Recently our firm was hired by a homeowner in Chicago, Illinois who needed help saving her home from foreclosure. To protect her privacy, I'll call this client “Ms. Campbell”.
Ms. Campbell's home was scheduled to be sold in a foreclosure auction in March, 2018. She hired us in January. Retaining an experienced law firm like ours that has a record of helping people in her situation was the smart thing to do, but it's better to do so before a sale date is scheduled.
With so little time until the scheduled foreclosure sale, would we be able to save her home?
Unlike most people facing foreclosure, Ms. Campbell wasn't past due on her mortgage payments. She doesn't even have mortgage payments. She was facing foreclosure on her reverse mortgage, which takes advantage of the equity she had in her home.
A reverse mortgage, also known as a home equity conversion mortgage (HECM), allows an elderly homeowner to convert the equity they have in their home into cash without having to sell their home. A homeowner can get a reverse mortgage and receive a lump sum of cash, monthly payments, or a line of credit that can be used for home improvements, medical costs, or anything else.
The money a homeowner gets from a reverse mortgage doesn't have to be paid back until the home is sold, the homeowner moves out, or the borrower passes away.
As a 73 year-old, retired, single woman on a fixed income with her home being her biggest asset, the cash Ms. Campbell got from her reverse mortgage provided some much needed financial help.
Unpaid Taxes and Insurance Leads to Foreclosure
But remember that even though you don't have mortgage payments, you still have to pay taxes and insurance. Forever. If they're not paid, you could face foreclosure.
That's what happened to Ms. Campbell. She fell behind on her Illinois property taxes and her reverse mortgage lender, American Advisors Group, initiated a foreclosure lawsuit to protect their interest in her home.
Our client needed to repay AAG who advanced the thousands in taxes she owed in order to avoid having the reverse mortgage foreclosed. Initially she believed that she owed about $7,500 in back taxes and insurance, which she had the money to pay off. We found out that she owed $4,000 more than that because of the fees that had been added, including legal fees.
Ms. Campbell did not have the cash to pay what she owed, but she had to find some way to pay it to stop the foreclosure. Where was that money going to come from? Fortunately, there's a government program called the Hardest Hit Fund that could provide Ms. Campbell with exactly what she needed.
Applying For Hardest Hit Funds
The Hardest Hit Fund was established in 2010 by the United States Treasury Department to provide help to people in states hit hardest by the subprime crisis. Homeowners can apply to receive cash from the fund to help them avoid foreclosure.
In Illinois, homeowners with an FHA reverse mortgage can apply for up to $35,000 in assistance through the Illinois Hardest Hit Fund. The only problem was that it takes time to apply for Hardest Hit Funding and the sale date for Ms. Campbell's home was fast approaching.
Emergency Motion To Stay Sale
To give Ms. Campbell enough time to avoid the sale, we filed an emergency motion to stay the foreclosure sale. The judge granted our motion due to the fact that there was a pending application for money from the Illinois Hardest Hit Fund that would cure the delinquency and allow our client to pay the money due and owing to the plaintiff.
Missing Quitclaim Deed
Initially our client was denied for Hardest Hit money because the processor couldn't find a quitclaim deed from Ms. Campbell's sister to her from 1986. The sisters had inherited the property and Ms. Campbell's sister gave her interest to her. But, it turns out the quitclaim deed was recorded in the city office rather than the county office, and it couldn't be immediately located.
Once the quitclaim deed was found, we requested the Hardest Hit application be reviewed again. The denial was reversed and Ms. Campbell was approved. The Hardest Hit money was sent directly to AAG to repay the debt. Then the sale was canceled and the foreclosure case was dismissed.
Everything worked out the way our client wanted. But success was not a foregone conclusion. If she hadn't gotten the Hardest Hit approval, she wouldn't have been able to pay off what she owed and would have lost her home in the foreclosure sale. If we hadn't been able to stay the foreclosure sale, the money would have come in too late to save her home.
Thanks to the knowledge and experience of our staff, we were able to find the solutions our client needed to keep her home, overcome the obstacles needed to make them happen, and save her home and get her case dismissed. If you're at risk of losing your home to foreclosure, you should consider working with an experienced professional. Their experience is invaluable and could help you get a better result than you could have gotten on your own.