How to Avoid Foreclosure
If you are a
homeowner at risk of foreclosure you need to know
there are programs and services that can help. It’s
important to act quickly and before you are three
months delinquent on your mortgage payment.
Foreclosures in
Illinois are a nine-month judicial process but after
90 days the lender will turn the delinquent loan
over to foreclosure attorneys and then the fees
really start to mount up. The key is to not ignore
letters from your lender. There are ways to work
through a bad situation if you act quickly. A
certified foreclosure intervention counselor can
also negotiate with a lender, servicer or private
mortgage insurance provider to restructure the loan
if it can be determined the homeowner has the
financial wherewithal to keep the home in the
future.
Other options for people facing foreclosure
include:
-
“Forbearance”
whereby a lender lets a borrower pay less than
the full amount of the mortgage or skip a few
payments if there is a reasonable plan to become
current on the loan.
-
“Reinstatement” is another option if the
homeowner is able to make a payment that covers
all of the previous late payments.
-
A “repayment
plan” from a lender will allow a borrower who
has fallen behind to make additional payments
each month until the amount past due is paid.
-
NEW!
90-day grace period.
Troubled Illinois homeowners facing foreclosure
will get up to a 90-day grace period under a law
signed by Governor Quinn April 5, 2009.
-
NEW!
The
Cook County Mortgage Foreclosure Mediation
Program offers free housing counseling and
legal assistance to homeowners who have received
a summons to appear in court.
At-risk homeowners
are encouraged to ask a local REALTOR® or a
HUD-certified financial counselor to find out where
to go for help. Other resources include:
Another option for
the homeowner is to sell the home. Oftentimes in
these situations the sale will be a “short sale in
lieu of foreclosure.” A “short sale” is an industry
term for when the owner of the home does not have
enough equity in the property and not enough cash or
liquid assets to be able to sell the property, pay
off liens and selling expenses (e.g., property
taxes, transfer taxes, real estate commissions) and
provide a clear title to the purchaser. Many
consider a “short sale” better in the long run for
the homeowner because it avoids foreclosure which
will damage a person’s credit score and make it much
harder for the owner to buy another home in the
future.
Short sale incentive program begins April 5: The
Obama Administration’s Home
Affordable Foreclosure Alternatives Program (HAFA)
takes effect April 5. HAFA, will help homeowners who
are unable to retain their home under the Home
Affordable Modification Program (HAMP), by providing
incentives for short sales and deeds-in-lieu of
foreclosure rather than foreclosure
Things to remember for Illinois foreclosures:
-
Don’t ignore
letters from your lender. Some of the
information will include foreclosure prevention
options.
-
Address the
problem immediately and BEFORE YOU ARE THREE
MONTHS DELINQUENT on your mortgage payment when
the loan is turned over to foreclosure attorneys
and fees mount up.
-
Find your
mortgage paperwork and read it to understand the
terms.
-
Contact a
HUD-certified counselor who is trained to help
and provide information on foreclosure
prevention options, 1-888-569-4287 or the
Neighborhood Works America Center for
Foreclosure Solutions at 1-888-995-HOPE (4673).
-
Learn more
from Illinois Legal Aid,
www.illinoislegalaid.org
-
Know that you
may qualify for options such as working with the
lender to restructure the loan or a repayment
plan.
-
Find a
professional Illinois REALTOR to help you
negotiate with the lender to place the property
on the market if selling your home is the option
you choose.
-
Avoid
foreclosure scams. Make sure you protect
yourself by working with a HUD-approved
counselor, professional REALTOR® and/or an
attorney.
-
Learn more:
www.hud.gov,
www.nw.org,
www.fha.gov,
makinghomeaffordable.gov.
-
Foreclosure
should be your action of last resort since it
will stay on your credit report for at least 10
years and greatly affect your ability to obtain
a home loan in the future.
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