Your months behind on your mortgage, you have quit taking calls from your homes lender, you are sick from worrying and you haven’t slept in months. Then you get the knock at the door and your handed Court papers giving you a foreclosure summons. The summons say show up in Court and pay up, including late fees, attorney fees and court cost or get out. Is your home being taken from you? Will the Sheriff come the next day and throw you and your furniture out on the street. No worries, sleep well, you have lots of options and you may well keep your house or it may take months, if not years, before you would be asked to move. In fact, in some cases, the lender may give you months to move out and offer to pay you thousands of dollars if you agree to move out on a preset date, even though you haven’t paid your mortgage payments, your real estate taxes and your insurance for months or years.

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So how long does a foreclosure defense take? The answer is approximately as short as six months to as long as several years. It depends on the experience of your attorney, the type of mortgage you have, whether your being foreclosed on in state court or federal court, if you were given the proper legal notices, whether the foreclosure court papers contain errors, was the Illinois Mortgage Foreclosure Law followed properly, is the foreclosure on a private, non-judicial loan or a lenders loan and the list goes on and on.
In one of our cases a foreclosure took several years to get to the Sheriffs sale. At the sale the defense lawyer discovered the long legal description was wrong. The lender had to start all over. In many FHA foreclosures, errors by the lender are common requiring the mortgage company to start a new foreclosure.

While the foreclosure is in litigation your attorney may be able to help you negotiate your way out of the problem. Your attorney may work on a loan forbearance for you. Your lender would temporarily lower your payments or pause your payments and stop the foreclosure to give you a period of time, months up to years, to catch up the arrearage. This works well for borrowers who were out of work because of illness, accidents or job loss. A return to work and a payment plan, in forbearance, suspends the foreclosure. Your attorney may also be able to negotiate a loan modification. Your late payments, default interest, attorney fees and court cost are put into a modified mortgage.

The loan period can be extended, the payment raised or lowered, the interest rate modified, all designed to end the foreclosure and get the lender repaid.

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How do I stop the Foreclosure Sheriff’s sale and keep my house when I don’t have enough money to pay all the past due payments, the late fees, the attorney fees and the court cost at one time? One option is to file a Chapter 13 bankruptcy, which is often called a save the house bankruptcy. In a Chapter 13 case, you will have up to five years to pay on your arrearage in sixty equal payments. At the end of the five years, your caught up and you continue on with your original mortgage. During the five year period, your protected from the lender by the Bankruptcy Court. For instance, if you were $12,000 behind to the lender, including attorney fees and court cost, your Chapter 13 payments on that claim would be $200 a month for sixty months.

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FORECLOSURE LOSS MITIGATION

You decide that there is no way you can keep the house. What happens? Again, you have several options. You might be able to sell the house for enough money to pay off the mortgage. But usually, you would sell the house by having your attorney get you permission to do a short sale. You would sell your home for less that the amount you owe on the mortgage, the lender would approve the short fall and usually forgive the difference you owe. Why? Because the lender resolves the matter quickly, doesn’t have to worry about damage to house by you, vandals or weather and doesn’t have deal with fixing up and selling the house. You might also have your attorney negotiate a deed in lieu of foreclosure. The process has you deeding the real estate directly to the lender without a foreclosure. The lender may agree write off any losses to quickly resolve the case.

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If you do a foreclosure defense, your going to live in your home for months, even years, free. No mortgage payment, no real estate taxes, no insurance and only minimum maintenance on your part. Eventually the house will be sold in a Sheriff’s sale and you will have to vacate the home. Yes, you will be given plenty of notice before you must move. Then what? The lender will have a deficiency judgement against you for the total amount of money the lender lost and will pursue you to collect it. What do you do? Well your attorney may negotiate a settlement. In one case, the lender settled a $1,286,484.00 deficiency for a $30,000 one time payment. You may also file a Chapter 7 Bankruptcy and just eliminate the whole amount in bankruptcy. Lenders sometimes take small settlements to avoid getting nothing in a Bankruptcy. Your lender may also agree to let you sign a promissory note and repay the deficiency amount over a number of years. Finally, you may elect to do a Chapter 13 and repay the deficiency amount over a sixty month period, paying back between 10% to 100% of the amount do in the deficiency.

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