In this article, we will discuss the laws and procedures for an Illinois foreclosure and answer the following questions:
As part of the home buying process in Illinois, the buyer will sign a promissory note and a mortgage (unless the home is paid for in full). The promissory note is a contract between the home buyer and the lender stating that the home buyer will pay back the loan and also describes the terms for repayment. The mortgage is a debt instrument that secures the loan using the house as collateral, allowing the bank to repossess and sell the home in the event of nonpayment by the borrower.
Most loans will have a 10 to 15 day grace period between the due date and when a late fee is assessed after a missed payment. 30 to 45 days after a missed payment the loan servicer will usually start to send letters or make phone calls to the homeowner. Often, the loan servicer will try to discuss loss mitigation options with the homeowner. Loss mitigation strategies include things like forbearance, loan modification (possibly decreasing the mortgage rate), a new repayment plan, a short sale, etc.
Federal law requires the homeowner to be 120 days delinquent on their mortgage payment before filing the foreclosure case in court. If the homeowner and the bank can’t come to an agreement on a loss mitigation strategy then the home will officially move into foreclosure.
Illinois is a judicial foreclosure state, meaning the lender must file a lawsuit (complaint) in state court to start the foreclosure process. The complaint is served to the borrower (the defendant), including a summons that lists a time period by which the borrower must file an answer. Failure to respond to the summons within the listed time period will result in a default judgment granted to the lender. The foreclosure will continue to move forward and the soon to be ex-homeowner will likely be looking at an eviction. But if the homeowner files an answer in response to the court action the lender will have to file a motion for summary judgment or go to trial. If the homeowner loses the foreclosure case, or summary judgment is awarded to the lender, the home will be sold at a foreclosure sale.
Unless the bank feels that the homeowner will continue to pose a threat to the stability of the mortgage, it is usually in the lender’s best interest to salvage the loan with the original owner. Beyond the loss mitigation strategies mentioned above, there are a handful of other ways the homeowner can stop the impending foreclosure and bring the delinquent loan current:
Prior to the foreclosure sale notices must be published in the newspaper not more than 45 days prior to the sale and less than 7 days before the date of the auction. Notice of the impending auction must also be given to the homeowner at least 10 days before the sale. The home can either be bought by a third party bidder or revert to ownership by the lender. If the loan amount is greater than the value of the home the lender can seek a personal judgment against the ex homeowner to pay the difference. Once the home is bought by a third party or reverts to the bank’s property the eviction process can begin. Under Illinois law, the bank or new homeowner is entitled to occupy the home and have anyone dwelling in the home evicted 30 days after the foreclosure auction. However, eviction processes are rarely simple and often involve their own legal process.
If you are a homeowner facing bankruptcy and/or foreclosure learn more about your options and your rights as an Illinois homeowner. Give us a call at 630-324-6666.
O'Flaherty Law is happy to meet with you by phone or at our office locations in: