What You Need to Know About Buying an REO Property in 2020

IL real estate attorney, Illinois real estate lawyer, If you are trying to find a new home at a good price, you might have family and friends mentioning that you try to find a foreclosure property. In theory, this is not a bad idea. A home that is for sale because the current owner defaulted on his or her mortgage could sell for far below market value. In the wake of COVID-19, however, foreclosures have all but stopped, thanks largely to a moratorium put in place on foreclosures on federally insured mortgages. Private lenders have mostly followed suit, which means that there are probably not many foreclosure properties available. The good news is that you may have another option for finding a good value: a real estate owned home, more commonly known as an REO property.

What Is an REO Property?

When a home is foreclosed on due to default on the mortgage, the lender (or current holder of the mortgage loan) will eventually seize the home and attempt to sell it. This sale usually takes place at a public auction. In most cases, a foreclosure auction does not give participants the opportunity to see the property or inspect the home ahead of time. This means that bidders are effectively making offers on a property about which they know very little. Additionally, the highest bidder is usually required to pay cash for the property at the time of the auction. Financing is uncommon at foreclosure auctions.

With all of this in mind, some foreclosure auctions do not result in the sale of the home. If the property does not sell, it still belongs to the bank or lender. At this point, the home is considered real estate owned or REO.

Buying an REO Home

Once a property becomes REO, the bank will usually start to take steps to sell the home. After all, the lender already lost money on the defaulted mortgage, so there is a vested interest in making some of that money back. An REO transaction is handled in much the same way as a standard real estate deal. The bank may enlist the help of a real estate agent to get the home listed on the “normal” listings. Prospective buyers can see the home and have it inspected. They can also make regular offers and arrange financing instead of having to frantically outbid other buyers at the auction.

Most REO properties are sold “as is,” which means that any repairs that need to be done will usually be the buyer’s responsibility. The selling lender is unlikely to arrange for the repairs or to drop the price to account for them. Therefore, it is advisable to include a contingency clause with your offer that gives the option of canceling the deal if the inspection reveals that the repair bill will be more than you can handle.

Why an REO Property Might Work Now

As the Chicago region and the rest of the country slowly starts to open back up again amidst concerns regarding COVID-19, the real estate market has suddenly flooded with people looking to buy a new home. In fact, the influx of prospective buyers has, by most accounts, tilted the market pretty substantially in favor of those with homes to sell. It can be tough to buy a home in a “seller’s market,” as prices are often higher, and sellers are less willing to include extra considerations in the deal compared to sale in a “buyer’s market.”

While there are significantly fewer foreclosures in process right now, a seller’s market gives lenders the incentive to get their REO properties listed and up for sale. REO properties are still typically priced on the lower end of the price range for comparable listings, so you might be able to find a great deal even in a seller’s market.

Call a Wheaton Real Estate Lawyer for Guidance

As things start to get back to some semblance of normal in the wake of COVID-19, lenders will be seeking to move REO homes as quickly as they can. While deals are out there, the process of buying an REO property can be complex. Contact an experienced DuPage County residential real estate attorney to get the help you need. Call 630-665-2500 for a confidential consultation at Stock, Carlson & Duff LLC today.

 

Sources:

https://www.investopedia.com/terms/r/realestateowned.asp

https://www.forbes.com/sites/forbesrealestatecouncil/2020/09/21/a-newfound-reality-buyers-currently-outnumber-sellers-in-housing-market/

https://www.washingtonpost.com/business/2020/09/10/home-prices-reach-record-high/

What Are Your Options for Avoiding a Foreclosure in Illinois?

IL foreclosure attorney, Illinois real estate lawyer, When homeowners default on their mortgage payments, sometimes the only option for lenders is to initiate foreclosure proceedings. However, this can lead to conflict between lenders and borrowers that may result in property damage, increased expenses, and challenges related to finding a new buyer. Sometimes, it is in the best interest of both lenders and borrowers to consider other options that may prevent the need for foreclosure.

Understanding Illinois Foreclosure Alternatives

When possible, lenders may consider working with homeowners to explore options that can prevent defaulting on payments or otherwise make a foreclosure unnecessary. These options include:

  • Loan modifications: Depending on the type of loan, it may be possible to pursue a modification to the terms, including lower monthly payments, lower interest rates, and a longer payback period.
  • Forbearance: As a temporary solution, the lender may allow the borrower to make smaller monthly payments for a period of time and then make up the difference in future monthly payments.
  • Refinancing: Similar to a loan modification, refinancing may allow borrowers to lower interest rates or monthly payments, but it often requires ownership of a certain amount of equity in the home, a good credit score, and the payment of additional closing costs.
  • Short sales: In a short sale, the homeowner agrees to sell the property for less than the remaining amount of the mortgage and give all proceeds to the lender in exchange for the lender’s forgiveness of the remaining balance.
  • Acquiring the deed in lieu of foreclosure: In this option, the borrower turns the deed for the home over to the lender and is not required to make any further mortgage payments. This often saves lenders and borrowers time and court costs when compared to a foreclosure.

An experienced real estate attorney can advise lenders and borrowers as to the viability and benefits of each of these options depending on the specific situation and work toward a solution that best meets each party’s needs. When a foreclosure is necessary, we can also represent and advise lenders to ensure that correct procedures are followed throughout each step.

Contact a DuPage County Real Estate Attorney

At The Illinois Law Office of Stock, Carlson & Duff LLC, we are committed to helping buyers, sellers, and lenders in residential real estate transactions. We can work to help you avoid or manage legal conflict and ensure that the relevant processes go as smoothly as possible. Contact an experienced Wheaton residential real estate lawyer today at 630-665-2500.

 

Source:

https://www.ilga.gov/legislation/ilcs/ilcs4.asp?ActID=2017&ChapterID=56&SeqStart=107100000&SeqEnd=115800000

New Illinois Eviction Law Helps Both Tenants and Landlords

Il eviction attorney, IL eviction laws, IL real estate lawyerThe COVID-19 outbreak across the U.S. has left many Americans wondering how they will make rent payments and what will happen if they are unable to do so. For the past few months, a residential eviction moratorium has been in place, restricting residential tenants from being evicted due to late rent payments. This moratorium has been extended on multiple occasions, but is intended to conclude at the end of July. A new state grant program is beginning in August to provide financial assistance to those who are struggling to make rent payments, yet this may not be enough for many Illinois residents to stay afloat for long.

In mid-July, the Illinois Supreme Court adopted a new rule for eviction proceedings that will go into effect immediately. Whether it is in response to COVID-19’s effect on renters or was a longtime coming, new Rule 139 requires aims to better inform all parties involved in eviction cases.

Rule 139

The eviction process is not as immediate as many may think — a number of notices are required and it can take time for the court to address the eviction request. Rule 139 does not quicken up the eviction process, but it better informs the renter and court about the details of the landlord’s eviction request and case against their tenant. Moving forward, all eviction complaints must include a copy of the written eviction notice and relevant portions of the lease agreement where applicable.

The Illinois Supreme Court has released standardized forms for use by the landlord in place of the eviction notice or demand, in addition to the use of an affidavit for landlords that do not have a lease or written lease agreement. It is now required for the landlord to include the attachment of demands, termination notices, proof of service of the demands and notices, and relevant portions of the lease agreement when filing the eviction complaint.

These new requirements provide tenants with the relevant information for their case without having to wait for the trial or discovery to be informed about the allegations being made against them. This will allow tenants to find a reputable attorney who can represent their case well in advance of the court date. They will also have additional time to formulate their defense strategy against the eviction. Being able to reference the exact terms of the leasing agreement that have not been followed will also allow judges to give a more well-informed and timely response to the eviction case.

Contact a DuPage County Residential Real Estate Lawyer

Receiving an eviction notice can send anyone into a mental state of panic and uncertainty. In order to better clarify the reasons behind any eviction notices, the Illinois Supreme Court has required more information to be readily available to tenants facing possible eviction. The legal team at Stock, Carlson, Oldfield & McGrath, LLC remain in-tune to any legal updates regarding Illinois real estate and their attention to detail can help you be well-prepared for your case. Eviction notices should be taken seriously and you should search for a reputable attorney from the first notice received. Contact a Wheaton real estate attorney for help with your defense strategy at 630-665-2500.

 

Sources:

https://www.illinoislawyernow.com/2020/07/illinois-supreme-court-adopts-new-rule-for-eviction-cases/

https://www.isba.org/sites/default/files/blog/documents/Adopted_Amended%20Rules%20139_101_181_7-17-20.pdf

https://www.daily-journal.com/news/illinois/pritzker-extends-residential-eviction-moratorium-until-july-31/article_5c140440-b14e-11ea-a33f-27d9f797b539.html