Foreclosure Defense - Selling the Property

The previous article on foreclosure defense discussed some of the foreclosure defenses that may be available where an Illinois homeowner wants to fight the foreclosure and retain the property. This article follows up by discussing options available to a homeowner who wants an opportunity to sell the property instead of having it go through foreclosure.

Schaumburg Foreclosure Defense

If The Homeowner Wants To Sell The Property

Defend Against the Foreclosure Action - While this at first may not seem to make sense, it is important to defend against a foreclosure even if the homeowner wants to sell the property. Defending against the foreclosure is important for two reasons. First, during the litigation period, the homeowner is not required to make normal monthly mortgage payments. Litigating the foreclosure buys the homeowner valuable time to make the next move. Additionally, defending against the foreclosure using viable legal defenses may result in the court ruling that the mortgage was improperly obtained and should be rescinded.

A ruling that the mortgage must be rescinded is very helpful to the homeowner. Rescission is an important legal concept. It is a remedy based on the concept of equity or fairness. If a court rescinds a mortgage because of improper lender behavior, it cancels the terms of the mortgage being foreclosed upon and results in an “unwinding” of the mortgage transaction. Payments that have been made by the borrower under this rescinded mortgage are then applied to the mortgage principal, instead of toward principal and interest, thus increasing the homeowner’s equity in the property. The homeowner gets the benefit from this equity when the property is sold.

Short Sale - A short sale is when a lender agrees to accept less than the total amount owed on a mortgage to avoid having to go through the expense and hassle of foreclosing on a property. Traditionally, to qualify for a short sale, the homeowner needed to owe more on the mortgage than the home was worth and the homeowner needed to prove the existence of true financial hardship (such as decreased wages, job loss, divorce, death of a primary contributor to mortgage payments, or a medical condition that alters available income or increased household expenses). However, as of November 1, 2012, homeowners whose mortgages are serviced by Fannie Mae or Freddie Mac can be eligible for short sale relief if they are current on their

payments but are otherwise facing financial hardships.

Deed In Lieu of Foreclosure - A deed in lieu of foreclosure (sometimes called a lieu deed) is a process that allows the homeowner to give up all legal rights to the mortgaged property in exchange for full satisfaction of mortgage obligations. A lender cannot get a deficiency judgment if it accepts a deed in lieu of foreclosure.

Chapter 7 Bankruptcy - Bankruptcy can sometimes be an option for homeowners facing foreclosure. For homeowners seeking to keep their home, filing for Chapter 13 relief can help restructure payments. For homeowners who want to be rid of the property, a Chapter 7 bankruptcy can help.

Whenever a bankruptcy is filed, an “automatic stay” arises. The automatic stay has the effect of stopping all pending litigation against the homeowner, including foreclosure actions. The homeowner may be able to use the breathing room created by the automatic stay to make arrangements for the property other than having it go through foreclosure. Even if the property does go through foreclosure, a Chapter 7 bankruptcy can relieve the homeowner of any deficiency judgment in the event that the property sells for less than what the homeowner still owes on the mortgage.

Defending against a foreclosure action in Illinois is complicated and should be done with the help of an experienced attorney. The Law Offices of Gilbert C. Schumm is committed to working with homeowners in the Schaumburg, Arlington Heights, Palatine, Des Plaines, Mt. Prospect, Hoffman Estates, Bartlett, Streamwood, Hanover Park, Elk Grove Village, Rolling Meadows, and Roselle areas who have fallen behind on their mortgage payments and are facing foreclosure. We have extensive experience in real estate disputes and litigation, and we are dedicated to obtaining the best outcome for you. To schedule a free consultation to discuss your home retention options, please call us at (847) 559-9109.

Insights from a Chicago Loan Modification Lawyer

Loan Modification in the Schaumburg Area

New rules recently took effect that change how home mortgages are serviced and modified. These new rules can help mortgage holders whose homes have dropped below the outstanding loan amount or who are no longer able to afford monthly payments under their current mortgage.  The new rules, issued by the federal Consumer Financial Protection Bureau (CFPB), took effect on January 10, 2014, and provide several new protections for mortgage holders who are having trouble making their mortgage payments.

Notification of Workout Options If You are Having Trouble Making Payments

Under the new rules, if you have missed a payment, your mortgage servicer must try to contact you within 36 days after the payment was due and talk to you about why payments are late or missing.

Within 45 days of a missed payment, your mortgage servicer must notify you in writing about mortgage workout options that may be available to you. Once your payment is 45 days late, your mortgage servicer must assign personnel to help you determine your options, but personnel can be assigned sooner if you request help.

You Can Request Foreclosure Prevention Options From Your Mortgage Servicer

If you are having trouble paying your mortgage, you can request information about how to apply for mortgage protection assistance from your mortgage servicer.

Mortgage protection assistance involves filling out a loss mitigation application. Additional documents and information will be required to establish your precise financial situation. It is important to return the application and supporting documents to the mortgage servicer by the date specified in order to get the most protection available under the new federal rules.  The mortgage servicer uses the loss mitigation application to make a list of your foreclosure prevention options. These may include:

- Temporarily suspending or reducing your payments (forbearance);

- Permanently changing your loan terms to an amount you can afford (modification); or

- Allowing you to leave your home without repaying the full amount you owe (short sale or other foreclosure alternatives).

The mortgage servicer must evaluate your eligibility for all of these foreclosure prevention options as long as your completed loss mitigation application was received by the mortgage servicer at least 37 days before any scheduled foreclosure sale.

Generally, within 30 days of receiving a completed application, the mortgage servicer must inform you in writing of your foreclosure prevention options. It also must tell you which options, if any, you did not qualify for and why you did not qualify for the option(s).

Two Options After Receiving Foreclosure Mitigation Options

1.    Accept Or Reject The Foreclosure Prevention Offer

The time for accepting or rejecting a foreclosure prevention offer depends on how far before the foreclosure sale it was submitted. For example, if you submitted a completed mortgage assistance application at least 90 days before a scheduled foreclosure sale, you have 14 days to accept or reject the foreclosure prevention offer. If you submitted the application at least 37 days prior to a scheduled sale, you have 7 days to accept or reject the offer.

2.    Appeal the Offer

If the mortgage servicer denies your loan modification request, you have the right to ask for a review of the decision if the mortgage assistance application was submitted at least 90 days before any scheduled foreclosure sale.

The appeal must be submitted within 14 days of the receipt of the mortgage servicer’s denial of your request.

You Can Call An Experienced Loan Modification Attorney For Help

Even with the new governmental rules helping borrowers, loan modifications can be tricky. Thus, as explained by one advisor, “If you do have some type of track record, and you have some time and you are savvy about these things, then you could tackle it yourself.” However, he also adds, “It’s always nice to have someone help you.”

In the Schaumburg area, you can get help from the Law Offices of Gilbert C. Schumm. We have over 35 years of experience helping people with obtaining loan modifications in Schaumburg, Illinois and the surrounding areas, including Elk Grove Village, Palatine, Chicago and Arlington Heights. If you are in Cook, DuPage or Will County, please call (847) 559-9109.

Available Defenses when facing Foreclosure

Foreclosure Defense Options in Schaumburg

The State of Illinois continues to experience a foreclosure rate that is over one-and-a-half times greater than the national average. According to the University of Illinois at Urbana-Champaign, the most common circumstances that cause foreclosure are medical problems, job loss, divorce, and death of one of the spousal owners. However, regardless of what caused the foreclosure, there are defenses available for Chicago area owners who want to fight a foreclosure action.

Illinois Mortgage Foreclosure Law and Foreclosure Defense

Illinois Mortgage Foreclosure Law (IMFL) governs the rules for foreclosures in Illinois. However, state and federal law can come into play when determining how to fight a foreclosure action.  There are types of defenses and counterclaims that can be raised in a foreclosure action. The choice of which avenue or avenues to pursue are very fact specific and depend upon the type of mortgage being foreclosed upon, the interest rate of that mortgage, and whether the lender made required disclosures when the loan was originated. The choice of defenses also depends on whether the homeowner’s goal is to keep the property or dispose of it prior to the foreclosure.

If The Homeowner Wants To Keep the Property

If a homeowner wants to keep his or her property that has fallen into foreclosure, there are several defense options to consider, depending on the particular facts. Possible defenses include:

Violation of the Truth In Lending Act - The Truth In Lending Act (TILA) was enacted to ensure that consumers received full and accurate information when they enter into credit transactions such as a mortgage. Under TILA, certain things must be disclosed to a borrower, including the annual percentage rate (APR) of the loan, the finance charge associated with the loan, the amount financed, and the total amount the borrower will have paid after making all scheduled mortgage payments. TILA also requires that the lender clearly disclose the number of payments required under the loan, the amount of each loan payment, and when payments are due. A borrower also must receive a copy of the right to rescind.

If the lender failed to provide any of the required information connected to the loan, the borrower can seek monetary damages and/or loan rescission.

Violation of the Real Estate Settlement & Procedures Act - The Real Estate and Procedures Act (RESPA) is a law that ensures that borrowers are informed about loan closing costs and settlement procedures. RESPA requires that homeowners receive certain disclosures at various times in the loan transaction, including a standardized Good Faith Estimate (GFE) and a HUD-1 outlining actual closing costs. It also prohibits kickbacks that increase the cost of settlement services.

Damages for a RESPA violation may include monetary damages, as well as attorneys’ fees and costs.

Home Ownership And Equity Protection Act - The Home Ownership and Equity Protection Act (HOEPA) is an amendment to TILA. It was enacted to address abusive practices in the area of refinancing and closed-end home equity loans with high interest rates or fees. HOEPA applies to mortgage transactions where the loan application was received on or after January 10, 2014. The law prohibits balloon payments, negative amortization, default interest rates higher than pre-default rates, unfavorable rebates of interest on default, most unfavorable repayment schedules and prepayment penalties, and many due-on-demand clauses.

Penalties for HOEPA violations include statutory and actual damages, attorneys’ fees and costs, and loan rescission for up to three years.

Illinois Interest Act - The Illinois Interest Act governs the maximum rate of interest that can be charged on loans made in Illinois. It specifies that contracts with an interest rate greater than 9 percent are void.

Common Law Fraud - Mortgage fraud occurs where a lender intentionally encourages a borrower to enter into a mortgage loan when the borrower would not have done so if he or she had correct information. Common law fraud also looks at whether the loan terms or circumstances surrounding the loan are or were so unconscionable as to “shock the conscience,” including situations where the borrower was pressured to enter into a loan, did not understand the loan terms, was not represented by counsel when entering into the loan, and entered into a loan with outrageous terms.

Unclean Hands - The principle of “unclean hands” is an equitable one. It requires that the party complaining about a matter before the court did not contribute to the situation being complained of. If a lender has contributed to a borrower’s default or has not cooperated with reasonable borrower requests (such as providing pay off information upon request), the lender may be found to have unclean hands and not be allowed to proceed with the foreclosure.

Lack Of Jurisdiction - In order to initiate a foreclosure action, the entity filing the foreclosure action must actually have an interest in the loan being foreclosed upon. With the selling and packaging of loans, it is possible that the entity filing the foreclosure action may not actually own the note any longer. Thus, lack of jurisdiction may be asserted as a defense if the plaintiff in the action cannot establish that it owns the borrower’s mortgage note.

Lack Of Standing - Lack of standing addresses whether the lender is registered to do business in the state and whether the party complaining of a mortgage default is authorized to bring the foreclosure action.

The Law Offices of Gilbert C. Schumm is committed to working with homeowners in the Schaumburg, Arlington Heights, Palatine, Des Plaines, Mt. Prospect, Hoffman Estates, Bartlett, Streamwood, Hanover Park, Elk Grove Village, Rolling Meadows, and Roselle areas who have fallen behind on their mortgage payments and are facing foreclosure. We have extensive experience in real estate disputes and litigation, and we are dedicated to obtaining the best outcome for you. To schedule a free consultation to discuss your home retention options, please call us at (847) 559-9109.

Insights from a Schaumburg Forecloure Lawyer

Foreclosure Help for Residents of Schaumburg, Illinois and Surrounding Areas

Although foreclosure rates are falling nationally, the foreclosure rate in Illinois remains one of the highest in the country. If you are one of the thousands of Illinois residents who owe more than your house is worth, several legal and non-legal options are available to help you.

Recent Cook County and DuPage County Foreclosure Rates

According to April, 2014 data, Illinois’ foreclosure rate was the sixth highest in the United States. In Schaumburg alone, there are currently 1,013 properties in some stage of foreclosure (default, auction or bank owned) and the number of properties that received a foreclosure filing was 34 percent higher than the previous month.

March home sales data showed that Schaumburg home sales were also down 8 percent from the previous month. The median sales price of a foreclosure home was $147,500, which was 13 percent lower than the average for non-distressed home sales.

Options For Homeowners Who Cannot Make Their Mortgage Payments

Being unable to make your mortgage payments is a scary feeling. Even if you have previously tried to modify your home loan, new “Making Home Affordable” (MHA) programs jointly implemented through the Department of the Treasury and the Department of Housing and Urban Development make it worth your while to try again. These programs include:

If you are employed but still struggling—there are a couple of programs that may be of help, including:

• Home Affordable Modification Program (HAMP). HAMP may lower your monthly mortgage payments in order to make them more affordable long-term. To be eligible for HAMP, you must meet certain requirements, including: (1) you obtained your mortgage on or before January 1, 2009; (2) you owe up to $729,750 on your primary residence (other values for rental property); (3) the property has not been condemned; (4) you have a financial hardship; (5) you are delinquent or in danger of falling behind on your mortgage; (6) you have sufficient, documented income to support a modification payment; and (7) in the past 10 years, you have not been convicted of a felony, larceny, theft, fraud or forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.

• Home Affordable Refinance Program (HARP). HARP may allow you to refinance and get a lower interest rate if you are unable to get traditional refinancing because the value of your home has declined. The program requires a loan application, and underwriting and refinance fees will apply. HARP eligibility requirements include: (1) your mortgage must be owned or guaranteed by Fannie Mae or Freddie Mac; (2) your mortgage cannot have been previously refinanced under HARP unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009; (3) the current loan-to-value (LTV) ratio must be greater than 80 percent; and (4) you must be current on your mortgage at the time of refinance, with a good payment history in the past 12 months.

If you are unemployed:

• MHA’s Home Affordable Unemployment Program (UP) may reduce mortgage payments up to 31 percent of your income or even suspend payments altogether for 12 months or more if: (1) you are unemployed and eligible for unemployment benefits; (2) you occupy your house as your primary residence; (3) you have not previously received a HAMP modification; (4) you obtained your mortgage on or before January 1, 2009; and you owe up to $729,750 on your home.
  

Getting Legal Help If You Are Being Faced With Foreclosure In Illinois

If loan modification is not a possibility for you, legal help may be available to prevent or stop a foreclosure on your home. Last year, the Illinois Supreme Court announced new rules governing mortgage foreclosures. These new rules require lenders to prove to judges that they have exhausted all efforts to help you keep your home prior to seeking a foreclosure judgment against you.

Foreclosure actions can be complicated to defend for individuals, partly because of the rules and because you are facing off against experienced lawyers and lenders who have been through this process hundreds of times. If you are facing a foreclosure action, you should strongly consider getting legal representation.

The Law Offices of Gilbert C. Schumm has more than 35 years of experience representing the rights of clients in Schaumburg, Illinois and the surrounding areas, including Elk Grove Village, Palatine, Chicago and Arlington Heights. If you are in Cook, DuPage or Will County, please call (847) 559-9109.