Mortgage Foreclosure FAQs

What are my chances of beating the bank?

If I met you in an elevator and only had a moment to answer your question, not knowing anything about your specific circumstances, I would say two things. First, no attorney can say exactly what is possible without thoroughly reviewing your situation. So, explain your details and we have a good chance of arriving at the best solution. You may not like all the answers, but you can rest assured we will explore your options and make a good decision.

Next, I would say that in most instances, whatever questionable things a mortgage company has done, your likely outcome is being able to delay, but not eliminate, many foreclosures. But this is important! Buying time has significant benefits when you are facing financial challenges. I help give clients additional time to raise cash and make well thought-out decisions. You also have a better understanding of all the red tape issues and I help take the guesswork out of what is an often frustrating situation.

What are some of the likely defenses to a foreclosure?

Some of the frequent issues include:

  • Lost or misplaced files
  • Escrow account issues
  • Improper force-placed insurance
  • Inaccurate accounting issues
  • The bank did not follow proper lending procedures
  • Unlawful alterations made to documents
  • Fictitious documents created by a lender or their agents
  • Improper signatures made by unauthorized persons
  • Violations of federal housing laws by lenders

As a general rule, however, never assume that any misdeeds or mistakes made by a lender will eliminate their foreclosure rights. So, never ignore a foreclosure lawsuit. That applies even if you have started the paperwork for a loan modification! Some errors the lender might have made give homeowners more power than others. Speak to me to discuss the particulars and I will help sort out our best remedies.

How long do I have to exercise my rights?

Under Illinois mortgage foreclosure law, there are very short periods of time you have to go on the offense against a foreclosure lawsuit. Speak to me as soon as possible so your rights to exercise certain remedies do not expire!

When is it too late to mount a foreclosure defense?

It is usually too late to explore your defenses to a foreclosure lawsuit when a judge has confirmed the sheriff’s sale. Because I am also a bankruptcy attorney, I can help you make decisions as to the possible benefits of filing a Chapter 7, such as avoiding deficiency judgments. These protections depend on your specific financial situation. This is another area of the law, but I am well qualified to discuss these “next step” options.

What about before the confirmation of a sale?

Many of the particular facts are important, such as which county the property is located. The Illinois Code of Civil Procedure gives your attorney the power to make certain motions to the court to set aside judgments. Whether they are granted depends. For example, it is easier to have a motion granted after a default judgment has been granted, but before the sale has taken place. Less easy to accomplish (but possible in a few counties) are motions granted that are made after a sale takes place, but before it is confirmed. More difficult still are those motions where the court requires that you (the defendant) establish that you have a valid defense to the complaint and exercised due diligence in attempting to fight your case. Most clients have the greatest difficulty passing the due diligence test.

So, there are different degrees of difficulty involved with each court proceeding. What makes things much easier is acting quickly on the issues you can control. Time is the big enemy. Get to me as soon as possible and your odds and options are greatly enhanced!!

How do the different companies involved influence my situation?

In the old days you knew the bank that held your mortgage and they were down the street. But then Wall Street turned mortgages into investments and “securitization” meant your paperwork passed through lots of hands.

So, we have on our list what attorneys call “chain of title” issues. This typically doesn’t affect whether you as a homeowner are in default on your loan. However, chain of title does influence who has the right to foreclose. So, if we discover there is problem with chain of title, it could mean a foreclosure against you cannot properly proceed because of “lack of standing”.

If your loan wasn’t securitized, then it is on the banks’ books and this may help us encourage the bank to engage in a loan workout.

What can I do on my own to help stop a foreclosure?

Don’t forget the simple things. Get your lender on the phone! If you are having trouble making payments, they may work with you. I can always help walk you through all the steps, but this is a quick and easy way to first establish whether you can get some breathing room.

Also, lenders will allow a 30-day extension to those in default who can prove they’ve talked to a U.S. Department of Housing and Urban Development-certified counseling agency. One is Mid Central Community Action, which is based in Washington, D.C. and they can be reached at 309-829-0691. Studies show that those who get some type of foreclosure counseling are 60% more likely to avoid losing their homes.

What is HAMP?

This stands for the Home Affordable Modification Program. Going this route can lead to a lower mortgage payment and feel free to call me to discuss, as this can be a viable option for some.

How do my negotiating efforts influence the legal proceedings?

They don’t, unless you take specific action. This is a common area of misunderstanding for homeowners. Foreclosure proceedings in court are separate from any loan-modification deal you are trying to work out with a lender or loan servicer. Just because you are negotiating with the lender (on a modification), it doesn’t mean the court proceeding is on hold. It isn’t.

What is a deed-in-lieu of foreclosure?

This process involves signing over the deed and essentially transferring the property back to bank. There are limited situations where this is viable but in some instances it can assist in preserving your future credit rating.

What about FHA approved loans?

Courts have held in Illinois and many other states that homeowners can defend against foreclosure if their mortgage lender failed to comply with federal mortgage servicing regulations. In these instances, the loan was FHA-insured and subject to the regulations of the U.S. Department of Housing and Urban Development (HUD).

These “affirmative defenses” could include the lender’s alleged noncompliance with HUD regulations, which requires loss mitigation, the acceptance of partial payments and face-to-face meetings prior to the commencement of foreclosure proceedings.

What if I am renting and my building is being foreclosed?

Most of the Chicago area renters affected are in the Austin, Humboldt Park, Belmont Cragin, New City, Englewood, West Englewood, Logan Square, North Lawndale and South Lawndale neighborhoods. More than 200 buildings were affected in the past several years, with Deutsche Bank and U.S. Bank the leading lenders involved.

Most tenants, owners, and even lenders and real estate agents are unaware of the laws affecting renters who live in buildings on which foreclosure proceedings have been initiated. First, you still have to pay rent. Also, new owners have to maintain the property. Additionally, Illinois law requires tenants to receive at least 90 days’ notice before a foreclosure-related eviction can be undertaken. In November of 2008, a Chicago ordinance was amended that requires most landlords in non-owner-occupied buildings to tell tenants about a foreclosure filing within seven days of being served and also to inform prospective tenants about the foreclosure before they move into a building.

How can I find out more about the status of a particular property?

Technically speaking (although I don’t personally recommend it) a Cook County resident can search and retrieve public documents through the Cook County Recorder of Deeds for foreclosure filings. However, you first have to find out the property index number, or PIN, for a specific address at the county assessor’s office.

If you are a renter and stressed out about a foreclosure issue regarding your building, I would advise contacting an Illinois-based help group/committee you can reach at 312-347-7600 or at lcbh.org. Renters also may contact the Metropolitan Tenants Organization at 773-292-4980 or tenants-rights.org.

I own a condo at risk of foreclosure. How is this different than a house?

I see condominium foreclosures on the rise in the Chicago suburbs. They often jeopardize the value of the building and threaten some condo associations. Most involved are investor owned. Know that most mortgage mediation programs established by loan servicers and including the federal government’s Home Affordable Modification Program apply only to owner-occupied homes, not investment properties. Also, because many are condo conversion projects, some owners are experiencing higher fees because the original conversions did not meet their required percentage of units sold within a particular building. Realize that these extra fees are typically difficult to contest.