Chicago Foreclosure Attorney Can Save Your Home With Loss Mitigation

13-Mar-2011 By definition loss mitigation is when someone helps a homeowner prevent foreclosure. Chicago foreclosure attorneys are trained in all the potential options available to the homeowner. These options are not all going to help the homeowner keep their home however it will help them avoid foreclosure and the ramifications that come with it.

The most commonly discussed forms of loss mitigation are short sales and loan modification.

A short sale is when the lender agrees to allow the homeowner to sell their home for less than what is owed on the mortgage. It is required that without this reduction in price the homeowner would not be able to sell their home. A short sale will affect the credit of the homeowners but not as dramatically as a foreclosure would.

Loan modification is an option for someone who is hoping to retain their home but is unable to keep up with current payments. If a homeowner qualifies for loan modification by the standards of the creditor they will be given some assistance by way of an interest rate reduction or fixing an interest rate, reducing the principal balance or increasing the loan term to decrease payments. They also may waive fees or penalties that may have built up. Another form of loan modification could be a special forbearance. This is when the lender allows the debtor to stop making payments for a set period of time. After the debtor is able to resume payments the life of the loan may be extended to make up the difference or the loan may simply be adjusted for that amount. Ultimately a lender stands to collect more in the end if they are flexible with the loan. They would rather you keep paying than foreclose on your property.

These are solutions you may expect to hear from your foreclosure attorney in Chicago. In addition they may suggest some of these less common solutions, short refinance, deed in lieu (DIL) or cash for keys.

A short refinance is when the creditor reduces the principal amount so that your loan can be refinanced by another lender. This would be necessary if the owner does not have enough equity to qualify for a refinance without this assistance.

DIL is basically when a homeowner agrees to give back their home. They hand over their home as collateral for the loan and stop making mortgage payments. This would only be allowed if the creditor was confident that the homeowner was unable to make their mortgage payments as agreed upon.

Lastly, cash for keys is similar to DIL but it is when a creditor pays the homeowner to leave their home quickly and without damaging the property. The benefit to the creditor is that they can save money by avoiding the eviction process and they can prevent any damage to the home by disgruntled homeowners.

Every lender has different considerations for loss mitigation. Hiring a qualified Chicago foreclosure attorney will ensure that all these options are considered and the most fitting is presented to your lender. Even if you are unable to keep your home these options put you in a better financial standing than foreclosure would.

Chang and Carlin
The content found on the Chang & Carlin site is not legal advice and is purely for informational purposes. The information contained herein is not a substitute for the advice of an attorney and does not create an attorney-client relationship. If you are interested in obtaining information about chapter 7 bankruptcy, chapter 13 bankruptcy, foreclosure services, real estate legal services, you are encouraged to call our law firm at 866-790-8601 or Request a Free Legal Evaluation. Chang and Carlin serves clients in Chicago, Schaumburg, Joliet, Warrenville, Waukegan, Illinois.