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  • Will the owner have to bring any money to the closing?
    Maybe. All closing costs/expenses are subject to the approval of the short sale lender. Occasionally, the lender will not cover necessary closing costs. If this occurs, the owner will have to pay this amount at closing. Generally speaking, these amounts are quite small and may (but not always), represent an unpaid water bill or unpaid homeowner’s association dues and/or liens and fees.
  • Will the lender make the owner legally responsible for the amount they forgive?
    Maybe. Not all short sales are handled the same. Every short sale is unique as DNA. While we try to negotiate a “full forgiveness” short sale where there is no further owner liability, sometimes this is not possible. Sometimes the lender will only allow a lien release, meaning they will allow the owner to do the short sale but hold the owner responsible for the deficiency amount. The good news is that most lenders really work with the owner if there is a lien release, and this amount can be negotiated downward considerably in most instances. Also, occasionally, the lender may require the owner to sign an unsecured, interest-free, promissory note for some of the deficiencies. Again, this note can normally be negotiated even further after the closing.
  • Who pays the realtor's commission, attorney fee, title insurance and property tax pro-rations?
    These fees are approved and paid by the short sale lender. The short sale lender may not approve all fees and commissions requested.
  • What should I expect on closing day?
    In real estate, the words “closing” and “signing” are considered synonymous. Expect there to be plenty of reviewing and signing of documents since the closing of a home is a very detailed and complex transaction. Your attorney will be there to assist you and take the lead by explaining to you all of the documents you need to sign. Here is what generally happens at a closing: • The ownership and property title are transferred over to the buyer’s name • The title company will send the new deed to the county to be recorded, and the buyer will be registered as the new official homeowner • The buyer will be expected to bring a cashier’s check or certified check for any of the remaining closing costs • Your attorney and real estate agent will collect his or her commission of the transaction through the settlement statement issued by the title company • The seller will collect the proceeds of the sale after his or her mortgage and closing fees are settled
  • Why did the seller reject my offer?
    While it’s not always clear why the seller rejects an offer, here are a few common reasons why offers on homes are declined: • The seller may have a grandiose idea about the value of his or her home • Your offer is lower than other interested buyers • You may not meet the seller’s preferred financing requirements • The desired closing time frames may not align between you and the seller • The seller may consider your repair requests unreasonable • The seller may have an underlying motivation that’s difficult to discern
  • I just made an offer to purchase a house. Now What?
    The real estate purchasing process begins simply enough. After long hours of searching for the right home to buy; your real estate agent will write a contract that you will sign. This constitutes the “offer” to the Sellers. Hopefully, the Sellers accept the offer by signing the contract and inserting a date of acceptance. No offer should be submitted without careful consideration of the attorney’s role in the transaction. Just about all “standard” real estate contracts contain “attorney approval” or “attorney modification” clauses. Significant differences exist among the approval and modification clauses in the many “standard” form real estate contracts commonly used in Northern Illinois. Some allow a buyer to easily “escape” a deal, while others can make the process much more difficult. It is an urban myth that Illinois law provides a “five day recession period” for real estate contracts. Each buyer’s contract will govern the ability of the buyer to terminate the contract. While an attorney would prefer to examine a contract prior to the submission of the offer, no offer should be submitted unless the contract at least contains an attorney approval or modification provision and the buyer understands the terms, rights, and limitations of such a clause. The buyer’s attorney will review the contract to insure that the contract does not take advantage of the buyer as well as resolve any potential ambiguities. The attorney typically focuses on the purchase price and personal property included in the sale, the mortgage contingency clause, the inspection clause, and the clause that governs penalties for default. In addition, the lawyer will make sure that the various prorations (taxes, rents, association dues, etc.) are fair to the buyer, and that the seller has provided the required disclosures (as to the condition of the property, radon hazards, and in some cases as to the status of lead paint in the home) and warranties. Normally, a contract will also contain the right to conduct a professional home inspection within five (5) business days of the date of acceptance. Inspection clause provisions vary from contract to contract. Some allow the buyer to request repairs be made to the property, some require that repairs exceeds a certain dollar amount and others merely allow the buyer to cancel the deal because the condition of the property is found to be unsatisfactory. The buyer’s attorney will assist the buyer in negotiating with the seller’s attorney regarding repairs. Once the modification and inspection periods pass, the buyer’s attorney will help the buyer manage the mortgage/financing contingency. Most contracts contain a “mortgage contingency” clause, a provision which allows the buyer to lawfully cancel a transaction if the buyer cannot obtain a loan that satisfies the terms of the mortgage called for by the contract. The attorney will stay in contact with the lender to determine the conditions necessary to be satisfied to obtain the loan commitment. The attorney will also request an extension of the financing contingency if necessary. The final tasks of a buyer’s attorney before the closing include negotiating any problems that arise during the final inspection/walkthrough, reviewing title company figures and insuring that the buyer knows everything necessary to bring to closing. At the closing, the lender will generally email or deliver a “package” containing the loan documents to the title company. This package is comprised of many documents, including the note and mortgage and as many as sixty to one hundred pages of documents disclosures and agreements. The buyer’s attorney will review these document, point out important terms and protect the buyer’s rights against the lender. The Seller will also come to the closing with a package of documents, including, most importantly, the deed to the property. The buyer’s attorney will scrutinize these documents to make sure that the buyer is purchasing and the seller is conveying the correct property, that all taxes and liens are paid, and that title is cleared and insured by the title company. This usually involves a review of the documents and a survey provided by the Seller. Mistakes made in this process may cause somebody else to end up owning legal title to the home just purchased by the buyer. The services of an experienced real estate attorney greatly reduce the likelihood of problems, issues and delays and provide an experienced guide to this very long and complex process.
  • My lenders are trying to collect a deficiency judgment against me from a short sale or foreclosure, Now what?
    The bad news is that some short sales don’t come with a full forgiveness of the balance owed to the lender. If your short sale was “lien release only” the lender reserved the right to sue you for the balance of the mortgage. They merely allowed you to sell the house by releasing their lien. When they released their lien, they didn’t release the balance of the mortgage. Also, some short sales required you to sign a “promissory note” to the lender for some or all of the mortgage/loan balance. Worse yet, if you were foreclosed upon, the lender can take a “deficiency judgment” against you for the difference between your mortgage balance at the time of the foreclosure and the amount they netted after they sold the property as bank owned/REO property. The good news is that an experienced short sale attorney can help you to negotiate these types of debts with the lenders. Since these debts are unsecured, we have had great success in reducing and resolving these matters for much lesser amounts.
  • My house just came under contract to sell. Now what?
    Most contracts used by the various real estate boards in the greater Northern Illinois area carry a five day attorney modification and approval clause. Once the attorney for the Seller receives the contract that has been signed by all parties, the attorney will conduct a thorough review. In reviewing a contract, a seller’s attorney will determine that the buyer’s earnest money is sufficient, the buyer’s mortgage terms and time frame to acquire a mortgage are realistic to ensure that the home is not off the market for too long. Additionally, the seller’s attorney will review the requested property tax prorations to confirm that the credit that the seller must give to the buyer at closing is calculated fairly. Assuming all modifications are agreed to by the parties, the buyer will most likely conduct an inspection. The seller’s attorney will negotiate the inspection issues with the buyer’s agent or attorney keeping in mind that most contracts carry set parameters regarding inspection requests. The next step in the process is confirming that the property is free of liens. This is accomplished by the seller’s attorney ordering a title search. The search will state if there are any liens on the property that must be cleared in order to close. An example of this could be a credit card judgment which would prevent a seller from closing unless it was paid. Other examples are requirements from municipalities such as transfer taxes and inspections and requirements of homeowner’s associations. If required by the contract, the seller’s attorney will order a survey. The survey will disclose if there are any potential boundary issues or encroachments that need to be addressed in order to close. A common example of this is a storage shed that may be over a building line or on an easement. In most instances, the attorney for the seller can resolve this problem by working with the title underwriter so that the issue is “insured over” by the title company at closing. The seller’s attorney will also monitor the buyer’s financing. This includes speaking to the buyer’s lender regarding any remaining conditions regarding the loan. Once the buyer’s financing is in place and the title is clear, the attorney will prepare the various documents required to transfer title at the closing. This includes a deed, bill of sale, affidavit of title, ALTA statement, closing statement and any other various documents required. This list could include substantially more documents depending upon the nature of the transaction! It is not necessary for the seller to be present at the closing as seller’s attorney can arrange for a power of attorney and/or for all documents to be pre-signed in advance of closing. The transaction will then be scheduled to close. At closing, the buyer’s attorney will make sure that all documents are properly executed by the seller, answer any questions or concerns of the buyer, and settle any contractual disputes or problems that arise. The buyer’s attorney will be checking the seller’s attorney’s work to determine if it accurately conveys title to the buyer. Using an experienced real estate attorney greatly increases the likelihood of a smooth and issue free closing.
  • How do lenders determine what sale price to accept?
    Most lenders will request a BPO (Broker’s price opinion) or full appraisal of property. In some cases they will use a drive by value or a fair market analysis, which is a comparison of three homes in a similar neighborhood that have sold in the past three months.
  • In Illinois, what happens if the owner just lets the property be foreclosed upon?
    Illinois is a “recourse state” for mortgages. This means that after the sheriff’s sale, the lender will market and sell the home as bank owned property. Once the sale occurs, they will seek a deficiency judgment against the former owner. This judgment represents the difference between the amount that was left on the mortgage and the amount the lender netted as a result of the sale of the home to a third-party. These judgments are often extremely large. Once a lender has a deficiency judgment, they can garnish wages, freeze and seize bank accounts, place liens on any other real property in the owner's possession. The judgments are good for seven years and then can be renewed for an additional three years. Keep in mind that a foreclosure has a major negative effect on the owner’s credit report for a very long time.
  • Is it possible the bank made a mistake regarding the foreclosure lawsuit?
    Yes, Chase, Wells Fargo, Ocwen, and other lenders have recently settled class action lawsuits regarding the improper processing, signing, and / or filing of foreclosure suits.
  • If I am served with foreclosure paperwork requiring an answer or appearance, what should I do?
    Due to recently enacted Illinois Supreme Court Rules, you have certain rights that can only be exercised if you have filed the appropriate paperwork with the Courts.
  • My property is scheduled to be sold at a sheriff’s sale. Can I stop the sheriff’s sale?
    Under certain circumstances, a sheriff’s sale can be postponed. Generally speaking, this will require the file of a motion before the judge who entered the Judgment of Foreclosure.
  • I have tried to work with my lender to prevent the foreclosure suit from being filed. The lender has ignored my efforts. Do I have any rights or recourse because my lender has ignored my efforts?
    Yes, there are formal mechanisms in place to lodge complaints against non-responsive lenders that must be investigated by a federal government entity.
  • I was never personally served with the foreclosure lawsuit. Do I have any recourse?
    You may have some recourse under certain circumstances.
  • I have been served with a notice of a sheriff’s sale, what does this mean and do I have to leave the home?
    The sheriff’s sale is the final phase of foreclosure. However, you don’t necessarily need to vacate the property prior to or even after the sheriff’s sale. You have rights even after the sheriff’s sale has occurred.
  • I haven’t paid my mortgage for many months. Is there a way to determine whether a suit has been filed?
    Yes, we can search the records to determine if a suit has been filed. We can also determine the status of the suit.
  • Once the bank has filed a foreclosure suit, is it too late to save my home?
    No, the foreclosure process can take months and sometimes years to complete. During that time, there are steps that can be taken to save the property.
  • Can an owner profit from a short sale?
    The seller cannot receive any proceeds from the sale of the property in a short sale transaction. However, there is one exception. If the owner’s mortgage qualifies for HAFA, the owner may receive up to $3,000 at closing. HAFA is a governmental program that stands for Homeowner Affordability and Foreclosure Alternatives.
  • How late in the foreclosure process can you start a short sale?
    A short sale can be considered even if the property is in foreclosure litigation. If there is a foreclosure sale scheduled, it will be up to the lender to postpone the foreclosure sale to consider the short sale.
  • What is a short sale?
    A short sale exists when a seller would be forced to bring cash to a closing, as the probable sale price for the property is less than the mortgage payoff and sellers cost to close. Lenders do not provide discounts to buyers and want perceived fair market value. Investor buyers are not normally the best purchase for short sales. Additionally, a short sale must be an “arms length transaction” and can’t involve related parties.
  • What is the effect on the seller’s credit when they are approved for a short sale?
    The credit report normally reflects “paid satisfied,” but there could be a notation that says, “less than full amount accepted” or something similar. It is obviously more favorable for a homeowner to have a short sale on their credit as opposed to a foreclosure.
  • Will the short sale create IRS consequences?
    If the home is your primary residence, you will not have to pay taxes on the difference between the amount accepted by the lender and the mortgage payoff. If the home doesn’t qualify pursuant to the current IRS definition of “primary residence,” the owner will receive a 1099C for the forgiven amount.
  • How do bankruptcies affect the possibility of doing a short sale?
    Lenders cannot consider a short sale if the borrower is in an active bankruptcy. The bankruptcy would have to be discharged or dismissed prior to the lender considering a reduced payoff.
  • What information is required by the seller's lender to consider a short sale?
    Most lenders require full financial disclosure from the seller. Some or all of the following are required: hardship letter, two years tax returns, three recent paystubs and bank statements, along with a written authorization for your attorney to speak with the lender. The lender will also want the owner to provide a financial statement detailing assets, liabilities, income, and obligations.
  • I need to evict somebody, Now what?
    Landlords may evict tenants for various reasons including, nonpayment of rent, violations of lease terms, or for the improper possession of property after a tenancy has terminated. Eviction actions are strictly governed by the Illinois Forcible Entry and Detainer Act (735 ILCS 5/9-101). If the tenant will not voluntarily vacate, the landlord may be forced to evict the tenant through a “forcible entry and detainer” lawsuit. Self-help is not an option for landlords in Illinois. The Forcible Entry and Detainer Act governs all eviction proceedings. If it is not strictly followed to the letter, you will not be able to successfully evict your tenant. While landlords commonly face many issues when a good tenant goes bad; the most important issue is normally removing the tenant from the premises. This can only be accomplished by an “order for possession.” The “order for possession” is granted by the judge as a result of an action brought by the landlord for Forcible Entry and Detainer. When the order for possession is granted, the tenant is given a date that he/she must vacate the premises. If the tenant fails to vacate the premises by said date, the landlord must enlist the services of the County Sheriff to enforce the “order for possession.” Generally speaking, judges will also enter a judgment for back rent, court costs and reasonable attorney fees concurrently with the entry of the “order for possession.” However, these items have to be requested in the appropriate manner or they won’t be granted. Unfortunately, evictions can be lengthy. Because tenants have to be served all notices and lawsuits in the appropriate manner; delays sometimes occur due to the inability to serve the tenant. As the courts handle many evictions, getting a court date can also cause delays. If the tenant contests the eviction and/or requests a trial, more time will elapse until the matter can be resolved. As evictions are procedurally intensive; they shouldn’t be undertaken by anybody not intimately familiar with the statute. Attempting to pursue an Illinois eviction matter without an attorney could lead to your case being dismissed and for you having to reinitiate the entire process from square one. While we recognize that many tenants have legitimate disputes with their landlords; our evictions practice is strictly limited to the representation of landlords. An experienced evictions attorney can make the eviction process smoother and hopefully, less frustrating.
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