What is foreclosure? It is a legal process by which a lender can take back (i.e., repossess) an Illinoisan’s home. If successful, at the end of the process, the resident will have to move out.
How is the process begun? Normally, the first step is that a lender will send the borrower letters saying that the borrower has missed payments. Illinoisans should not ignore these letters. But often that is exactly what happens: a borrower will ignore the letter because he or she does not have the ability to pay. That is a mistake because often a lender will work with a borrower to restructure the borrower’s payments. Doing so often is better for the lender and the borrower alike.
For Illinoisans who receive these kind of letters, is there help available? Absolutely. One good starting point is to take advantage of the U.S. Department of Housing and Urban Development’s website, which contains a list of approved housing counseling agencies. These agencies normally offer a variety of services, often free of charge.
If the process proceeds, is being kicked out of the home the end of the story? Usually not. After a lender takes back a property, it will normally sell it. If the sale price does not cover the remaining loan plus other fees, then the Illinoisan will continue to owe money.
Are there any alternatives to foreclosure? Yes, there are options that can avoid or stop a foreclosure. For instance, a lender may give a special forbearance in which it agrees to a payment plan (as discussed earlier). The lender might also agree to temporary reduction or stoppage in payments. Or it might agree to what is called a deed-in-lieu of foreclosure, in which the parties agree to bypass a foreclosure by having the borrower give the property back to the lender without going through the foreclosure process (usually in exchange for walking away from the property free and clear).
None of these alternatives are necessarily simple, however. Illinoisans interested in learning more about foreclosure and its alternatives may benefit from speaking with an experienced foreclosure attorney.