At least within the State of Illinois, homeowners should not immediately lose their homes now that the moratorium is over for evictions and foreclosures. There is a process for foreclosure, they can’t just take away your home. With some mortgage companies, modification options will automatically be offered to homeowners. Mortgage companies do not want to own a hundred thousand houses, so they have relaxed the standards on who can get a modification. If you’re in forbearance or are falling behind because of COVID, the first step is to reach out to your mortgage company to see if they’ll give you a modification.
In addition, the foreclosure process in Illinois takes at least ten months from the time you’ve been served. Your mortgage company’s attorney will file a complaint in court and once you’ve been served those papers, that timeframe starts. You then have 30 days to file an answer. Most people don’t understand what that is, and they can find an attorney to help them if needed. An extension can be given to get that answer on file correctly. You can just defend your foreclosure case if you have grounds or try to work it out with the mortgage company. Even after you’ve been served, you still have the right to try to modify the terms of the mortgage with the lender.
You have ten months if you do absolutely nothing before you will lose your home. You may have longer in your home if you have an attorney defend you in the foreclosure case. If you can’t work it out a settlement or modification with the lender, you have the option of filing a Chapter 13 Bankruptcy, which will give you up to five years to cure a default on your mortgage.
Do Banks Want To Put Delinquent Homeowners Into Foreclosure At The Moment?
Banks themselves don’t care if they foreclose on you, because it is a business decision. If you run a business and you are not paid, you are going to go out of business if you do not act. Sure, the banks have insurance and sometimes they have the government money backing them up, but at the end of the line, they are a business and if they don’t move to foreclose on homes, it’s going to be a problem for them. If the banks are not paid, they are not losing revenue. They are going to end up closing the door because even banks cannot sustain a loss.
At the same time, mortgage companies don’t want to own tons of properties. If they must foreclose, they would like to sell quickly. However, if the banks own a lot of property, what are they going to do with them? If they are taking properties back, they almost always take them back at a loss because maintaining property costs money. Bank must pay property taxes and insurance, as well as possibly having to fix up a place to try to resell it. So, if there’s a way that they can keep a homeowner in the home and it makes business sense, they will. However, if it doesn’t make business sense in the corporate model, they’re not going to approve a modification of the mortgage.
Is It Always Better To Restructure A Loan Or Is It Ever A Good Idea To Let Your Home Go?
It is not always better to restructure a loan…every person, every house, every budget, every life, is different. There have been times over the years where I say to people “why are we trying to save this house?” One factor that we look at, are they upside down? If you own a house that’s worth $100,000 and you owe $200,000 on the mortgage, or you’re hypothetically taking in $2,000 a month in income and your mortgage payment is $1,800 a month. Why keep the home? What is it that you need trying to accomplish?
There’s also the other side, where there might be a reason to keep a home no matter how it looks on paper. One example is if you have a mortgage that’s $1,100 a month and you are a household of five people. How much home will that payment in rent afford you if you? It might not make sense to try to rent something because it’s going to cost a lot more for a lot less space. You really must analyze each case individually to decide whether keeping the home or giving it up is the right choice.
It is never an easy decision, but sometimes it really is the best choice to walk away.
For more information on Losing Homes After Expiry Of Moratorium, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (847) 440-5998 today.