Legal Question in Real Estate Law in Illinois
Lost job, wants to foreclose on condo
My parents live in Illinois and own a condo, which they have been trying to sell for over a year. Now they lost their job due to an acquisition, and since they're old (mom's 70, dad's 67), they decided to just come and live with me in another state. They want to foreclose on the condo. They're afraid that the bank will go after the little amount of money they have saved for retirement as well as their SSS pension that they receive monthly. What is the best thing for them to do? I've read about a Deed in Lieu of foreclosure. Is this a good option for them? Also, I'm afraid that this will affect my dad's application for U.S. citizenship (mom's already a citizen). Will the foreclosure have consequences on my dad's citizenship application?
1 Answer from Attorneys
Re: Lost job, wants to foreclose on condo
Last question first: I don't know. It's beyond my area of expertise. To find out if a foreclosure affects immigration status, consult an immigration attorney.
As far as a deed in lieu, my experience is that the banks are not too fond of them right now because thay already own more property than they want to. The bank is legally allowed to but very likely won't chase your parents for the deficiency (the difference between what was owed to the bank and what they were able to get through the forclosure process). Legally, once the house is taken back by the bank, the remaining debt (if any) is a personal debt, similar to a credit card debt.
What may be a good option for your parents is a "short sale". That's where the bank agrees to accept less than they're owed. These types of sales are happening very frequently these days. In most (but not all) cases, the bank agrees to wipe out the entire debt and there is no deficiency. Also, the credit score damage seems to be minimized with a short sale as opposed to a foreclosure judgment.
Contact my office for a free consultation to determine if a short sale makes sense for your parents.
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