Another possible solution is a short sale.  In a short sale the lender agrees to receive less than the amount owed in exchange for the sale of the property. A short sale has advantages over a foreclosure to both you and your lender in the following ways:

1.)  It may not impact your credit
2.)  It tends to cost less to your lender
3.)  It doesn't take as long to process
4.)  It is not as emotionally stressful

Contact me. I can help you find the right solution for you and your family. In the meantime, please educate yourself through the articles listed below.  Click here to view the "Top 10 Short Sale Questions.... Answered".

Pinched homeowners turn to 'short sales' Tactic involves getting lender to accept less than you owe, written by Jim Wasserman on dwb.sacbee.com, click here for the article.

Here is an excerpt from the article:

Why accept a short sale? To cut their losses, lenders sometimes accept less for a property than the loan value. It may be cheaper and easier than foreclosing and returning the property to market -- especially if home prices are dropping.

How does it work? Real estate agents determine the house is worth less than the amount owed and advertise it as a short sale. The owner provides detailed financial information to document genuine hardship and inability to repay the full loan. The agent or short-sale expert negotiates with the lender to accept less than the loan value.

What are the advantages? The owner can avoid bankruptcy. It is less damaging than foreclosure to a credit rating.

How does it affect the owner's credit? A short sale doesn't directly damage a credit score if the bank accepts the offer and doesn't report negative credit behavior. Typically, any payments missed leading up to a short sale remain on a credit report for seven years. Lenders factor that into decisions to issue new loans. Foreclosures also remain on credit scores for seven years, making it more difficult to get standard financing. Borrowers may have to pay higher interest rates. The impact on credit scores diminishes over time.

What are the drawbacks? The Internal Revenue Service may treat vanished debt as taxable income. The process is complicated and time-consuming, and it makes it harder to attract potential buyers to the home.

Why would anyone do this? Declining real estate values often aggravate already onerous financial situations. An individual may be facing divorce, job loss, a sudden drop in income, or the inability to meet rising payments of adjustable-rate mortgages.

What were previous short-sale cycles? Texas and other oil-crash states in the 1980s. California in the 1990s after military base closings and recession.

What are the alternatives? Foreclosure, bankruptcy, finding another person to assume the loan, applying to a lender for a new repayment schedule to catch up over time.

OTHER ARTICLES

Mortgage Trouble Clouds Homeownership Dream, written by shortsalecenter.com, click here for the article.

Troubled homeowners are finding a new way to sell 'Short sale' an option to avoid foreclosure, written by Catherine Reagor in The Arizona Republic, click here for the article.

Short Sale May Be an Option When Mortgage Debt Looms Too Large, written by June Fletcher on www.RealEstateJournal.com, click here for the article.

Five Tips on How Short Sales Could Save Homes, REO Magazine, Vol 1 Issue 22, click here for the article.

HOW DOES A FORECLOSURE WORK IN ILLINOIS?

Illinois Foreclosure Laws

Illinois foreclosures are carried out solely through court proceedings. The typical timeline for an Illinois foreclosure is approximately one year.

Pre-foreclosure Period

A foreclosure begins in Illinois when the lender takes action in court against the borrower. A notice of the court action is given to the borrower and other affected parties in person or by publication if necessary. All parties have 30 days to respond to the court action or the lender will continue to pursue the foreclosure by requesting the court to make a ruling on the matter. If the court rules against the borrower, the lender can schedule a public sale to recover the amount owed on the loan plus applicable costs.

A borrower has the right to stop the foreclosure within three months of being notified of the court action by paying the default amount plus fees and costs. The borrower can redeem the property for at least seven months (sometimes longer) after being notified of the court action by paying off the entire loan balance.

Notice of Sale / Auction

A notice of sale must be sent to all affected parties and include the property address and legal description; times the property may be inspected before the sale; the day, time, location, and terms of the sale; the case title, number, and court handling the lawsuit; and a contact person. The notice is published in the legal notice and real estate sections of a local newspaper once a week for three weeks. The first publication is no more than 45 days before the sale date, with the last publication no less than seven days before the sale date. If the sale must be postponed, the person conducting the sale announces the details of the new sale. If a sale is postponed for more than 60 days from the originally scheduled sale date, a new notice is republished.

The sheriff typically conducts the public auction. Anyone may bid, including the lender, and the property is sold to the winning bidder. Once the winning bidder pays the full bid price, the person conducting the sale gives the winning bidder a certificate of sale, subject to confirmation by the court.

Upon court confirmation, the winning bidder receives ownership of the property and is entitled to take possession of the property unless eviction is necessary. If the property is still occupied, the winning bidder gets possession after 30 days.

Source: http://www.realtytrac.com/foreclosure_laws.asp?strState=Illinois