Due to financial difficulties and hardships, there may be times when we are unable to pay our mortgage payments on time. Submitting payment past due dates on a regular basis or skipping payments not only leads to additional fees – it can also lead to potential foreclosure. When a foreclosure process starts by a real estate developer or bank, the homeowner will have to forfeit all their property rights. All outstanding debts are paid by a foreclosure auction. If you are facing financial difficulties and wish to understand ways to avoid a potential foreclosure through loss mitigation, you should seek guidance from skilled real estate and bankruptcy attorney.
Options from U.S. Department of Housing and Urban Development
The Department for Housing and Urban Development provides a variety of repayment and affordable home projects that can help homeowners renegotiate their existing mortgage plans. These include The Making Home Affordable (MHA) Program, lower payment refinance options such as Principal Reduction Alternative (PRA) and Home Affordable Modification Program (HAMP), and Home Affordable Refinance Program (HARP) for homeowners with underwater mortgages or decreasing home values. There also are options for unemployed individuals such as FHA Special Forbearance and Home Affordable Unemployment Program (UP) that suspend mortgage payments.
Redemption and Refinance
Redemption and refinance of mortgage works in accordance with the Illinois Mortgage Foreclosure Law. When a homeowner pays the whole amount of the house within seven months of a complaint or three months of a court order for foreclosure, it is called redemption. On the other hand, refinancing can be difficult if you don’t have enough equity in your current plan. Interest rates may be higher, while there are potential for refinance scams. Refinance can be discussed with a competent real estate attorney.
A short sale occurs when homeowners wish to repay their mortgage, but the overall value and proceeds received have fallen short from the total mortgage debt owned. Although a short sale can avoid foreclosure with minimum consequences on credit score, it can still involve repaying the remaining amount.
Chapter 13 bankruptcy can be used to delay foreclosure and provide homeowners with additional months or years to repay their debt. It is approved by the court through a repayment plan that should be adhered to for three to five years. However, bankruptcy can have a negative effect on the credit score for the next seven years.
If you are looking to avoid foreclosure, or if you require assistance in determining any other real estate or family law related matter, feel free to schedule a free consultation. Contact Casement Law Group at (847) 888-9300 to speak with an experienced bankruptcy lawyer to help understand your rights and obligations.