What is a Pre-Foreclosure in Chicago?

With millions of homes across the country going into foreclosure, it’s important for both buyers and mortgage holders to understand the process.

So what is a pre-foreclosure in Chicago anyway?

Many homeowners across America and Chicago are facing difficulties making their monthly mortgage payments.

When a homeowner misses 3-6 months of mortgage payments, the lending institution will issue a warning, notifying the homeowner to pay or lose their home. This period is known as “pre-foreclosure.”

Banks and mortgage lenders typically provide three months for the homeowner to become current.  Of course, the rules have changed as the corona virus pandemic has taken place and most lenders are currently allowing borrowers to enter a forbearance plan which will allow to temporarily not make payments on your mortgage until you are able to (assuming you don’t exceed 12 months on no payments).

If a homeowner fails to make the necessary payments, the bank will foreclose on the home, assuming ownership, and evict the homeowner. Thankfully, during this stage of the foreclosure process, a mortgage holder has the opportunity to take advantage of several options to prevent losing their home.

Pre-foreclosure Options for Borrowers

If you’re behind on mortgage payments, you’re likely to receive a “notice of default” from your mortgage lender.

This document will state that you have not made mortgage payments for the last 90-180 days. It’s important not to panic.

You have options that can delay or even prevent losing your home:

  • If your mortgage is “above water,” (meaning you have equity in your house) you may be able to refinance your mortgage, receiving lower monthly payments.  Check with your local Chicago mortgage broker… or contact us and we can connect you with a reputable one.
  • You may be able to quickly sell your home to a real estate investor that’s reputable in Chicago like us at Blue Ladder Development, using the cash acquired to pay the months of back-payments owed (or we *may* be able to work out something with the lender that relieves all or part of your back payments.We can buy your Chicago IL area home quickly, often in just a week or two, will pay in cash, and takes the stress out of trying to find a buyer.
  • You can contact the bank and ask them to permit a short sale. In a short sale, you’ll sell your home for less than it’s worth, and the bank will take the loss as a tax write-off.  In some short sales you may still be required to pay the difference to the bank if the house doesn’t sell for what is owed on the loan.
  • You may be able to declare bankruptcy, which can buy you time to pay your debt. Bankruptcy will remain on your credit report for years, and can cause significant damage.

Lenders are very much aware of the widespread financial troubles across the country and they’re willing to work with borrowers a lot of the time.

If you’re honest and communicate with your lender, you’ll often find that there are options that will allow you to remain in your home, or at least salvage your credit rating.

A foreclosure can often negatively affect your credit score by 200-400 points and can prevent you from obtaining a loan of any sort for 5-7 years.

So be responsive when you receive a notice from your lender and communicate your inability to make payments. Let them know that you intend to work with them on finding a resolution that is acceptable for everyone. Unfortunately, many people decide to never respond to communication sent from their lender and put themselves into an even bigger hole at the end of the process.

Remember that your credit rating will be evaluated by a third party on the next place you intend to move to so it is important that you do everything you can to keep as high of a rating as possible. A low credit rating will severely limit your housing options in the future and having a default judgement on your credit history may also scare away many landlords from approving your lease.

But if you’re not able to find a solution with your lender working directly with them… connect with us. We may be able to help.

Ways We Can Help If You’re In Pre-Foreclosure

  • We can potentially help with a short sale – Submit your info on this website so we can evaluate your situation to see if we can help.
  • We can buy your Chicago area houseWe buy houses in Chicago and would love to make you an all-cash offer on your house too. Just fill out the form here to get started >>
  • You can ask us questions and we can provide you FREE guidance and resources so you can make a well educated decision. This costs you nothing, there’s absolutely no pressure, no obligation… just free guidance without a catch.

If you’re in the pre-foreclosure stage… you’ve still got time to fix this situation.

Just connect with your bank to see if they’re willing to work with you… or contact us if you’d like to see what we can buy your house for or to tap into our free foreclosure foreclosure resources.

Want To Discuss Your Pre-Foreclosure Options? Call Us at 630-387-6861
Or, Submit Your Info Here To Get A Cash Offer On Your House >>

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