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using viable legal defenses may result in the court ruling that the mortgage was improperly obtained and should be rescinded.

A ruling that the mortgage must be rescinded is very helpful to the homeowner.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 Payments that have been made by the borrower under this rescinded mortgage are then applied to the mortgage principal, instead of toward principal and interest, thus increasing the homeowner’s equity in the property.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.