If Your Home Goes Into Pre-Foreclosure, What Are Possible Options To Save It?

If your home is in pre-foreclosure and your intent is to save your property, there are several viable and good options that our law firm can help you with.

Just to name a few, we can help borrowers and homeowners in pre-foreclosure to:

Obtain loan modifications
Obtain repayment plans
Negotiate discounted payoffs. These are agreements that allow you to pay off the debt at an amount less than what is actually owed.
Straight refinancing of the existing loan through a new lender.

There are many good options for someone to save their property, even if it’s in the pre-foreclosure stage. An experienced attorney can help you explore and pursue these options.

Can Loan Modifications Help Those Who are Further Down the Line Into Foreclosure?‍

If you’re on the path to foreclosure or if you’ve defaulted on your mortgage loan, a loan modification can definitely help you.

Loan modifications can help you get your loan back on track so that you can resume making monthly mortgage payments to your lender. More often than not, the loan modifications that we’re able to obtain for our clients actually lowers their total monthly payments. Regardless of how far along you are in the foreclosure process, a loan modification is a very important tool in our toolbox.

What Exactly is a Loan Modification, and Who are the Best Candidates for Them?

A loan modification, as the name implies, is a type of agreement that modifies the terms of a loan. The modified terms can include the interest rate of the loan, as well as the maturity date and the unpaid principal balance, among others. Through these modifications, we are often able to lower the total monthly payment amount that the borrower needs to make.

A loan modification is appropriate for any homeowner who is struggling with making their monthly mortgage payments, or who has already defaulted and missed one or more monthly mortgage payments.

Will a Mortgage Loan Modification in the Pre-Foreclosure Phase Give me a More Affordable Payment?

The objective of any mortgage loan modification is to lower your monthly mortgage payment and to make it more affordable for you as the homeowner. This makes modification a really good tool if you’re a homeowner and you’re struggling with the amount of monthly mortgage loan payments.

Will a Mortgage Loan Modification Extend the Life of my Loan?

A mortgage loan modification can sometimes extend the life of your loan. It should be noted that when we say “extend the life of your loan”, we’re really referring to extending the maturity date of the loan. Setting the maturity date of a loan further out “extends the life” of the loan, meaning you will ultimately make a larger number of payments that cost less individually rather than a smaller number of payments that cost more individually. This is one easy way to help homeowners lower their monthly mortgage payments and make mortgages generally more affordable.

What Happens After COVID-19 Related Forbearance on my Loan Expires?

After COVID-19 forbearance on your loan expires, there are several things that could potentially occur, depending on your lender and the investor on your loan. In some cases after forbearance expiration, we have seen lenders pursue lump sum payment. That is, certain lenders very unreasonably demand that homeowners pay all of their arrears in one lump sum.

Another option we have commonly seen offered after forbearance expires is loan modification. In that scenario, you would continue making your regular monthly payments, but they would be increased each month to cover the past due amounts.

Yet another option would be payment deferral. In that scenario, the lender typically puts the past due amounts at the very end of the loan, where you’ll have to deal with those sums as a balloon payment.

Perhaps the best scenario after COVID-19 forbearance expires would be to try to get a loan modification where the loan itself gets restructured. With this sort of restructuring, those past due amounts can be re-amortized, meaning that sometimes they can be for given and sometimes they can be pushed to the very end of the loan. Bottom-line, though, your monthly mortgage payments would be reduced in this scenario.

Can I Still be Foreclosed on During a Loan Modification?

Generally, you cannot be foreclosed on if you’re in the process of a loan modification. The loan modification has the effect of curing any existing defaults, and it also has the effect of de-accelerating your loan so that the lender is able to start accepting regular monthly mortgage payments from you.

For more information on Foreclosure Law in Illinois, an initial consultation is your next best step. Get the information and legal answers you are seeking by calling (312) 600-8815 today.
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