I have noticed that a fair bit of the traffic coming to my website is seeks an answer to how you can stop the foreclosure of your house in McHenry County. You have six basic options that are outlined at the end of this post. Hopefully, this will answer a few of your questions, and if you have any additional questions you should not hesitate to give me a call. I return all phone calls personally within 24 hours, and usually the same day.
So, the bank has filed a foreclosure lawsuit against you in McHenry County. What happens next?
Although you should have known it was coming, most people are blindsided when a process server or sheriff’s deputy knocks on the door to serve you with papers for the foreclosure lawsuit. When this happens to you, take a deep breath because it is not the end of the world, and you will not be homeless for at least the next 7 months (read this previous blog post I wrote outlining the timeline for your foreclosure case).
Once you have been served with papers, the first thing you need to do is pull out your calendar. The process server handed you one or more copies of two types of documents: the Complaint and the Summons. Here’s what your Summons will look like:
The first paragraph of the Summons commands you to “file an answer in this case, or otherwise file your appearance. . . within 30 days after service of this summons, exclusive of the day of service.”
Mark this date down on your calendar. The day you were served does not count as one of the 30 days. Therefore, for example, if you are served on November 1, 2014, the 30 day clock begins counting on November 2, and you need to file an appearance in writing with the Clerk of Courts on or before December 1, 2014. If the 30th day falls on a weekend day or court holiday, your appearance is due on the next day the Courts are open. Call the Clerk of Courts before you drive out to Woodstock to make sure the courthouse is open–(815) 334-4310.
Next, look at your Complaint. It will look like this:
Look at the red arrow in this picture. Mark that date down on your calendar, and make sure to go to court on that date. However, if you wait until this date to file your written appearance, you will be in default in the case and a judgment may be entered against you before you go to court. In practice it rarely happens, but it is a possibility. Do not ignore the date commanded by the Summons merely because the Complaint has your first court date written on it!
After your first court date, make sure to calendar every court date that is coming up. While I cannot guarantee that the judge in McHenry County will not pull the rug out from under your feet and end the case, you have a much better chance of avoiding an immediate foreclosure judgment if you show up to court for your case.
So, now that I know what deadlines I am working against, what can I do to stop my foreclosure?
Stopping a foreclosure is easy in theory and difficult in practice. When you missed the payments on your mortgage, the bank “accelerated” your loan which means that instead of having to honor the monthly payment plan that you agreed to with the bank, they can now demand that you pay the loan in full immediately. However, there are certain federal and Illinois-specific programs that the banks are bound by that an get you out of this jam. Let’s talk about your options in order.
Option 1: Pay off the mortgage in full including any accruing interest, court costs, attorney fees, and other charges.
Of course paying off the mortgage in full is an option, but if you had enough money to pay the mortgage off, you wouldn’t have been late on your payments.
Option 2: Defend the foreclosure in McHenry County court.
Defending the foreclosure only buys you some time to sort things out. You’re not going to “win” your foreclosure because a foreclosure case is not terribly difficult to prove: Did you take out a loan with the bank? Yes. Did you pledge your house as security for the loan? Yes. Well, then the bank is 99.99% of the way to what is has to prove in court. You are almost certainly not going to win unless the bank violated a federal law such as RESPA (rare) made a big mistake (super rare).
And, the downside of defending the foreclosure is that the time you gain is not free. Interest on the loan is still being added to the balance. The bank is still paying your property taxes and adding that amount to the balance. The bank has probably “force placed” insurance on the property, and the insurance they buy is about two to three times more expensive than what you could buy, and that amount is added to the balance. The bank’s attorney fees are added to the balance. The bank’s court costs are added to the balance.
Defending a foreclosure case can very quickly dig you a very deep financial hole, and for most people the only way out of that hole is bankruptcy. If you are not a great candidate for bankruptcy, defending a mortgage foreclosure case long is dangerous. That said, if you defend your mortgage foreclosure case and aggressively pursue other options such as a loan modification, short sale, or Deed in Lieu of foreclosure, the risk that you take to buy some time could pay off in the end.
Most people avoid calling a lawyer for their foreclosure because we all know that lawyers are expensive. You shouldn’t let this deter you. All of the lawyers practicing foreclosure defense know that you don’t have a lot of money (If you did, why would you be in foreclosure?) and are willing to work with you. I offer predictable, transparent, and reasonable pricing and a free initial consultation. If I can help you, great. If I can’t help you, you have only risked your time.
Option 3: Obtain a loan modification.
There are a number of mortgage foreclosure loan modification options available to McHenry County homeowners, both offered in-house by your bank and forced upon the banks by the federal and state governments (e.g. HAMP, HARP). I am not going to give an extensive run-down of these programs in this blog post because the programs and their eligibility requirements change on an almost monthly basis. By the time you read this blog post, the information about loan modifications will likely be stale. Give me a call if you want to know the current lay of the land. That said, almost all loan modification programs require the following things to be true:
- You do not qualify for a traditional refinancing of your mortgage.
- You have experienced a “hardship.”
- You are several months behind on your mortgage payments.
Pay attention to that last one. I have heard horror stories from my clients where they needed a loan modification and called up their lender and were told that they need to stop paying their mortgage to qualify. So, they stopped paying, applied for a loan mod, were denied, and lost their house to foreclosure because the person who answered the phone for the bank told them to do it. Before you do something drastic like intentionally stopping making payments on your mortgage to get a loan modification, you should talk to someone who knows what they’re doing.
Option 4: File a Chapter 13 Bankruptcy.
Nobody wants to file bankruptcy, but if you are behind on your mortgage and cannot make ends meet, it is not a terrible option. There are four main types of bankruptcy available to individual debtors. Chapter 7 and Chapter 13 bankruptcies are the most common for consumer debtors. Chapter 7 creates a straight discharge of your debts, including the money you owe on the mortgage. A Chapter 7 bankruptcy will not eliminate the lien on your house created by the mortgage, and your lender can still foreclose on your house to recover payment. Accordingly, Chapter 7 is not a great option if you want to save your house. It is a great option if you need to get rid of the house.
A Chapter 13 bankruptcy will enable you to propose a plan to pay off some of your debts over 3-5 years and will stop the foreclosure on your house. If, at the end of those 3-5 years the plan has not brought your mortgage current, the bank can foreclose again.
Conceivably, you do not need an attorney to file bankruptcy. You can file bankruptcy on your own or with the assistance of a professional petition preparer. Attorneys, in my opinion, are invaluable for the bankruptcy process because it is a complicated process and you will likely need legal advice at some stage of your bankruptcy case.
Option 5: Short sell your house.
A short sale is a process by which the bank agrees to let you sell your house (and release their mortgage) for less than the bank is owed. Short sales are not a lot of fun because they might not extinguish your personal liability for the difference between what the bank is owed and what it gets, they take a lot of work, and they add a third party to the negotiations (you, the buyers, and the bank). That said, short sales succeed all of the time. Most short sales are driven by the listing real estate agent. If you would like to short sell your house, give me a call and I can give you a referral.
Option 6: Obtain a Deed in Lieu of foreclosure.
If your house is underwater, the bank probably will not give you a Deed in Lieu. I ask for these in just about every mortgage foreclosure case I handle, and the bank has yet to agree to it. Don’t bet the house on obtaining a Deed in Lieu because you probably will be disappointed.
How an attorney can help.
I have successfully defended dozens of residential, commercial, and farm land foreclosures in McHenry County, Illinois and surrounding areas. I will sit down with you to evaluate your goals for the foreclosure case and help you pursue them. Every case is unique, and everyone has different goals. The best solution for you may not be outlined on this page. Foreclosure cases move quickly in McHenry County, and you need to act as soon as possible to preserve your rights. Schedule your free initial consultation today.