Foreclosures in the Chicago area are at an all time high and because the filing of the foreclosure by the mortgage company is a matter of public record, real estate “scam artists” are alerted.
Be aware of the “buyer” who approaches you and offers to get you out of financial trouble. The ‘buyer’ promises to pay off your mortgage or give you a large sum of money when the property is sold. The “buyer” often suggests you move out quickly and that you deed the property to him or her. The “buyer” then collects rent, does not make any mortgage payments, and allows the mortgage company to foreclose. This type of scam is called equity skimming.
Signing over the deed to someone else or quit claiming the property to another person does not necessarily relieve you of your obligation on the mortgage or stop the foreclosure.
Groups or organizations calling themselves “counseling agencies” or so-called “home saver organizations” offer to perform services for a fee. These may be services you can do for yourself, at no cost, such as applying for HUD’s assignment program or a pre-foreclosure sale procedure or negotiating a forbearance payment plan with your lender to help save your home. If you have any doubt about whether to agree to pay for such services, call HUD-Approved Housing Counseling Agency.
Be especially cautious of mortgage brokers who offer refinancing, requiring an up-front fee. Most will string you along during the foreclosure process and just before the sale date will advise you that they can’t help.
When the homeowner falls behind on mortgage payments, the mortgage company has the right to foreclose on the property. Once the foreclosure is filed, the mortgage company can add court costs, attorneys’ fees and interest each month until the process is completed or the mortgage reinstated. The homeowner has seven months after service of summons or publication before going to sale. Up until this time the homeowner can generally reinstate the mortgage by coming up with all arrears, costs and attorneys’ fees, refinance or sell the property. If none of these approaches are feasible, the sheriff will have the right to sell the property to any third party who might be interested and if no third party bids are received, the mortgage company will generally bid in for their balance and acquire title. If the homeowner hasn’t already moved out, eviction by the sheriff’s office will shortly take place.
Chapter 13 of the Bankruptcy Code can stop the foreclosure, provided it is filed before the sale takes place and the homeowner is eligible having the ability to make current mortgage payments and catch up on mortgage arrears within three to five years.
Chapter 13 may also extend and lower other installment obligations including car notes, credit cards, furniture and medical bills, parking tickets and IRS obligations. If the homeowner does not have sufficient income to fund a
Chapter 13,
Chapter 7 of the Bankruptcy Code may be of help. Filing
Chapter 7 will not save the home, but it will get rid of all of the mortgages and most installment obligations as well as obtaining a little more time for the homeowner to vacate the premises. Most importantly, the IRS will no longer be able to assess the homeowner the balance of the mortgage as earned income. You must assert your rights and act quickly to deal with the problem as it’s not going to go away by itself.
