According to recent data, so far 2020 has seen fewer foreclosures than last year. November 2019 saw approximately 50,000 foreclosures. However, as of September 2020 only 10,000 homes were foreclosed upon. This should be good news for homeowners in Chicago, but this number may be masking deeper financial issues homeowners face.
Forbearances rather than foreclosure
Many homeowners took a financial hit in 2020 and have turned to their mortgage lenders to pause mortgage payments through a process known as forbearance. Under federal law, a forbearance can last for 180 days initially, and then could be extended another 180 days if necessary. In addition, federal laws were passed in 2020 temporarily putting a pause on many foreclosures. However, once these laws expire, likely some time in 2021, these homeowners who are well behind on their mortgages will face foreclosure.
Protecting your home from foreclosure
If at all possible, you may want to keep making at least some mortgage payments even if you have received a forbearance to avoid missed payments. If that is not possible, a situation that is likely if you are seeking a forbearance, try to save money over the length of the forbearance to help you afford your mortgage once you have to start paying again.
You can also work with your lender to refinance your mortgage. This could lower your mortgage payments, making them more affordable. However, to refinance you need a good credit score and proof of income. Lenders may even be willing to make a loan modification if paying your mortgage or refinancing are not viable options for you.
Ultimately you need a plan
In the end, it is important to have a plan in place for repaying your mortgage in 2021. Foreclosure is a legal process, and this post does not contain legal advice. Real estate attorneys in Chicago may be a useful source of information for those who want to avoid foreclosure.