The Foreclosure Process & Time-Line, Mortgages & Liens, Deficiency Judgment
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The first steps to take navigating through the foreclosure jungle is understanding the basics outlined on this page with these two videos below. Arming yourself with all of the relevant information is crucial to making the right decision for you, your family, and your property. Please feel free to contact us with any questions and/or comments you may have. We hope you find this material useful.
Contact George To Set Up A Free Consultation At: 312-546-3113, or, george@chicagolandshortsale.com
VIDEO 1: The Foreclosure Process & Time-line & Differences Between the Liens and Mortgages
Understanding the Foreclosure Process and Time-Line are critical for any homeowner considering a short sale. Illinois is a Judicial State, meaning the foreclosure process takes place via the court/legal system. Currently, the high rates of foreclosure in the Chicagoland area have backlogged the process and the courts. By understanding foreclosure process the homeowner can use it to their advantage when it comes to timing and structuring your deal.
Obtaining the best possible outcome with the least amount of liability for the homeowner should always be the top priority for any short sale service provider. In order to accomplish this, both the homeowner and their agent/negotiators must know the difference between a 1st mortgage, true 2nd mortgage, and a home equity line of credit (HELOC). This is important for determining how to structure and negotiate your deal properly with the bank(s). Every short sale deal is different and utilizing the correct negotiation strategies and tactics is key to obtaining the least amount of liability as possible for the homeowner.
VIDEO 2: Deficiency Judgments and How The Banks Handle The Loss
What will happen to loss or debt owed and what are the homeowners liabilities from this loss/debt after the short sale transaction has completed? This is the most common question we receive from homeowners about the short sale and it’s good one. The loss is called the “deficiency” amount of debt owned, and there are several ways the banks can handle a deficiency.
10 Foreclosure Facts
Here are some other facts about foreclosures you should consider:
In Illinois, the foreclosure process is lengthy and can take up to 9 months after the Notice of Default (NOD) as been served. This can be delayed if you have the proper representation. You can estimate that after you have missed your first payment it can take approximately a year before your lender will actually foreclose on you and repossess your property.
For the Banks/Lenders, the foreclosure process is COSTLY. They are not, nor want to be, in the business of repossessing properties, maintaining properties, and then selling those properties.
Lenders do not like excess inventory or foreclosures on their books.
Lenders can lose a lot more money if the property goes to auction.
A home owner who goes through foreclosure is ineligible for a Fannie Mae backed loan for 5 years thereafter, and an investor owner for up to 7 years.
Future mortgage loans and interest rates will be affected because the foreclosed homeowner must answer “Yes” to form 1003 Uniform Residential Loan Application question “Have you had property foreclosed upon or given title or deed in lieu thereof in the last 7 years?”
A foreclosure affects credit scores downward 250 to 300 points, typically for over 3 years.
Foreclosure stays on credit history for approximately 10 years
Current and future employment may be affected as many employers now require credit checks, particularly for employees in financial or sensitive positions.
Outside of conviction of a crime, foreclosure is the most serious issue affecting security clearance for your job. For those who have careers in law enforcement, the Military, a security company, the CIA or other government agencies, a foreclosure could mean the immediate loss of the security clearance and the position.
Remember, if your facing a foreclosure you do have options and alternatives. The sooner you act the more options you have. We strongly encourage you to call or email George at 312-320-8274, george@chicagolandshortsale.com for a consultation.
HOUSING REPORTS PRESENTED ON CAPITAL HILL DURING MIKE’S VISIT:
Report 1:
The Governments Loan Modification
and Short Sale Programs
Why would a lender agree to accept a short payoff on a mortgage? The Following bullet-points help answer this question.
In Illinois, the foreclosure process takes place via the court system and is backlogged and lengthy. The process can take up to 9 – 12 months. Furthermore, the process can be further delayed if you have the proper representation show up to court and make a case for prolonging the foreclosure.
The foreclosure process and repossession of the property costs the bank(s) money.
Lenders do not like excess inventory or foreclosures on their books, especially in this market.
Lenders can risk losing more money if the property goes to auction.
Lenders are not in the property management or real estate brokerage businesses and have no intentions to getting in to them. ‘
Lenders are in the business of loaning money to individuals who buy properties, they are not in the business of loaning money on properties and then taking them back via foreclosure, and finally reselling them for a discount. This would not be a very profitable business model & one thing most banks do well is make more money than it loses.
Why Choose Doing A Short Sale?
The answer is simple, in order to avoid a FORECLOSURE. A foreclosure can be extremely damaging to an individuals credit report and have long-term effects on any individual seeking credit for up to several years. In some cases filing for bankruptcy can be less damaging than having a foreclosure on your credit. Since we live in a credit driven society, keeping a good credit rating can save a family thousands of dollars in attractive finance rates for vehicles, home mortgages, and other large items. A negative credit report and poor score can affect everything you do from renting an apartment to buying a car.
Short Sale vs. Bankruptcy
When faced with foreclosure some individuals may turn to bankruptcy as an option to solving the problem. Filing for bankruptcy will consolidate your debt and can wipe out your liabilities, but it will not prevent an eventual foreclosure if the bank has already started the process. A bankruptcy only delays a foreclosure. However, if all you need to do is delay a foreclosure and there is little to no other major outstanding debt which needs to be settled, then there are other methods which may be more suitable. Trying to conduct a short sale while in bankruptcy requires strategy and a plan. It is best to consult with a knowledgeable bankruptcy attorney prior to making any decision in order to gain the proper information and make an appropriate plan. If your home is the only debt that is creating an uncontrollable situation for you, a short sale option is likely your best bet VS. a bankruptcy. If you need additional help with debt consolidation you can give George a call at 312-320-8274 to refer you to a trusted bankruptcy attorney.
What can qualify me for a Short Sale?
What can qualify me for a short sale? In order to qualify for a short sale, the seller/homeowner must show legitimate hardship. The following list shows some of the more common legitimate hardship situations. 1. Borrowers unable to keep up with current mortgage payments. 2. Divorce 3. Death 4. Relocation 5. Over valued properties. 6. Predatory lending situations/mortgage fraud. 7. Loss of job 8. Unable to sell your property due to market conditions. 9. Loan amount is higher than you can currently sell your property. and many other reasons…
Frequently Asked Questions
What If I Have More Than One Mortgage On My Property?
What if I have more than one mortgage on my property? This is a common situation. Negotiations with each lender will be performed during the process. As in anything else, the more lenders needed to short, the more time consuming and complex it can get. In the “Foreclosure Facts” section you will find more information regarding Liens & Mortgages that you will find helpful. How much time does it take? From the day you accept a contract to the time the property will close can take up to 90-120 days. However, if negotiations go poorly the process may be extended. No two short sale deals are alike and every seller has a different situation, but we will put 110% into each deal to get it approved and closed.
What If I Have Already Filed Bankruptcy?
Just because you have already filed bankruptcy does not mean you cannot do a short sale. Bankruptcy may cure your debt and liabilities, but it will not save your credit. Whether you file for a chapter 7 or 13 bankruptcy, you can still do a short sale, there is just more paperwork involved and it will take a bit longer to complete. If this is your situation, a strategy should be mapped out between your bankruptcy attorney, agent, and processor (the individual who will actually negotiate the short sale) to determine the right course of action for you to take. We have worked with many bankruptcy attorneys in the Chicagoland area to structure deals such as these.
What About Property Taxes I Did Not Pay?
They get paid at closing from the lender since title has to be free and clear when transferred to a new buyer. Are all short sales accepted? If the lender believes they will net more money for your property through a short sale vs. taking the property back as a foreclosure/REO, they are likely to accept the offer. Many lenders are encouraging them vs. taking the property back. It is in the lenders best interest in most cases to accept a short sale vs. repossession/foreclosure.
How Much Does This Cost?
This process costs you nothing. When conducting a short sale, or any deal, you always must deliver free and clear title to the new purchaser of your property. While we are conducting a short sale with a lender all costs are taken into account and paid for by the lender. Part of the amount that you are shorting the lender includes all the closing costs typically associated with selling a home. These costs are viewed as a “wash” for any lender because if they took the property back, they would be responsible to pay them anyways. These costs include property taxes, title costs, attorney fees, back assessments, and even commissions, which is how we are paid. Once in a while you may be shy of reaching the lenders requested net amount and you will have to go into your pocket to pay the difference, but this is rare. If you use the right representation you can avoid that!
How Do I Start A Short Sale?
Simple, make an appointment with one of our agents to schedule a consultation. All of our consultations are fully confidential and free. We believe it is best to give the short sale consultation first and provide the homeowner with ALL of the relevant information about short sales and the process. After the consultation we advise seller’s to seek out second opinions, check with an financial professional about any tax ramifications, and discuss the short sale with their attorney. This way the homeowner has performed the research, been educated in the process, and is able to make the best decision for themselves.
*IMPORTANT DISCLOSURE
EXIT STRATEGY GROUP IS NOT ASSOCIATED WITH THE GOVERNMENT, AND OUR SERVICE IS NOT APPROVED BY THE GOVERNMENT OR YOUR LENDER. EVEN IF YOU ACCEPT THIS OFFER AND USE OUR SERVICE, YOUR LENDER MAY NOT AGREE TO CHANGE YOUR LOAN.
