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Ellen
Ellen, Lawyer
Category: Real Estate Law
Satisfied Customers: 36714
Experience:  25 years of experience helping people like you.
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I own a property in Illinois that is 82,000.00 under water. I am not late on my mortgage p

Resolved Question:

I own a property in Illinois that is 82,000.00 under water. I am not late on my mortgage pmts yet; however, I see no alternitive than to foreclose because there is no way I can rent my property for what I owe on my motgage and association fees, nor can I afford to pay for 2 places if the renter defaults. I need to do something before the end of 2012. I know about the short sale forgivness program and that it is only applicable until 2012. If I get approved for a short sale and do not sale it, what happens then? I do not want to be stuck with this property. I have owned it for 4 years. I am 57 years old and want a place where I can call my own forever, and that is not here. I know that my credit score will suffer big time ( I have an 810 credit score), but what is a person supposed to do? I also live 1 hr. and 20 mins away from my current employer. What should I consider? Living here for another year is not an option.
Submitted: 6 years ago.
Category: Real Estate Law
Expert:  Ellen replied 6 years ago.

WebLaw :

*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.*

WebLaw :



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 borrower

To 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.

Customer:

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!!!!!!

WebLaw :


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.

WebLaw :


I realize that this answer may not be entirely to your liking, and I regret being the bearer of information that you really don’t want to hear. But it would be unfair to you and unprofessional of me were I to provide you with anything less than truthful and honest information. I hope you understand.

WebLaw :

I hope that it helps to know this information

Thank you in advance for remembering to click accept. If you experience difficulty using the accept button, please let me know as JustAnswer pays me for my time only if the "accept" registers.

Customer:

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?

WebLaw :

unfortunately yes

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