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.

Facing Foreclosure in the Schaumburg Area? A Short Sale May Provide Alternative Relief

Acquiring your Chicago dream home has finally happened. But so have life’s surprises. Now you are behind on your payments; you may even be underwater and catching up, but even selling the home to pay off your debt seems impossible. You are not alone. According to Market Watch, Illinois ranks in the top five states in the country with the highest foreclosure rates. But you may have another, less painful, option: a short sale.

Foreclosure versus Short Sale

A foreclosure is a legal proceeding initiated by a mortgage lender when a borrower defaults, or gets behind, on payments. It is the legal right of the lender to gain ownership of the property or sell it and use the proceeds to pay off the defaulted mortgage. A short sale is when a homeowner owes more money on the home than what it will likely sell for in the real estate market, and the lender agrees to take less than what is owed to them to avoid the foreclosure process. Where previously the requirements to qualify for a short sale were more stringent - including owing more on the mortgage than the home was worth and proving financial hardship such as job loss, divorce or decreased wages of the primary provider of the mortgage payments - as of November, 2012, homeowners whose loans are serviced by Fannie or Freddie Mac may be eligible for a short sale if they are not behind on payments and are experiencing financial hardship. Similarly, the federal government passed the Home Affordable Foreclosure Alternatives (HAFA) program, streamlining the short sale process, which used to take months and, unfortunately, sometimes still ended in foreclosure.

Two Short Sale Destroyers

Unfortunately, not all situations will allow for a short sale of the home. In particular, there are two circumstances in which short sale approval is extremely difficult and will most likely be unsuccessful. First, if your loan is not in default a lender will likely not accept a short sale offer or request. In other words, you need to fall behind on your payments or receive a notice of default before your lender will even consider a short sale. Second, if a person seeking a short sale has filed for bankruptcy, a mortgage lender will likely not consider a short sale of the property. The reason for this is because negotiating a short sale is considered a collection activity, which is prohibited by law in bankruptcies.

What’s in It for the Lender?

Forgiving a shortfall on a mortgage seems counterintuitive, however, as a consequence of the real estate housing crash banks still have homes on their books affecting their profits. Avoiding foreclosure is beneficial for the lender as well as the homeowner because the foreclosure process is expensive, time-consuming, and complicated. Approving a short sale will keep the property from becoming the bank’s liability and keep the parties out of court.

Obtaining a short sale approval from your lender, however, is not guaranteed. You will need to provide specific documentation to prove your hardship including: 1) an authorization letter giving the lender permission to discuss the short sale with a buyer or agent; 2) a hardship letter, evidencing your dire financial situation and your inability to bring mortgage payments up to date; 3) an assessment of the property in question, in the form of an appraisal or a broker’s opinion; 4) a purchase offer or contract, showing the lender you have a ready buyer; and 5) a settlement statement, often prepared by a real estate lawyer, detailing what the lender’s net proceeds will be. Experienced legal, real estate and tax professionals should work together to help your case and provide assistance through every step of the short sale process.

Sometimes life’s circumstances happen, causing late or missed mortgage payments on a home. If you are at risk of losing your home you may be eligible for a short sale, which will avoid the foreclosure process. The short sale process is complicated and an experienced attorney can help you every step of the way. The Law Offices of Gilbert C. Schumm has over 35 years of experience in helping homeowners find relief and services the Schaumburg, Arlington Heights, Palatine and Des Plaines areas, among others. Contact an Illinois foreclosure defense attorney today for a free initial consultation.