Illinois foreclosure tid-bits
• “To address the growing foreclosure problem, especially with subprime loans, some state and local governments and nonprofit organizations are offering financial assistance. Ask your REALTOR® or counselor about who to call.”
• The FHA market share for home purchases is expected to further accelerate in 2008 helping first-time buyers enter the market with a safer and lower interest rate mortgage product. (NAR forecast, 11/14/07)
• “Be wary of advertisements like ‘Cash for Houses/Any Situation’ or ‘We Buy Houses for Cash.’ Consumer groups have learned that many of these are scams that bait homeowners with the promise of rescuing them from imminent foreclosure. Unfortunately, the ‘rescue’ often involves the borrower signing over the house and the family being evicted from their home.”
• “There are large local variations, but for the nation as a whole, closed transactions in the fourth quarter will be their weakest in seven years. The subprime loan bust, the still notback- to-normal jumbo loan market and the usual lag time effect will account for the current quarter soft figures. There is good news. FHA loan applications and approvals have been rising strongly. HUD’s endorsement of FHA loans for home purchase rose by 58 percent and that for refinances rose by 23 percent compared to a year ago.” (NAR, 11/07)
• “If your current lender isn’t willing or able to help, you may be able to refinance your current mortgage with another lender. REALTORS® can help you find responsible lenders that make fair and affordable loans.”
• “While the recent rise in foreclosures and delinquencies has dampened consumer confidence in real estate, these problems have been concentrated in the subprime market.
• “If you are having trouble paying your mortgage for any reason, or expect problems, you should work with experts and your lender to find a solution now. If you’re in trouble, call 888-995-HOPE.”
• “The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.” (U.S. Department of Housing and Urban Development)
• “A 2007 survey by default counselors in the Chicago area found that a large share (28 percent) of defaults and foreclosures can be attributed to ARM resets. Most (45 percent) result from job loss while 9 percent are due to fraudulent loans.” (Illinois REALTOR® Magazine)
• “Most foreclosures are the result of job loss while a larger percentage now are from adjustable rate mortgage resets and a smaller portion to fraudulent loans.” (Survey of Chicago area default counselors, 2007)
• “The new FHA Secure program can help families who have been making their mortgage payments at the starter rate but were unable to keep them up after the loan reset to refinance through the FHA and keep their home.” (www.fha.gov)
• “It is estimated that more than $1 trillion worth of subprime, adjustable-rate mortgages (ARMs) are due to reset between now and November 2008.” (The Mortgage Bankers Association)
• “Foreclosures in Illinois are a 9-month judicial process but after 90 days the lender will turn the delinquent loan over to foreclosure attorneys and then the fees start to mount up.” (Beth Llewellyn, Partnership for HomeOwnership, www.pfho.org)
• “It’s ideal if the REALTOR® can get to the homeowner before they are delinquent three months. At that time a professional REALTOR® can negotiate with the lender to place the property on the market and possibly save the buyer any equity left as well as prevent a foreclosure on their credit file.” (Beth Llewellyn, Partnership for HomeOwnership,
• “In a short sale, depending on how the seller got into the situation they are in, the lender may work out a program to sell the home but for less than what they owe (a short sale in lieu of foreclosure). The REALTOR® can put the home on the market, give the lender what they want and the seller walks away without credit damage.” (REALTOR® Lori Cox in Illinois REALTOR® Magazine)
• “A certified foreclosure intervention counselor can also negotiate with a lender or private mortgage insurance provider to restructure the loan if it can be determined the homeowner has the financial wherewithal to keep the home in the future.” (Beth Llewellyn, Partnership for HomeOwnership, www.pfho.org)
• What should a homeowner do to avoid foreclosure?
- Do not ignore letters from your lender. If you are having problems making your payments, call or write to your lender’s Loss Mitigation Department without delay to explain your situation.
- Stay in your home for now. You may not qualify for assistance if you abandon the property.
- Contact a HUD-approved housing counseling agency. (U.S. Department of Housing and Urban Development)
• Options for people facing foreclosure include:
- FOREBEARANCE. Lenders may let a borrower pay less than the full amount of the mortgage or skip a few payments if there is a reasonable plan to become current on the loan.
- REINSTATEMENT. A homeowner may be able to make a payment that covers all of the previous late payments usually at the end of the forebearances period.
- REPAYMENT PLAN. Lenders may allow a borrower who has fallen behind to make additional payments each month until the amount past due is paid.
- LOAN MODIFICATION. Lenders will sometimes change the terms of a mortgage to help homeowners avoid foreclosure.
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