Benefits and Consequences of a Consent Foreclosure

 Posted on May 29,2024 in Foreclosure

If you are a homeowner in Illinois facing foreclosure, you may be considering a consent foreclosure as an alternative to the traditional judicial foreclosure process. An Illinois real estate lawyer can share some insights on the benefits and consequences of this approach to help you make an informed decision.

What is a Consent Foreclosure?

A consent foreclosure, also known as a “deed in lieu of foreclosure,” is an agreement in which you, the borrower, voluntarily transfer the property’s title to the lender to avoid the lengthy and costly judicial foreclosure process. This arrangement can benefit both parties, but it is essential to weigh the pros and cons carefully.

Advantages for Borrowers

Consent foreclosures offer several advantages for borrowers like you who are facing mortgage default. By proactively working with the lender to resolve the issue, you can minimize damage to your credit score, reduce the risk of a deficiency judgment, and potentially qualify for relocation assistance programs. This approach allows you to take control of the situation and negotiate more favorable terms, protecting your financial future.

How Illinois Law Plays Into Consent Foreclosure

In Illinois, consent foreclosures are governed by the Mortgage Foreclosure Law (735 ILCS 5/15-1401). To ensure a valid deed in lieu of foreclosure, you must voluntarily transfer the property title, the lender must accept the deed, and the transaction must be free from fraud, duress, or undue influence. A real estate lawyer will work diligently to ensure the process adheres to these legal requirements, protecting your rights and interests.

Potential Drawbacks

While consent foreclosures provide several benefits, there are potential drawbacks as well. You may lose your right to contest the foreclosure in court by agreeing to a consent foreclosure. You could also face tax consequences related to the cancellation of debt income. If the property’s value does not cover the outstanding mortgage balance, the lender may still pursue a deficiency judgment against you. You and your attorney can carefully evaluate these potential risks and determine the best course of action for your unique situation.

Contact a North Chicago, IL Foreclosure Attorney

If you are considering a consent foreclosure, a Lake Forest, IL foreclosure lawyer is ideal to have on your side. With the proper legal guidance and support, you can make informed decisions and take control of your financial future. Call Newland & Newland, LLP at 847-549-0000 for a free consultation to see what next step would be ideal for you.