Options for Avoiding Foreclosure in Plainfield, IL

By
Real Estate Agent with Steve Roake Homes - Keller Williams Realty Infinity

So many people today are in foreclosure in Plainfield.  There are 3 million more expected in 2010.  Half of the people in foreclosure have no idea that they have any options.

I've started sending out letters to people in preforeclosure and the response has been fairly good.  In just over 150 letters sent out I've had 3 appointments.  No listings yet, but I'm sure its only a matter of time. 

Options To Avoid Foreclosure*

1.  Loan Modification.  Get an attorney to contact the bank and take this over for you.  Most people who try to do it on their own give up because banks don't seem to want to do this.  A loan modification on a $200,000 home could save $150 per month with only a 2% reduction to the interest rate.  The only drawback to this strategy is that 52% of loan modifications are back in default after 9months.

2.  Sell the house and bring cash to closing.  Definately works if you have the resources.  Unfortunately, for anyone who has been in their home for less than 10 years, its likely that the amount that would need to be paid at closing could be 25-50% of the value of the home.  I don't know too many people who would or could pay more than a few thousand dollars to sell at a loss.  Credit scores, however, would be maintained.

3.  Short sale.  Sell the house and don't bring any cash to closing.  The lender(investor) forgives any debt that remains after the house is sold and the proceeds applied to the debt.  In most cases, the seller does not owe the bank and does not have to pay taxes on the forgiven debtGood news is that this process seems to be getting better for most banks (even Bank of America).  The drawback is that there is likely going to be 50 point or so reduction to the credit score in addition to whatever reductions were made by missed payments.

4.  Deed in lieu.  Useful if the home can't be sold.  Advantages would be similar to short sale and the bank would get ownership of the home much quicker (and usually in better condition) than if it went to foreclosure. 

5.  Foreclosure.  The trustee in the foreclosure case will schedule an auction to attempt to recoup the amount owed on the loan.  Any amount remaining can be entered as a deficiency to the homeowner and wages could be garnished, etc.  Credit scores will get a 200 point or so reduction and the homeowner will not be able to buy another home for 7-10 years.  Clearly, the worst outcome for the homeowner.

 Foreclosure resources in Powerpoint presentation.

Now that the options are laid out, how does one know what to do?  Consult an attorney, Realtor, tax advisor or other professional to explore which option would work best in your situation. 

For help in Plainfield, Joliet, Shorewood, Oswego, New Lenox, Lockport, Mokena, Tinley Park, Orland Park, Frankfort and surrounding areas, please go to my website for contact information. 

 The Illinois Housing Development Authority and HUD also have links for resources to counseling options.  These are more beneficial if your loan is owned by Freddie Mac or Fannie Mae.

 

*The foreclosure process varies from state to state and options may vary.

 

Posted by

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Steve serves the real estate needs of buyers and sellers in Shorewood, Plainfield, Joliet, Crest Hill, Romeoville, Bolingbrook, Oswego, Minooka, New Lenox, Aurora, Naperville and NW Will County.  Specializing in short sales, investment properties and first time home buyers, Steve attacks problems with a tenacious outside the box approach and keeps working where many others would have given up.   

To learn more visit www.getmovingwithsteve.com.  Specializing in Shorewood IL Real Estate, Plainfield IL Real Estate, Joliet IL Real Estate, Minooka IL Real Estate, Channahon IL Real Estate, New Lenox IL Real Estate, Oswego IL Real Estate, Bolingbrook, IL Real Estate, Romeoville IL Real Estate, Naperville IL Real Estate and Homes For Heroes Affiliate - Learn more or Register at PlainfieldHeroes.com 

 

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Mary Jo Thomas
Solutions Real Estate - Phoenix, AZ

Hi Steve,  Thank you for the post.  Good information to get to the homeowner since so often they don't know what choices they may have.

Mar 30, 2010 06:36 AM #1
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