Foreclosure Options
What is a Mortgage Modification?
Well, it sounds like its name – it modifies the terms of your existing mortgage. Modifying the terms of the mortgage vary per lender and its guidelines. To see if you are eligible for a mortgage modification, you must request a mortgage modification application / packet from the bank and follow the bank’s detailed instructions. The bank typically requests a lot of detailed information and documents as to why you are applying for a mortgage modification.
Although the process sounds simple, it is usually lengthy and detailed and overwhelming. This can be accomplished without an attorney, but it is good to have an attorney assist you with this process.
What is a Loan Reinstatement?
The Illinois Mortgage Foreclosure Law gives you 90 days after you have been served to reinstate the loan. Reinstatement requires you to pay all of the missed payments and any fees that have accrued as a result of the default.
Once the restatement is paid in full, the bank must dismiss the foreclosure lawsuit and deem you current.
But before you make an offer, speak to an attorney to discuss the legal and long-term implications as banks sometimes charge unauthorized fees which will increase the amount you need to reinstate your loan.
What is a Repayment Plan?
A Repayment Plan is where you enter into an agreement with the bank, and if you comply with the agreement, the bank will dismiss the foreclosure case. Nothing requires the bank to enter into an agreement with you and each mortgage servicer has its own guidelines with respect to repayment plans and availability.
It is highly advisable you speak with an attorney before you enter into an agreement with the bank.
What is a Forbearance Agreement?
A Forbearance Agreement is where the bank agrees to temporarily pauses the foreclosure process and or collection of the mortgage payments and enter into a plan that will bring you current on your payments. This option allows you to re-establish your financial situation. Nothing requires the bank to enter into an agreement with you and each mortgage servicer has its own guidelines with respect to a forbearance agreement.
However, as simple as it seems, the bank typically will not entertain this offer without applying for a forbearance (similar to a mortgage modification application) with proof of income.
It is highly advisable you speak with an attorney before you enter into an agreement with the bank.
What is a Deed-In-Lieu?
The complete sentence to that phrase is “Deed-In-Lieu of Foreclosure.” This option is where you give title or deed to the bank rather than the bank going through the foreclosure processes. Typically, in order to induce to this option, the bank will offer to waive any outstanding deficiency against you. This is only a good option if you don’t want the property. Typically, you are only eligible for this option if you do not have any other liens on your property (i.e., second mortgage).
However, as simple as it seems, the bank typically will not entertain this offer without applying for a Deed-in-Lieu application (similar to a mortgage modification application) with proof of income and the reason for this request.
It is highly advisable you speak with an attorney before you enter into an agreement with the bank.
What is a Consent Judgment?
In order for a bank to foreclose on your property, it must file legal action as required by the Illinois Mortgage Foreclosure Law with the Court; this process is known as a judicial foreclosure.
If the bank is successful in its foreclosure lawsuit, then the Court will enter a judgment that the bank is entitled to possession of the property and possibly a personal deficiency judgment against the you.
A consent judgment is an agreement that the bank gets possession of the property immediately and in exchange waives any potential deficiency balance. Again, this only a good option if you don’t want the property.
But before you make an offer, speak to an attorney to discuss the legal and long-term implications.
It is highly advisable you speak with an attorney before you enter into an agreement with the bank.
What is a Short Sale?
A Short Sale is where you list the home for sale for an amount that is less than what you owe on the mortgage. A short sale cannot be done without notifying the bank. The typical process is the you have to apply with the bank to sell the home via short sale market and seek approval. If you choose this option and get approved, you want to make sure the bank agrees to waive the deficiency amount against you.
The process requires a financial application to be filled out with the bank and proof of your hardship. Please note that the time to complete a short sale is “not short.”
But before you make an offer, speak to an attorney to discuss the legal and long-term implications.
It is highly advisable you speak with an attorney before you enter into an agreement with the bank.
What does Chapter 13 Bankruptcy have to do with Foreclosure?
First, only a bankruptcy attorney can determine whether or not you are eligible for a Chapter 13 bankruptcy. If eligible, you may be able to take all of the arrearage/past-due amount (with all of the applicable fees) and roll it in a court-approved 3- or 5-year payment plan (depending on your eligibility). In conjunction with the chapter 13 monthly payment plan, you must also make your regular mortgage payment. Bankruptcy is a highly complex federal process. Accordingly, it is highly advisable that you retain a completed Chapter 13 bankruptcy to handle your case.