Real Estate Law
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*Due to rules of your state bar or mine, nothing herein is intended as legal advice, only intended as general information to better help yourself.*
When a property is foreclosed in Illinois, a judgment can be entered by the court for any amount of the loan that remains unpaid. This is called a deficiency judgment. The deficiency judgment can be used to execute on other property and wages of the borrowerTo avoid or minimize the deficiency, you will need to convince a lender that a modification to allow a short sale will mitigate the lender's losses. To do this you will need to show the lender that the property would not yield the amount of the mortgage in a foreclosure sale, that you cannot pay the current payments and that you would be able to obtain a short sale at a more favorable price than a foreclosure sale.To clarify, there are three prongs to convincing the lender that a modification will mitigate the lender's losses:1. Convince the lender that the property would not yield the amount of the mortgage in a foreclosure sale,2. Convince the lender that the you cannot pay the current payments - show the lender that there are no other assets available to pay a deficiency.3. Convince the lender that you would be able to pay a reasonably lower payment or short sell at a more favorable price than a foreclosure sale.
How do I prove all that stuff???? I am not out of work, but I cannot go on paying this ridiculous amount on my salary. I do have other bills. I do have money in my savings to satisfy a few months of mortgage payments. So, do I have to exhaust all my savings to keep this place in order to do a short sale of foreclosure. What if I just do not make any mortgage payment anymore? I don't want to do that because I am not that kind of person. Am I stuck? That would really be unfair. If this townhome is worth only 117,000.00 and I owe 167,000.00, that's crazy!!!!! I would just leave!!!!!!
The first thing to be aware of is that a lender is not going to modify a fully performing loan. You will typically need to be 90 days or more behind before they will discuss modification. They will only modify to mitigate their risk . As long as you are paying, they have no incentive to modify.
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Maybe I wasn't specific enough. If I have say 20,000.00 in my savings at the time of my 90 days of being behind on my mortgage payments; does the lender look at that and say exhaust that first? Then we will talk?