Buying a Short Sale vs. a Foreclosed Property in Chicagoland

Although the real estate market is improving and, according to housing statistics gathered by the Illinois Association of Realtors, home prices have been increasing steadily since 2012, the sales of homes have not risen, mostly because of tightened credit standards and less available inventory. Nevertheless, the state remains one of the top five states in the nation with the highest foreclosure rates, as well as high rates of short sales. Buyers looking for a deal may be inclined to purchase a foreclosed home, in which the lender has retained possession of the home by way of court action as a result of the owner’s failure to pay the mortgage, or a short sale home, which is a property that is listed for sale at a price lower than what the borrower actually owes in order to avoid the foreclosure process. Before looking for a property, a buyer should first understand the benefits, disadvantages and differences in purchasing a short sale versus a foreclosed home.

Short Sale Homes

Short sale homes are properties that have yet to undergo the foreclosure process and, as such, tend to be in better condition than their foreclosed counterparts. The owner of a short sale home still occupies the property – unless it is rented out to tenants who are still living on the premises – and defects that may exist in a foreclosed home are not present because often the utilities are still connected, the landscaping has been maintained, and the home is still habitable. Just like foreclosures, the price of a short sale is lower than a non-distressed property and the lender selling the home may offer favorable closing options because avoiding the foreclosure process eliminates time, expenses and gets the liability off the bank’s books. Timing, however, is a disadvantage to purchasing a short sale, as they take much longer to close than other types of real estate transactions. That being said, buyers may avail themselves of the federal Home Affordable Foreclosure Alternatives (HAFA) program, which facilitates the lengthy process by streamlining and simplifying the short sale process. Another drawback of a short sale is that every entity that has an interest in the property must agree to the sales price – in other words, if the home has been mortgaged two or three times, all lenders must agree on the terms of the transaction as they have the ability to block the sale.

Foreclosed Homes

According to an article in the Chicago Tribune, approximately 12,671 Illinois homes received a foreclosure filing in the spring of this year. Benefits of purchasing a foreclosed home include a lower purchase price and less closing costs than when buying a non-distressed home. On average foreclosed homes sell for 30 percent less than non-distressed, move-in ready homes. In a foreclosure sale buyers, can often negotiate closing costs and, depending on the financing terms, the home can be rented out or lived in by the property owner. Also, unlike short sales, the time frame to close a foreclosed home can be fairly quick as banks are eager to take the liability off of their books. Disadvantages of buying a foreclosed property include difficulty finding one in an ideal neighborhood as well as the investment and time needed to repair the home. Foreclosed homes are often located in less desirable neighborhoods that are full of abandoned homes and, as such, property values will be low and likely not rise in the immediate future.  Although rare, wealthier neighborhoods may have a handful of foreclosed homes up for sale; if this is the case, buyers must be prepared to outbid any other interested purchasers. Additionally, foreclosed homes are often damaged and may have deficiencies including moldy walls, damaged or missing appliances, destroyed flooring and plumbing or electrical defects, to name a few.  Assistance is available, however, and some buyers may qualify for federal loans to repair a distressed home under the FHA 203k program.

Contact a Chicagoland Real Estate Attorney

The factors to consider when deciding whether or not to purchase a distressed property can be complicated. You don’t have to navigate this alone. Contact an Illinois real estate attorney today if you are considering purchasing or selling a property. The Law Offices of Gilbert C. Schumm has more than 30 years of experience with real estate transactions of all kinds and serves residents in the communities of Mt. Prospect, Schaumburg, Arlington Heights, Rolling Meadows and Roselle. Call (847) 559-9109 today to schedule your initial consultation.

Elk Grove Village Foreclosure Defense: Does the Lender Have Standing to Sue?

According to recent foreclosure statistics, 1 in every 747 homes in the state of Illinois is undergoing foreclosure. Although a notice of foreclosure from a lender may seem like all hope is lost, there are legitimate legal defenses to a foreclosure. If you or someone you know is facing the possibility of losing a home, contact a Chicago foreclosure defense attorney today to assert your legal rights and intervene on your behalf.

Lack of Standing

A defendant attorney’s first line of defense when a client is facing the loss of a home is to challenge the lender’s right to foreclose, known in the legal field as “lack of standing.” One of the most often asserted affirmative defenses in foreclosure litigation, the legal doctrine of standing requires the party bringing suit in court to have an interest in the case or controversy. As a result, standing only permits those with an injury in fact and a legally cognizable interest – in other words, a real interest in the outcome of the case – to file a claim. In foreclosure cases, the debate between parties regarding standing revolves around whether or not the plaintiff had sufficient interest in the mortgage and note in order to initiate a lawsuit.

As a result of the mortgage backed securities dealings that occurred during our nation’s housing boom, many home loans were divided, sold, and resold by the original lending institution to other financial organizations. In order to establish standing, a plaintiff in a foreclosure proceeding must prove that it is the proper holder of the note and mortgage, which can be shown by producing the original note and mortgage. If a borrower’s mortgage loan has changed ownership since the original purchase of the home, it is more likely than not that the third party does not have the original note and/or other documentation required to prove a full and proper transfer of interest.

Burden of Proof and Timing

The burden of proof to establish that the plaintiff in a foreclosure case lacks standing to bring the suit is placed on the defendant, according to cases decided by the Illinois Supreme Court .  Moreover, the statutory form complaint used by foreclosure plaintiffs complies with Section 1504(a) of the Illinois Mortgage Foreclosure Law (IMFL) and, as such, contains all of the necessary allegations to establish standing. That being said, the Illinois Supreme Court ruled that lack of standing is an affirmative defense which means that a successful challenge to standing results in a dismissal of the case.

In addition to proving lack of standing, a foreclosure defendant must assert lack of standing and other affirmative defenses within a certain time frame during the proceeding or forfeit the ability to raise them later. In foreclosure litigation, the point in time in which a waiver of affirmative defenses by a defendant occurs is the entry of a judgment of foreclosure and sale, which occurs at the end of the proceedings.

Foreclosure Defense in Elk Grove Village

Buying a home is a large financial decision and, sometimes, life can get in the way of keeping up with mortgage payments. If you or someone you know is facing foreclosure, contact an Elk Grove Village foreclosure defense attorney today for assistance with defending your home.  A skilled and experienced foreclosure attorney can advise you about the rights and obligations associated with property ownership in Illinois. The Law Office of Gilbert C. Schumm has provided legal advice to clients regarding real estate for many years, servicing the greater Chicago areas including Elk Grove Village, Hanover Park, Hoffman Estates, Mt. Prospect and Rolling Meadows. Call (847) 559-9109 today to schedule your initial consultation.

Loan Modification Denials in Arlington Heights

Recently, a Huffington Post article reported that 80 percent of homeowners unable to keep up with mortgage payments are unable to obtain a loan modification under the federal government’s Home Affordable Modification Program, known as HAMP. Created by Congress in an attempt to help struggling Americans keep their homes, HAMP is just one of many options available from a homeowner’s lending institution. The guidelines and eligibility requirements under this program are strict and, consequently, not everyone can qualify for the program. If you or someone you know is having trouble making mortgage payments, contact a Chicago loan modification attorney for guidance as to alternatives available in Illinois.

Qualifying under HAMP

A loan modification is a renegotiation of a struggling homeowner’s original loan terms, often resulting in a reduction in payments due to a lowered interest rate and principal amount. A successful loan modification avoids foreclosure of the property and, therefore, allows the owner to remain in the home. Before inquiring as to whether or not a homeowner qualifies for a loan modification under HAMP, the owner of the mortgage must be determined. If the home loan is owned, insured, or guaranteed by Fannie Mae, Freddie Mac, the Federal Housing Authority (FHA), the U.S. Department of Agriculture (USDA) or the Department of Veterans Affairs, the HAMP program is likely available. More than 70 of the country’s large and small mortgage companies participate in HAMP. Eligibility requirements under HAMP include:

• A mortgage obtained on or before January 1, 2009;
• A loan balance of up to $729,750 on a primary residence or a 1-to-4 unit rental property;
• Demonstrated financial hardship; and
• No convictions within the past 10 years in connection with a real estate or mortgage transaction of: felony larceny, theft, forgery, tax evasion, money laundering or fraud.

Reasons for Denial

There are two main reasons as to why a borrower is denied a loan modification under HAMP.  First, in order to qualify for a modification under this federal program, the simple task of completing and submitting all of the required documentation to the lender is essential.  Understanding the lender’s guidelines and providing exactly what is requested will increase the likelihood of an approval. Second, mortgages are denied loan modifications because the loans do not satisfy the program requirements such as debt and housing ratios imposed on the borrower by HAMP. Too much income will make it difficult for a distressed borrower to show financial hardship while too little income will cause the lender not to take on a borrower at a high risk of defaulting again.

Loan Modification Assistance

The specific guidelines and mandates required under the federal loan modification programs are complicated. Don’t navigate this process alone. If you or someone you know is having difficulty making mortgage payments and would like to inquire more about loan modification, contact an Arlington Heights loan modification attorney today for assistance with defending your home. The Law Office of Gilbert C. Schumm has guided clients through the loan modification process for years and provides legal services to the greater Chicago areas. If you are located in Arlington Heights, Hanover Park, Hoffman Estates, Mt. Prospect or Rolling Meadows, contact (847) 559-9109 today to speak with an experienced and skilled attorney.

Right to Redemption in an Arlington Heights Foreclosure

The state of Illinois is a judicial foreclosure state, meaning the lender must avail itself of the court system in order to reclaim a property upon which debt is owed. On average, the entire foreclosure process – from the initial filing of the complaint to eviction by the sheriff - can take approximately nine months, however, foreclosure defense may prolong the foreclosure process as much as 24 months. A owner facing foreclosure of their residence or commercial property may face not only the loss of the property but also personal liability for any amount owed above and beyond the foreclosure sale price, loss of any equity built in the property over the years, and a negative impact on the owner’s credit history.

Right of Redemption

Illinois state law provides the owner of a foreclosed property the right to redeem even after the bank has obtained a judgment against the owner. In order to exercise the right of redemption a homeowner must pay all the fees relating to the subject property, which often includes the principal and interest owed to the lender as well as any amounts relating to court costs, attorney’s fees, and collections. State law affords a homeowner the opportunity to exercise the right of redemption, known as the redemption period. These statutory time limitations depend on whether or not the real estate is residential and the redemption period can be shortened under certain circumstances, such as when the property is deemed abandoned or when the value of the property on the date of judgment is less than 90 percent of the redemption amount and the lender has waived any and all rights to a deficiency judgment.

For residential property, the right of redemption may be exercised by the borrower within three months after the date of the entry of judgment by the court or within seven months of service with summons or by publication, whichever is later.

For non-residential property, the right of redemption may be exercised by the borrower within three months after the date of entry of judgment by the court or within six months of service with summons or by publication, whichever is later.

State law guarantees the right of redemption for residential properties – meaning any attempt to waive the right by contract is deemed null and void. Owners of non-residential, or commercial, properties do not have this protection and mortgages on these types of properties often have an express provision waiving the right of redemption. If the home has not yet gone into foreclosure, it is best to contact the lender immediately and attempt to negotiate a way to become up to date on the loan. Once the foreclosure process has been initiated, it is imperative for the homeowner to decide whether or not keeping the property is a viable option based on a pragmatic assessment of current finances. Options available may include redemption, short sale, deed in lieu of foreclosure, loan modification or bankruptcy, among others.

Contact an Experienced Foreclosure Attorney

An experienced Illinois foreclosure attorney can provide a homeowner with legal advice on rights and obligations relating to the property and may be able to exercise the right of redemption on an owner’s behalf, if it’s still available under the law. Contact the Law Offices of Gilbert C. Schumm at (847) 559-9109 to schedule your initial consultation. With over 35 years of experience, our firm’s foreclosure attorneys will be adamant in protecting homeowners’ rights during the foreclosure process. Our firm services clients in Arlington Heights, Mt. Prospect, Hoffman Estates, and Hanover Park areas.