What Are Your Rights as a Tenant If Your Rental Is Being Foreclosed?

Most tenants are unaware of whether their landlord is making timely payments of their mortgage. In most cases, tenants are caught by surprise when they get the news that their rental is being foreclosed and they will have to vacate their home. Due to this, tenants are left out in cold with little time on their hands to find a new place that matches their rental budget. If your rental home is about to be foreclosed or you received a notice to vacate the premises after foreclosure, you should talk to a reliable and experienced attorney to help you evaluate possible options for your specific situation.

Your Rights as a Foreclosed-Upon Tenant

If you are a tenant who lives in a property facing foreclosure, you should be aware of your following rights and responsibilities in such a situation:

You must continue paying your rent and act in accordance with all the terms and conditions of your rental lease agreement even if you know that the property is going to be foreclosed.
You must know that you will not be paying rent to the original landlord with whom you signed the rental agreement after the foreclosure sale. Since they no longer own the property, you must make the payments to the new owner.
It is important to know that you will not be required to vacate immediately after the foreclosure sale.
If someone claims to be the new owner, you must first ask them to show the Trustee Deed for your rental property to confirm ownership. You may also contact your state’s record office or auditor to confirm the authenticity of the deed.
Before the new owner or bank can take an eviction action, they must send you a proper written notice for vacating the property.
As per the 2009 federal legislation, if you have a lease, then you will be able to keep it. If you are paying rent on a monthly basis, you will have at least 90 days to vacate and find a new place.

There are a few signs that may indicate your landlord’s mortgage default. If your landlord pays the utility bills and the utility company has cut the supply, it is safe to assume that your landlord may be facing foreclosure. This is because if they are unable to pay the utility bills, there is a high chance they don’t have the money to make mortgage payments either. In such a case, you may conduct a research for a Notice of Trustee Sale filed against your landlord in your state or county publicly recorded documents to find out about an upcoming foreclosure.

If you have a hunch that your landlord is going through foreclosure or have received a notice to vacate your rental property, it is advised that you talk to an experienced attorney right away. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today. We have offices in Schaumburg, Warrenville, and Nap

Shortcomings of a Short Sale for Sellers and Buyers

It is not uncommon for a homeowner to be facing foreclosure when they have taken out a mortgage against their property. In such cases, a short sale is the perfect solution for the homeowner to avoid foreclosure. Although it may seem like a one stop solution to everyone facing the problem, there are certain risks associated with a short sale for both the buyer and the seller.

What is a short sale?

For those who are not yet familiar with the concept of a short sale, let’s start by defining it. A short sale is the selling of a home by the owner for an amount that is exceeded by the total debt balance on the mortgage. This is a way in which a homeowner can avoid foreclosure.

Risks for sellers

Deficiency Judgment

This is one of the biggest risks that sellers take when making a short sale on their home. A deficiency is the difference in the total debt on the property and the selling price of the home.

To understand it better, let’s take the example of a homeowner that gets the approval to sell their property for $300,000 but the amount owed is $350,000. This creates a deficiency of $50,000. In most states, the lender reserves the right to seek personal judgment against the seller for the recovery of the deficiency.

To evade a deficiency judgment, the short sale agreement must specifically state that the current transaction fully satisfying the debt and the lender approves to waive their rights to the deficiency.

The Application and Approval Process

The process is extremely frustrating for the seller because the short sale must be approved by the lender and their loss mitigation department. Most short sales fail to materialize because the lender takes their sweet time to analyze the deal before they come to a decision. The decision can be both in approval or a rejection.

The deal can be rejected by the lender if the selling price is lower than the fair market value or is lower than the listing price.

Fortunately for borrowers, the Federal National Mortgage Association (FNMA) and the Federal Home Loan Mortgage Corporation (FHLMC) have made the processes much more streamlined so that the approval can be quick and easy.

Risk for Buyers

Prices are not what they seem

Buyers get attracted towards short sale offers when they look at the price, but the initial price was set most likely by the real estate agent, which is why it was low. When it comes to the actual price after the price has been approved by the lender, the lender has to minimize their loss, which is why they will make the price go up and the buyer will find themselves wasting a lot of time being interested in a property they cannot afford.

Not in good condition

Most short sale homes are sold in a hurry and the buyer receives them in the condition that they are, which means any long term repairs will all come under the buyer’s responsibility.

In case you are considering buying or selling through short sale, consider talking to a lawyer who specializes in these cases. Contact Covert & Covert, LLP at (630) 717-2783 or online, to schedule a free consultation today. We have offices in Schaumburg, Warrenville, and Naperville.

Mistakes Leading to Foreclosure Even When You Are Current With Your Payments

If you fall behind or fail to make timely payments of your mortgage loan, the lender will issue a 90-day foreclosure notice, and when the period expires, will take legal action to repossess your home.

This is the typical situation in which homeowners lose their home to foreclosure, unless they resort to any defenses suggested by their foreclosure defense attorney. While it is true that your home is safe if you are making payments on time, there are certain conditions outlined in the mortgage agreement that, if violated, can trigger the lender’s right to sell your home.

The following are some mistakes that may lead to foreclosure even when you are current with your mortgage payments:

Not Paying the Homeowners Insurance Premiums

Every mortgage contract requires the homeowner to have their property insured. The logic behind making homeowners insurance a part of the agreement is that if the property is damaged by a natural disaster, fire breakout, or any other incident and the homeowner goes default on their payment, the lender may not be able to reimburse the full amount of the loan.

The homeowners insurance policy is made mandatory to ensure any substantial damage is covered that may devalue the property. The lender may not send you reminders for paying the insurance premium. If you don’t pay it, they will wait for the insurance company to cancel your policy, and purchase a lender-placed or force-placed insurance policy. The lender will then add this cost to your loan payment, and if you refuse to pay this amount, they consider it as a default payment and may foreclose the property.

Not Paying the Property Tax

It is imperative for a homeowner to stay current on their property taxes. If they don’t, the taxing agency has the right to file a property tax lien, enabling them to sell the house and use that money to pay off the tax debts. In order to avoid losing the property to the tax agency, the lender will send reminders to pay the property taxes. If they are still unpaid, the lender will make the payment to ward off a tax sale, and add the bill to your loan.

Under the mortgage agreement, the lender has the right to add this amount to your total loan amount. If you don’t reimburse the lender for the property tax they paid, they might foreclose your home. If you settle the debt, the lender may ask you to open an escrow account to ensure the tax is paid regularly in the future.

Other mortgage violations may include breaching the due-on-sale clause by transferring the title to another person and not maintaining the property that may affect its market value, among others.

It is essential to read the terms and conditions of the mortgage agreement carefully to ensure you don’t make such mistakes and lose ownership of your property. However, if you are facing foreclosure and want to keep your home, you should talk to an experienced foreclosure defense attorney to evaluate your options. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation today. We have offices in Schaumburg, Illinois, Warrenville, and Naperville.

How Can an Attorney Avoid Foreclosure by Working With Your Lender?

If you have received the 90-day pre-foreclosure notice or expecting it in your mail anytime soon, hiring a foreclosure defense attorney in the early stages can make a big difference. After carefully studying your case, the attorney will be able to present you with more options than in the later stages of the foreclosure process. Not only that, they may also be able to get you a great deal with the lender, allowing you to stay in your home while finding a way to adjust payments to make the situation favorable for both parties.

The following are a few ways in which your foreclosure defense attorney can work with your lender to avoid foreclosure:

1. Loan Modification

A loan modification is a process in which the lender and the borrower enter an agreement with adjusted terms of the loan. Your foreclosure defense attorney can help you with negotiating terms in order to get the best possible deal considering your financial situation. A loan can be modified in three different ways: your lender decreases the original interest rate; your lender extends the loan repayment period to reduce the amount to be paid per month; and your lender reduces the principle balance that is due on you. After you have reached an agreement, your attorney will review the documents with modified terms to ensure there are no illegal or hidden charges.

2. Forbearance

A forbearance agreement gives you a break from payments by suspending or reducing your payments for a short period. In exchange, you will have to make full payment when the agreement expires, along with an extra amount to compensate for the missed payments. Forbearance is the best option for people who have lost their job due to which they are unable to make payments. A forbearance agreement typically spans for three to six months, but can be extended depending on your specific situation.

3. Loss Mitigation Options

Another way to prevent foreclosure is to opt for a loss mitigation option. These are special programs that are a part of Fair Housing Administration loans and make you current with your payments. For example, you may be eligible for a “partial claim” that will bring the remaining amount into good standing. Your attorney will advise you on how to opt for loss mitigation options and ensure that you don’t end up in being in more trouble than you already are with the loan.

4. Foreclosure Mediation

Foreclosure mediation allows you work together with your lender to come up with an alternative to avoid foreclosure. Your attorney will negotiate on your behalf and make sure that the lender considers your situation when setting out new terms for the loan payment.

The thought of losing your home to foreclosure can be frightful, especially when you are alone in the fight. In order to increase your chances of saving your home from the clutches of your lender tenfold, the best way is to hire a foreclosure defense attorney. Contact Covert & Covert, LLP at (630) 717-2783 or online to schedule a free consultation to evaluate your legal options. We have offices in Schaumburg, Warrenville, and Naperville.

Home Loan Modification – Why You Need an Attorney

Loss of income, unemployment, divorce, medical emergency, etc. – these are just some of the reasons why Americans fail to keep up with their mortgage payments and end up defaulting. The worst part is once you start falling behind on your payments, it is very difficult to get back on track. Some people think that chapter 13 bankruptcy is the only option they have to protect themselves from losing their home to the lender, but there is another way.

Since foreclosing a property is a costly process for lenders, they are willing to work with homeowners to find ways to help them make their payments. One solution they offer is home loan modification, also known as mortgage modification. However, there are several potential pitfalls associated with this option, and it is advisable to have a foreclosure defense attorney by your side when considering home loan modification.

How Home Loan Modification Works

It refers to permanent restructuring of your home loan, in which the lender changes the terms of your mortgage to make it easier for you to make regular payments. The lender may agree to make any of the following changes to your mortgage plan:

Putting a cap on the monthly payment to a certain household income percentage
Waive off some of the principle balance or some penalties
Lengthen the term of the loan
Reduce or eliminate late fees
Reduce the interest rate
Mortgage forbearance program

If you want to apply for a home loan modification, you have to submit an application to the lender or mortgage servicer. You will have to attach certain documents with it such as bank statements and recent paystubs.

How a Home Loan Modification can help you

The foremost benefit of opting for home loan modification is that it saves your home from being foreclosed. It works in those situations as well where foreclosure is already scheduled. Moreover, a short sale doesn’t hurt your credit score as much as a foreclosure sale does. A home loan modification makes the mortgage affordable, as the modified payment plan is based on your current financial situation.

Do you need an Attorney for Mortgage Modification?

Here are a few good reasons why hiring an attorney for a home loan modification is a good idea:

They can help you get the best loan modification option from the lender with more flexible terms.
Some lenders trick homeowners into believing they will get mortgage modification so they stop fighting, but are foreclosed later on. The attorney can avoid this situation altogether.
Since there is a lot of paperwork involved in the loan modification process, the attorney can take care of this daunting task for you.
An experienced attorney will know how to prevent your loan modification application from being rejected.
Lenders are willing to negotiate and show more flexibility in modifying loans for homeowners with legal representation.

If you have received a notice for foreclosure, you need to act fast and talk to a foreclosure defense attorney to help you devise your way forward. Contact the Law Office of Brian Covert at (630) 717-2783 or online to schedule a free consultation. We have offices in several areas of Illinois, including Schaumburg, Warrenville, and Naperville.