Know your legal rights if sued for foreclosure
If you have been served with foreclosure papers, you have several legal rights that may help you work out a settlement with the lender.
“The first step should be to contact a lawyer who is experienced in foreclosure matters to help you determine what options may best help you fight the foreclosure,” says John G. O’Brien, 2009-10 president of the Illinois State Bar Association (ISBA) and a real estate attorney from the Chicago suburb of Arlington Heights.
O’Brien states that one option is the right to reinstatement or catching up on your missed payments, which must be completed within 90 days from the date of the foreclosure action. In addition, you must also pay the mortgage company’s attorney fees and court costs. If you reinstate the mortgage, the lawsuit is ended, and your mortgage remains in effect.
“Those who choose this action should be aware that it can only be used once every five years,” O’Brien says.
Another option to dealing with foreclosure is to file for bankruptcy. This automatically stops the foreclosure while the bankruptcy case proceeds.
A third option is the right of redemption or paying off the entire loan. “You have seven months from the date you are served with the foreclosure notice or within three months from the date of entry of a foreclosure judgment,” states O’Brien. “This can be a tough option for someone who is already financially strapped,” O’Brien continues. “The homeowner must pay off not just the entire balance but all the interest owed, as well as attorneys’ fees and court costs.”
Even after a foreclosure has been filed against you, you can continue to live in your home without further payments until the period of redemption expires, according to O’Brien. After that, you may stay in the house until 30 days after the confirmation of the judicial sale – if you pay a fair amount for rent.
“On occasion, the new home owner will agree to lease the home back to its former owner,” says O’Brien. “It’s certainly an option that would allow you and your family to remain in the home.”
There are also several government options available to help stave off foreclosure. For further information, visit the U.S. Department of Housing and Urban Development at www.hud.gov or contact your attorney.
Note: This information was prepared as a public service by the Illinois State Bar Association and is a joint project with the Illinois Press Association. Its purpose is to inform citizens of their legal rights and obligations.