My home is in foreclosure. I have a first and second, originally with same lender. House underwater on first alone. Original lender sold off first mortgage after starting foreclosure proceedings. They held onto the second. Both loans discharged in Ch 7. New holder of first has floated the possibility of cash for keys on first. Sizable payment to us to proceed this way. I need to get second released. If old lender holding second fails to "work with me", will a consent foreclosure wipe out second loan in Illinois? Will consent FC be a cheap and speedy enough process for new holder of first to still offer $ for keys?
"In Illinois, the lenders go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. The property is then sold as part of a publicly noticed sale. The court with jurisdiction over a foreclosure is known as the Circuit Court. In Illinois, the Circuit Courts are broken down by county, and the Chancery Division handles foreclosures. A complaint is filed in Circuit Court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.
In Illinois, a party can offer a Deed in lieu of foreclosure, which effectively deeds the property back to the lender. There can be no deficiency judgment if the lender accepts a Deed in lieu of foreclosure.
If legal action has already ensued, the property owner can request a Consent Foreclosure, which shortens the foreclosure process, and based on judicial discretion, will further prevent a deficiency judgment, although the property owner may be liable for court costs and attorney fees."
Excerpt taken from forclosure.com
Hope this helped!
Welcome to forums!
You won't be liable for paying off the second mortgage if the loans are discharged in your bankruptcy filing. After the foreclosure, the lenders will decide and divide the money that they receive from the sale of the property. It will depend upon your first lender to decide whether or not they will still offer you the option of cash for keys.
Feel free to ask if you've further queries.
Thanks for the reply, but with all due respect, I believe your answer is incorrect. Upon a straight foreclosure, the second mortgage gets completely wiped out. There will be no sharing of proceeds after a sheriff sale.
I realize I am no longer obligated to the debt. My question is in a consent foreclosure, will the second get wiped out as well, or did your answer indicate that it will not, and that is the meaning of "divide the monies" in your reply?