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Banks are still ruthless when foreclosing on homes

It’s been 10 years since the start of the Great Recession, when the housing crisis across Illinois and the nation was on the nightly news. As businesses shed jobs, millions of homeowners faced the reality of foreclosure or selling their homes short. Banks ended up with millions of devalued properties on their books. As Cook County emerged from the recession along with the rest of the country, jobs returned but the former homeowners were locked out getting a new mortgage because of a foreclosure on their record. Now, years after the recovery, banks still hold the title to millions of homes, on which they are paying property taxes. But bankers aren’t in the business of selling any foreclosed or repossessed property for anything less than the full value they can get from a buyer.

 

Are banks backing off on foreclosures?

One would think that the banks and mortgage lenders might be a little reluctant to continue to add residential homes to their portfolio of assets. The reality though, is that the rate in 2018 in Will County is still running as high as one out of every 471 homes. In Kendell County, the rate is only slightly better at one in every 554 homes. Even in more affluent counties in the Greater Chicago metropolitan area, such as Cook (1/850), De Kalb (1/1051) and DuPage (1/1286), facing foreclosure is still a very real threat to homeowners who fall behind on their payments. In short, the number of foreclosures may be down, but it’s not because the banks are any less aggressive; it’s because property owners in the neighborhoods have been able to hold onto their jobs.

What are homeowners options when facing foreclosure?

The time to start looking into options for avoiding foreclosure is when YOU know you are in too deep. Don’t wait for the bank to tell you. Bankruptcy attorneys report that most of their clients admit to juggling their monthly credit card bills a year or more before considering bankruptcy. Their house payment is the last thing to get thrown into the juggling act. It is not unusual to skip a mortgage payment in order to keep the juggling pieces up in the air another couple of months. If that sounds like you, it is probably time to admit to yourself that a foreclosure letter may be in the mailbox soon.

According to homeownership.org, a 501(c)3 nonprofit organization supporting homeownership there are concrete steps to take before and after receiving a foreclosure notification:

  • Do whatever you can to continue to pay the loan. Every payment you can make will be viewed as good faith toward wanting to keep the house, in the event of legal action taken by your lender.
  • If your monthly house payment amount is causing the problem making ends meet, discuss refinancing to a lower rate, if available. However, keep in mind closing costs and other fees that will be added to the refi.
  • Meet with your current lender to discuss a loan modification. But don’t expect to get a positive answer on your own. Coming prepared with legal representation often strengthens your position.
  • Discuss the possibility of a repayment plan workout for the amount of arrears you owe. This will require you to remain current with all monthly house payments going forward.
  • Discuss the possibility of receiving a forbearance due to very specific financial circumstances, such as dealing with a critical illness or injury.
  • File for bankruptcy but exempt your house by ‘reaffirming’ to continue to pay the mortgage on time each month. Be eliminating other debt, many homeowners are able to meet their monthly house payment.

If it’s the loss of a job that caused the problem, finding another job quickly may help bring in the income, but it may not get you caught up in time with the debt payments you owe. It may be best to accept that your financial circumstances are not likely to change enough to dig yourself out of the medical bills, credit cards and student loan debt that often contributes to the problem. Discuss your concerns with an attorney or financial organization that specializes in helping people get out of debt.

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