Legal Question in Credit and Debt Law in Illinois

Hello, I have recently seen articles about debtors jail and collection agencies seeking to imprison people and that Illinois in particular supports this. What recourse is there?

A friend I helped buy a home in 2007(?) for $180k, has tried to get sale the house since. Six months after the purchase it's value unbeknownst to us had dropped 25%, in 9 months 50% until by 2008 or 2009 it was worth in the mid $30K's. He secured a HELOC at purchase in June and was told to wait 6months and they (National City) would refi into a lower fixed mortgage. It wasn't until they drug out the process for several months and we looked elsewhere that we realized the value had dropped. He also had a current mortgage, so sonce he could not sell that one and could not pay the mortgage after 9months on the new home, he went into default. Time went by an we found a cash buyer for 150% of the then value, however Nat'l City would not accept the short sale, after telling us to send the contract and have the buyer bring the mortgage current, which he did. The bank paid the back taxes abut $5k to keep the home. Nor would they do a deed-in-lieu. Months went buy and they stopped responding. Then after a year, he got a call from PNC who he was informed now owned Nat'l City and they wanted the loan paid off in 30 days.. We sent the rep a summary of the transaction, Nat'l city did a walk thru, we brought the mortgage current, had a cash buyer for 150% which was refused, deed-in-lieu rejected. Subsequently, he began getting calls from collection agents. I advised him to contact PNC again to try and get a deed-in-lieu and now am concerned about this collection agency initiated debtors prison or people going to jail.

He had a plus 750 FICO before this. No other debts in trouble. I need to help him...I suggested he buy the house and facilitated the deal thinking he would gain equity, then all hell broke loose. In Chicago at the time a bill called HB450 was introduced that effectively relined 10 minority neighborhoods with the highest property values on the false premise that they were victims of mortgage fraud. Therefore if you wanted to buy a refi a home in those neighborhoods your had to take a state sponsored housing class(90days), that HAD TO BE PAID FOR BY THE LENDER, NON-RECOURSE!!. The fee could not be added to the loan, nor was their any protection if the POTENTIAL borrower decided not to sell or refi and didn't finish the course...or for that matter of they decided to take a loan from another lender. This effectively killed the market in the Chicago area and limited severely access to loans in the surrounding suburbs. This was unknown to the general public and wasn't publically protested until implemented, but by then the damage was done. So it is with this backdrop that we found ourseleves with a home whose value seemed to disappear overnight.

How do I help him...this collection agency...driven jail news is more stress.

Please help.

Sincerely,

Lovell Nabors


Asked on 12/02/11, 9:14 pm

1 Answer from Attorneys
Sanford M. Martin Sanford M. Martin, P.A.

The description of the financial situation of your friend is too common in this era when

mortgages and banks were allowed to play a deceptive game with borrowers. PNC and

other lenders in such situations should consider loan modifications, short sales, deed-in-lieu of foreclosure, and other remedies but they often will not cooperate. Be assured that, so

long as there is no criminal fraud or other crime involved in the transactions, your friend

should not be concerned about prison. Debt collectors and creditors will use such

threats and false information to intimidate and pressure debtors, but it is immoral and

illegal to make such threats. They will threaten lawsuits, criminal actions, and whatever

actions will arouse fear in persons such as your friend. Report it to your local business

bureau, state's attorney, legal aid agency, and Illinois Consumer agency. The purpose

of bankruptcy and other legal remedies is to discharge such debt, if necessary.

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Answered on 12/03/11, 4:26 am


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