Steps of Foreclosure
THE steps involved in foreclosure are important information for you to know once a foreclosure law suit is filed against you, or if you are having difficulty making your payments, and there is a chance you might end up in foreclosure.
Knowledge is power! The more information you have now, the more power you will have in the negotiating process and the better your results can be.
This does not mean that you can stay in your home, do nothing, and still be able to keep your home. But this foreclosure time line will let you know when things will happen, so you can plan your future steps accordingly.
- Default on your monthly payments.
- GRACE PERIOD NOTICE - In Illinois, the bank must notify you of your rights regarding the GRACE PERIOD. The bank mails you the Grace Period Notice, after which the bank must wait 30 days before filing the foreclosure. During that 30 days, you have the right to contact a government approved free agency to help oyu out. If you contact the agency, using the information in the notice that the bank sent you, or at makinghomeaffordable.gov, and you get the name and number of an agent who is working with you, and report that information to the bank, then the bank must wait an additional 30 days before filing the foreclosure, for a total of 60 days. If the agency takes certain actions in your case, and the bank is notified of that also, then you can get even another 30 days before the bank can file for the foreclosure, for a total 90 days of living in your home without paying the mortgage, while the bank must wait to file the foreclosure case, once you get the GRACE PERIOD Notice, and take the appropriate action. Don't ignore your mail or your phone calls.
- Filing of Foreclosure Suit against you with the court. The bank files the foreclosure lawsuit case, which is normally a 20 to 30 page document, more or less.
- Personal service or filing served by Sheriff or by Publication, right after filing of the suit. The bank needs to bring a copy of the foreclosure complaint document, plus a summons document, to your home, to give to you. They don't need for you to sign for it. If they see that you are home, and not answering the door, then they will leave it in the door and consider you served, even if someone takes it out of the door and throws it away, and you never see it. If they don't find you at home, then they can give it to someone you live with, or else publish notice of your foreclosure in a local newspaper. You have then "been served."
Reinstatement period expires in 90 days after you have been served in Illinois. After you are served with the foreclosure complaint and summons documents, you have a right, within 90 days afterward, to make all of your back payments, plus attorney fees and costs, and go forward with your mortgage as before.
Foreclosure judgement - the Judge in your foreclosure case enters judgment of foreclosure sometime at least a month after you were served with the foreclosure documents. The judgment may be entered without you knowing about it, although you need to have been served with the summons and complaint at some point back at the start of the case, either personally, substitute, or by publication service. The judgment of foreclosure includes a redemption date. The sheriff must wait until the redemption date to sell your home at a foreclosure auction. You can sometimes delay the foreclosure judgment by participating in the foreclosure case. Contact WWW.LawGuy.org, or other foreclosure defense attorneys, for help with this.
Redemption period expires in about three and a half months or more following the filing of the case.
Foreclosure sale (auction), usually a few days after the redemption period expires. Anyone can buy your home at the sheriff's foreclosure auction. But usually, the bank buys your home, since nobody else is willing to pay more than the bank is willing to pay at the auction.
Confirmation of the foreclosure sale (auction), usually a week or two after the foreclosure sale. The Judge enters an order confirming the sheriff's sale of your home. Your home now belongs to whoever bought it at the sheriff's sale, even if you are still living in the home.
Deficiency Judgment. If you said "Just let the bank take it," regarding the foreclosure of your home, and you did nothing about the foreclosure case, then you have a HIGHER than average chance of getting a deficiency judgment entered against you, which means that if your home was sold at the sheriff's foreclosure auction for less than what you owed on it, then the additional amount owed is entered against you as a judgment. This allows the bank to come after your wages, your bank accounts, your other property. This is what we try to prevent. Our job is easier if you come to us sooner rather than later.
Second and Third Mortgages. Foreclosure does not get you out of owing money for your second mortgage, third mortgage, judgment liens, or tax liens. You still owe all of this additional money, even after your home is gone. We help you to get out of owing these debts, but only if you get to us soon enough.
If you have renters in the house, new Illinois law requires that the renters get notice of the foreclosure case, and an additional 3 months to get out. That is not how the law is written, but that is how it is being interpreted and applied as of mid-year 2009.Eviction of named parties by Sheriff.
(A couple weeks after "right to possession" expires, if you are still there)
Recording of foreclosure deed.
Now we can discuss what are your options at this point.
1. You can "Redeem" your mortgage.
"Redemption" - is a time period during which the borrower can remedy the foreclosure by paying off the entire loan amount plus fees."
In other words, you can pay off your home and STOP foreclosure. You can sell the home in order to raise the money to redeem the mortgage, so long as your home is worth enough money to cover the mortgage. Your mortgage is paid off this way, but your home is gone. You can refinance in order to redeem the mortgage. Lenders are not offering to refinance people in foreclosure as a general rule right now.
2. You can try to do a "Reinstatement".
"Reinstatement" is a time period during which the borrower can remedy the foreclosure by paying all past due payments and any fees."
In other words, you can catch up with all missed payments plus fees. Banks will usually let you do this even if you are beyond the 90 days within which they are required to let you reinstate.
3. You can attempt to receive a "Loan Modification".
"Loan modifications" is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford."
In other words, you can try to renegotiate your loan terms with the lender/Bank. The reason I used word "try" is that the renegotiations are not always successful. I had a clients who successfully renegotiated their loan with an amazingly low interest rate and I had clients who got a letter from their Bank/lender stating that they cannot provide a renegotiation condition for their lone.
But please be very careful in hiring a 3rd party negotiators.
4. You can short sell your home.
"Short sale" is a sale of a real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold." Source :[Encyclopedia www.wikipedia.org].
Your home is worth less than what you owe, but you sell it anyway, with the bank's permission. Short sale is a great way to avoid a foreclosure record on your credit report plus it normally frees you from the deficiency judgement that might occur otherwise.
For more information on Short Sales please check here Short Sale
5. You can file "Bankruptcy."
Chapter 13 is Best for you
"Bankruptcy - The condition of a legal entity that does not have the financial means to pay their incurred debts as they come due. In the U.S. this status is established through legal procedures involving a petition by the bankrupt or by its creditors. [Source: www.teachmefinance.com]"
Note: Please do not rush into Bankruptcy before you discuss your personal situation with a Real Estate Attorney or anyone trustworthy. You should make a plan and then follow it. There is a best time to file a bankruptcy, depending on your situation.
Bankruptcy is pretty much the worst mark you can have on your credit report.
6. Foreclosure doesn't happen quickly if you are educated, and you participate in the process.
Please DO NOT be ashamed of your situation, there are a lot of people around you, who are in the same boat with you.
DO NOT hesitate to ask questions and contact professionals who will work on helping you.
And DO NOT postpone and delay seeking a solution to your problem.
ACT NOW and you will be among those who got out of this situation with grace and dignity and moved on with their lives with clean conscience and better credit.