Blog

Feb
07
Rising Chicago Home Values Reduce Window For Mortgage Strip-Offs

Rising Chicago Home Values Reduce Window For Mortgage Strip-Offs

To many in the Chicago area, it’s welcome news to hear that property values are rebounding to approach prerecession levels. However, the increasing values will negatively impact some struggling homeowners seeking to strip off a second mortgage.

Mortgage strip-offs are a tool that allows some financially stressed homeowners to save their property. Chapter 13 bankruptcy allows qualified claimants to strip off a second mortgage and reorganize other debts into an affordable repayment plan. Mortgage strip-offs may be available to businesses through Chapter 11 bankruptcy.

Chicago area property values have steadily increased. If this trend continues, the availability of second mortgage strip-offs will dramatically decrease.

How Rising Values Affect Mortgage Strip-Off Availability

To qualify for a mortgage strip-off, a homeowner must:

File for Chapter 13 bankruptcy

Have a first mortgage where the money owed to the lender exceeds the value of the home
If the above conditions are met, qualified bankruptcy claimants will be permitted to strip off the second mortgage.

But Chicago area home values have been trending upward. When the value of a property reaches or exceeds the payoff sum of the first mortgage, a mortgage strip-off is no longer available to the homeowner, regardless of how financially burdened he or she is. Unfortunately, the bad news doesn’t necessarily end there.

First Mortgage Modification May Be Affected

Rebounding Illinois home values are also affecting people’s ability to modify the terms of their first mortgage.

When a struggling homeowner contacts his or her lender, seeking to change the terms of the first mortgage, the mortgage company will do a “net present value” calculation. In this exercise, the mortgagor is assessing the value of the home and the market to determine whether it should modify mortgage terms with the homeowner or foreclose on the house.

The rising property values make it more likely that the mortgage lender will foreclose, because it can often recover its cost by placing the home on the improved sales market.

Want To Keep Your Home Via Illinois Bankruptcy? Then Act Now.
Market trends indicate that Chicago residential property values will continue to rise, further decreasing the number of troubled homeowners who will qualify for a second mortgage strip-off. This will also make first-mortgage lenders less willing to alter loan terms, putting homes in foreclosure instead.

Now is the time for financially stressed homeowners in Illinois to act. The window for using bankruptcy to save a home may be shrinking.

For the best chance of saving your home and getting control of your financial future, it’s important to contact an experienced mortgage lawyer. A skilled Chicago foreclosure defense attorney is an expert negotiator and knows how to make the best presentation of your ability to make future mortgage payments.

Whether you end up using mortgage-debt solutions in or out of bankruptcy, an experienced Illinois foreclosure prevention attorney will help you get control of your situation and secure an improved financial outlook.


Convenient Locations

In order to provide convenience for clients throughout Chicago and Northern Illinois, we have offices in the following locations: 

Chicago • Schaumburg  • Oakbrook • St. Charles • Naperville • And More

Locations

We have office locations throughout the Chicago Area:

Chicago (Downtown)

Schaumburg

Oak Brook

Naperville


All calls are routed through our Downtown office for your convenience.

Phone: 312-967-3159

Locations

We have office locations throughout the Chicago Area:

Chicago (Downtown)

Schaumburg

Oak Brook

Naperville


All calls are routed through our Downtown office for your convenience.

Phone: 312-967-3159

Less
Sign Up for Our NewsletterLess
Sign Up for Our Newsletter
Subscribe Here