you are in a similar situation, you should consider consulting with a short sale attorney who can provide legal guidance and enlighten you with the pros and cons of going for a short sale. They will also explain any other options you may have to overcome your current circumstances, verify the legal soundness of the short sale documents, and provide advice about personal liability after the process is complete.

In a short sale, you need to get approval from your lender to proceed with the process. This is because generally, you get a lower price for the property than what you owe, and you need consent of the lender that they will accept the less settlement amount for your mortgage debt or seek deficiency judgment after the short sale has been finalized.

Qualifying for a Short Sale

Before you can proceed with a short sale, you need to qualify for it by getting approval from your lender. Lenders want a seller to provide genuine or legit reason that they have no choice but to short sale their property. Here are some requirements you must meet to be eligible for a short sale:

1. The Market Value of your Property Has Dropped

If the drop in the market value has decreased the worth of your home lower than the mortgage debt, you can request for a short sale to settle the outstanding amount. However, if there is still some unpaid balance, you may have to pay a prepayment penalty.

2. Financial or Other Forms of Hardship

You must submit a letter of hardship to your lender, explaining why you are unable to pay your mortgage payments and have to short sale your home. Most people have a vague idea about what constitute as hardship in the eyes of a lender. A few examples of hardship include divorce, bankruptcy, medial emergency, unemployment, and sudden illness. Examples of what does NOT constitutes as hardship are pregnancy, buying another home, unhappy with the neighbors, and bad purchase decisions.

3. Defaulting on Mortgage Payments

If you are not current with your payments, you may be able to qualify for a short sale. The lender will evaluate your financial situation and may want to try out a few alternatives before agreeing to the short sale.

4. You Have no Assets

Lenders request a copy of a financial statement or tax returns to determine whether you have any significant assets that can be liquidated to cover the shorted difference. If there are such assets, then the lender is likely to reject your application or seek deficiency after the short sale has been finalized.

Working with an experienced short sale attorney can help you better negotiate the terms with your lender. Your attorney will scrutinize the documents and make sure the lender is not tricking you into signing anything that may affect you in the long run. If the lender has agreed to waive off the deficiency judgment verbally, your attorney will make sure it is also in black and white so that they cannot come after you to claim it. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today and let our short sale attorney help with your case.

Potential Errors by Mortgage Servicer Leading to Foreclosure

When borrowers acquire a mortgage loan for their home, they usually make monthly payments to companies, typically referred to as mortgage servicers. There may be a third-party handling payments for your original lender, such as banks. Mortgage servicers perform a number of responsibilities for the management of mortgage loans, such as:

Collecting, recording, and processing monthly payments
Sending statements to borrowers on a monthly basis
Reviewing applications for loan modification and working out alternatives to foreclosure to help borrowers in default
Paying insurance and taxes from escrow accounts
Initiating and carrying out the foreclosure process

As mortgage servicers handle accounts of many borrowers for different lenders, it is important to ensure that they are not wrongly using their powers or making errors in processing your payments. If you are a borrower, you must understand your rights and learn about the mistakes and intentional frauds certain mortgage servicers make to ensure you do not up losing your home to foreclosure.

Common Types of Mortgage Servicers Errors

Considering the volume of data mortgage servicers handle on a day-to-day basis, there is a lot of room for error in terms of recording and processing payments. Here are a few common types of errors that mortgage servicers make:

Imposing unreasonable charges or fees
Improperly crediting or applying payments
Not accepting conforming payments
Dual tracking the borrower; meaning that the mortgage servicer is simultaneously pursuing foreclosure while assessing your request for a mortgage loan modification or contemplating any other options
Starting a foreclosure or carrying out a foreclosure sale process without following proper procedures
Not providing accurate information regarding foreclosure status or any work out options

Disputing Mortgage Errors to Protect Your Home from Foreclosure

The Real Estate Settlement Procedures Act (RESPA) is a federal law that has statutory guidelines for borrowers to dispute potential errors made by your mortgage servicer, and allows you to obtain essential information of your account with the company.

In order to initiate the process, you must send a letter to your mortgage servicer, known as the Notice of Error, that is for requesting information. Different time limits have been assigned to the mortgage servicer to provide a response to the notice of error, depending on the request you have sent.

If the notice of error is to notify your mortgage servicer about a certain error in the management of loan, the company is required to correct the error, inform you about it, and provide contact information so that you can follow up on your request. The time limit for the mortgage servicer to acknowledge your letter is five business days. Sending a response has different time limits, which range from 7 business days to 30 business days, depending on the nature of error. It is important to note that the clock starts ticking the day the mortgage servicer receives your notice of error. The company may extend the duration to 15 days, if they inform you about the delay within the initial deadline of response, along with a reason for it.

If your mortgage servicer has made errors or engaged in any type of mortgage abuse leading to your foreclosure, you should consider working with an experienced foreclosure defense attorney to help you with your case. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today.