Chicago Foreclosure Lawyer Blog

The blog ChicagoNow has an interesting post about people's experiences with obtaining loan modifications.

Since I'm not a fan of reposting, I'll simply allow you to follow the link and read the post. It's really quite disturbing and absurd at the same time. From answering a seemingly innocuous question incorrectly to stealth home sales to dirty tricks with checking accounts, there are many ways in which people are denied modifications. The lesson learned? The bank doesn't have your interest at heart, its main goal is to increase shareholder value.

Governor Quinn signed two new bills on August 2, according to the Illinois Government News Network. Of particular interest for our readers is Senate Bill 3739, which creates the Save Our Neighborhoods Act of 2010.

The bill provides funding to foreclosure prevention outreach groups and housing counselors. It generates some of this funding by adding an additional $50 fee for filing foreclosure actions. The bill also extends the Homeowner Protection Act. The Act requires lenders seeking foreclosure of residential mortgages to send the homeowner a 30 day grace period notice. Among other things, that notice informs homeowners that if they seek counseling from a HUD-approved counselor they will receive an additional 30 days to work something out with the bank. The bill extends this period to 90 days, which seems a bit more realistic given the difficulty that many people have with obtaining loan modifications.

The bill goes into effect January 1, 2011. We here at LOSA hope that it is a step towards alleviating the current mortgage crisis.

A recent article in the New York Times was rather surprising, even to me, someone who practices foreclosure defense litigation. As you may have read in our previous post, Fannie Mae's plan to prevent strategic defaults seems designed to punish all homeowners who find themselves seriously underwater on their mortgages.However, the New York Times indicates that the wealthy are engaging in strategic defaults than any other group.

More analysis after the jump.

Continue reading "Strategic Defaults -- Who's Foreclosing Now?" »

The L.A. Times reports that two new bills in the California state legislature seek to prevent banks from seeking deficiency judgments against individuals that walk away from underwater mortgages and those that give up their properties via short sale. As someone who generally likes California, I have to admit, this just makes me like the state even more.

Given the fact that property values were obviously inflated during the lending boom, it seems that homeowners shouldn't be left holding the bill. Some may argue that it is an issue of personal responsibility -- these people made a choice. The difference here is that these choices were generally made based on bad information. If a doctor told you that a heart transplant had a 0% chance of complication, and you consented to that surgery, did you really give informed consent? How is it different for home purchasers who were told that values only went up, that they could refinance that exotic ARM before it adjusted, &c.?

So, State of Illinois, I challenge our legislators to introduce similar legislation. Many of the Federal statutes have protections that expire before homeowners need them or are aware that they were protected. It is incumbent upon the states to protect their citizens from this crisis.

Cook County residents who are facing foreclosure may receive a visit from Action Now/Foreclosure Convening representatives in the near future. Ten groups will be covering Cook County in an attempt to get home owners who are facing foreclosure involved in the Cook County Mortgage Foreclosure Mediation Program. This program seeks to put home owners in touch with mediators and their lenders to work out alternatives to foreclosure such as loan modifications, refinancing and other payment plans.

The program has $3.5 million in funding from the Cook County Board of Commissioners and began on July 1, 2010. This outreach program will put volunteers on the doorsteps of area home owners. The volunteers will explain the benefits of the mediation program and offer to make a call to the county's toll-free helpline then and there. While this program may not produce dramatic results, some positive outcomes will still be an improvement on the status quo.

More information about the program is available here.

To read the article on which this post is based, and to see a frightening look at the number of homes in foreclosure within a 7 block by 5 block area on Chicago's West Side, click here.

Two days, two articles, two different viewpoints. If you listen to NPR, you may have heard the segment on the "troubled Obama mortgage program." If you read MarketWatch, you may have read that loan modifications are on a sharp rise. So, which one is right? Oddly enough, both are pretty accurate once you filter out the spin.

After the jump, I attempt to do just that.

Continue reading "The HAMP Program -- Success or Failure? It Depends Who You Ask." »

According to the Wall Street Journal, Fannie Mae has a new plan to prevent strategic defaults. Strategic default is a bit different from strategic foreclosure. In a strategic foreclosure, homeowners in underwater mortgages can seek remedies like deed-in-lieu of foreclosure, consent foreclosure, or a short sale. A strategic default is simply walking away from the mortgage.

From a financial perspective, strategic default may expose you to a deficiency judgment once the house is sold at a sheriff's sale. Generally, homes don't sell for the value of the mortgage. Borrowers are liable for the difference between the value of the loan and the sale price of the house. Many of the strategic foreclosure options protect borrowers from deficiency judgments.

If that wasn't enough, the new plan from Fannie Mae aims to provide strong deterrents against walking away from an underwater mortgage. After the jump, I break down the new "time out" periods for borrowers who engage in a strategic foreclosure or default.

Continue reading "Fannie Mae's Plan to Prevent Strategic Defaults" »

As the person who often deletes spam comments on this blog, I have been discovering that many of them are posted by other firms that engage in bankruptcy practice. Our firm also handles bankruptcy cases, but generally separately from our foreclosure defense practice.

Here is the obligatory disclaimer: We are a debt relief agency. We assist people with filing for relief under the Bankruptcy Code.

My own concerns about the ethical implications of comments that do not provide this disclaimer aside, I feel that it is important to give it before the jump. After the jump, I will talk about bankruptcy vs. loss mitigation strategies and when they are most effectively used.

Continue reading "Bankruptcy vs. Loss Mitigation" »