What Triggers A Foreclosure?
July 23, 2020
In Illinois, a home owner has 30 days after he or she has a notice of intent to foreclose notice by mail before a foreclosure suit can be filed.
WILL MY FINANCIAL REPUTATION BE RUINED IF I GO INTO FORECLOSURE?
Foreclosure filings are listed on one’s credit report. It does lower the score.
CAN I SAVE MY HOME ONCE A FORECLOSURE HAS BEEN FILED?
Besides a few remedies in state court, a chapter 13 is the best way to save your home. Basically you must have sufficient income to make the regular mortgage payments and to make a chapter 13 payments to catch up on your mortgage arrears.
CAN I AVOID FORECLOSURE BY NEGOTIATING A LOWER RATE OR OBTAINING A LOAN MODIFICATION?
The answer is no. Foreclosures and loan modifications work on separate tracks. A foreclosure will progress regardless of the status of the loan modification. Many home owners have been stunned to find that their homes have been sold in the sheriff’s sale even though the mortgage company has indicated they would most likely modify the loan. Don’t ever trust a bank.
IS BANKRUPTCY AN EFFECTIVE FORECLOSURE DEFENSE OPTION?
A chapter 13 is not truly a defense but a means to stop the foreclosure and to repay the back payments and other costs associated with the foreclosure.
WHAT ARE SOME OTHER FORECLOSURE DEFENSE STRATEGIES?
Once a chapter 13 has been filed, a home owner can continue to apply for a loan modification. Many chapter 13 clients have successfully obtained the loan modification after the filing of a chapter 13.
IS IT FAVORABLE TO THE BANKS WHEN PEOPLE IN A CHAPTER 13 APPLY FOR A MODIFICATION?
I don’t think it has any affect at all. It is not more difficult once a chapter 13 has been filed to get a loan modification. Basically banks look for every possible way to avoid the modification. They constantly lose files, and they are very picky on the application. If you don’t dot every “I” or cross every “t” they return it time after time after time to try to frustrate the home owner. They do not really cooperate.
IS IT BECAUSE THEY ARE LOSING A SUBSTANTIAL AMOUNT OF MONEY?
I don’t know about that but banks don’t like to do the loan modifications, they feel compelled to do so by the government and they do everything that’s possible to avoid it.
WHAT FACTORS SHOULD BE CONSIDERED IN A FORECLOSURE DEFENSE STRATEGY?
If someone wants to save their house, the best strategy they have is to file a chapter 13, they have the right to pay the back payments and any defense they would have in the state court, they have in bankruptcy court.
ADDITIONAL INFORMATION REGARDING FORECLOSURE DEFENSE
The only other thing would be if one has a second mortgage that is “underwater”, the second mortgage, can frequently be avoided in its entirety. Assume the house is worth $100,000, the first mortgage is $125,000. You have a second mortgage of any amount, let’s say $30,000. In a chapter 13, you can avoid the second mortgage and treat it as an unsecured debt and pay a small dividend rather than the entire $30,000.
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