Foreclosure

Short Sale. A lender may allow you to sell the home for less than what you owe on your loan before it forecloses on the property. This helps you avoid a damaging foreclosure on your credit report, but with it can come a tax liabiltiy on the forgiven amount of debt. You must act fast to initiate a short sale and in addition to securing the services of a qualified REALTOR, you should also seek the advice of an attorney and/or tax professional.

Reinstatement. This can occur only when you can afford to repay the lender your entire past due balance plus any late fees or penalties by an agreed upon date.

Forebearance. This is an agreement with your lender whereas your mortgage payments are reduced or suspended for a certain length of time. At the end of your time limit, you would begin regular payments once again and bring the loan current thru a lump sum or additional partial payments over a certain period of months. This option may have some room for negotiation, i.e. forgiveness or reduction of the amount owed.

Repayment Plan. With lender approval you would add an additional sum of money to your monthly payment until you catch up on the past-due amount you owe.

Loan Modification. Can involve a change in your loan terms to help you keep your payments going. This can include lowering the interest rate, adding missed payments to your loan balance or extending the term of the loan in order to reduce the payment amount or to factor in your past due amount.

Deed in Lieu. A Deed in Lieu of foreclosure is when you voluntarily deed your property title back to the lender, with lender approval, in exchange for a reduction or cancellation of the rest of your debt. It can be less damaging on your credit than a foreclosure, however, you will lose any equity you may have. Again, you may face a tax liability on the amount of forgiven debt. This likely is not an option if you have more than one loan on the home.

Bankruptcy. Some people find they need to look into filing for bankruptcy. This may only suspend the foreclosure process temporarily, or you may still be forced to give up your home, but sometimes it can get a lender to accept a repayment plan. There are many variables here, and in some cases people who file bankruptcy, in the end have both a foreclosure and a bankruptcy on their credit report. Seek legal and tax counsel from qualified Bankruptcy specialists.

Foreclosure Facts

There is no statutory right of redemption in Illinois.  A mortgagor in default who wishes to exercise the equitable right of redemption to avoid loss of the mortgaged real estate may do so after the date of judgement of foreclosure is entered.  When a property is redeemed, the sale does not occur.

The mortgagor generally has a right to remain in possession of the property from the time of service of summons until the entry of a judgement of foreclosure.  After judgement and through the 30th day after confirmation of the sale, the mortgagor can retain possession, but he or she must pay rent to the holder of the certificate of sale.  Thirty one days after judgement, the morgagor must vacate the property or be evicted by the owner of the certificate of sale, who receives a sheriff's deed and gains the right to possession.

While Illinois does not offer mortgagors in default a statutory right of redemption, there is another recourse available, the statutory right of reinstatement, applicable when the defaulting mortgagor wishes to cure the default and reinstate the loan as if no acceleration had occurred.  The mortgagor has the right to excercise this statutory right for a period of ninety days after service of summons.  The suit must be dismissed by the lender, and the mortgage loan remains in effect just as before.