Homeowners in who face foreclosure in Chicago could still be pursued for the remaining balance. Some lenders may file a deficiency judgment as an attempt to collect the difference between the money made on the foreclosure sale and the loan balance. Lenders seldom make attempts to collect the balances, but since lending profits are unpredictable, more lenders try it.
Foreclosures occur when homeowners fall behind on mortgages. Not only do owners lose the home, but their credit score can also drop, and the mark may remain several years on the credit report. A lender commonly devises a mortgage contract to benefit themselves in case of payment default. Each state allows lenders gives a specific time frame to file a deficiency judgment, but the typical time frame is five years and 20 years to collect the debt.
Banks commonly allow the sell of homes to pay debt under a short sale, which means the home gets sold for less than the value. Some homeowners have tried strategic methods to avoid paying debt, such as walking away, because they owe greater than the home value. If the lender finds the homeowner can afford the payments, they may seek a judgment.
A homeowner could also be required to pay county and certain state transfer fees. Homeowners also had to pay federal taxes between the difference of the sale price of the home and the mortgage balance until 2007. Homeowners should be aware some lenders may sell bundles of mortgages to collection agencies. The agencies could file a deficiency judgment as well as freeze assets and garnish wages.
A deficiency judgment may force a homeowner to file bankruptcy. Lenders must follow all foreclosure laws before foreclosure on a home. Foreclosure laws are usually complex, so an attorney knowledgeable about foreclosures (both prosecution and defense) might be helpful.