The mortgage payment is often an Illinois resident's largest monthly
expense, and an unexpected illness or layoff may make meeting this obligation
a challenge. While lenders may initiate foreclosure proceedings when a
mortgage becomes seriously delinquent, they may also be receptive to a
number of alternative strategies.
One possible alternative to
foreclosure is a partial claim from the FHA Insurance fund. This could bring an FHA
mortgage current for property owners who have fallen behind but are able
to continue to make full mortgage payments thereafter. Lenders may also
be willing to agree to a special forbearance. In this type of arrangement,
lenders agree to lower payments for a specified period, or they may suspend
payments altogether, to assist a property owner who has suffered a temporary
A loan modification refinances the mortgage balance. This may reduce mortgage
payments to a more affordable level by reducing the loan's interest
rate or extending its term. However, property owners must qualify for
a modification and demonstrate that they will be able to meet the payments.
A pre-foreclosure sale, which is also known as a short sale, involves
a property being sold for less than the amount of the outstanding mortgage.
A lender may consider this option to avoid foreclosure costs. With a deed
in lieu of foreclosure, the property owner surrenders the property to
The threat of foreclosure can cause a great deal of stress for those already
struggling with a difficult financial situation. While alternatives to
foreclosure may seem attractive, they generally require the agreement
of the lender, but this may be difficult to secure in certain situations.
An attorney with experience in this area may explain the benefits of the
various foreclosure alternatives as well as options such as a Chapter
13 bankruptcy filing.
Alternatives to Foreclosure
Source: Findlaw, "
Foreclosure ", November 18, 2014