In Illinois, a home foreclosure takes place in the courts. Illinois is what is known as a “judicial foreclosure” state. The Illinois Mortgage Foreclosure Law is a great protection for Illinois residents. The judicial process takes time. You can use that time to work out a solution that best meets your needs. In Illinois, you own your home from the moment that you purchase it. The mortgage is a lien against the property until it is paid off. The bank can only take the property through the foreclosure process. This means that you cannot lose your home until the foreclosure case is over. Don’t panic.
A forbearance is when a lender temporarily suspends your payments. Once that forbearance ends, you are on the hook for all of the missed payments--generally paid in one lump sum. A deferment/deferral is when a lender adds a certain number of payments on to the end of your loan. For example, your auto loan should have its last payment in May. You request a deferment of two months of payments. Those months are tacked on to the end of the loan—in this case, extending the loan’s maturity date to July.
If your lender offers you a forbearance, understand that you are expected to be saving money to cover the skipped payments. If you can’t afford the end payment, then you may end up in default. Given the current economic uncertainty, it’s highly likely that many homeowners in a forbearance program will end up in default.
If you default on your mortgage payments, expect the bank to contact you. You may be offered a loan modification. The terms offered may not ultimately be sustainable. It’s wise to have any offer reviewed by an attorney before agreeing.
At this point, it is important to answer phone calls and open mail. You will know that the bank is preparing to foreclose when it sends you a formal notice of default. The letter is required under paragraph 22 of most residential mortgages. If you have a HUD or VA-backed loan, then the rules are a little different—the bank must make several attempts to contact you, possibly even in person. The default letter must tell you the default, what needs to be done to cure it, and give you 30 days to do so.
Once you receive the notice of default letter, foreclosure is likely not far behind.
You will be served with a summons by the sheriff or a special process server. This is your formal notice to act. Don’t panic. The foreclosure process in Illinois takes time. You won’t be suddenly forced from your home.
It is important to know that, if you wait too long to get involved in your case, then a default order will be entered against you. If you continue to do nothing, then the case will quickly move towards the entry of judgment, the sale of your home, and the bank being granted an order of possession. The bank may also seek a deficiency judgment against you—the difference between what you owe and the sale price of your home.
Don’t let that happen. You may have very valid defenses that should be addressed. The only way to protect your rights is to get involved in your case. Doing nothing is the worst possible idea.
After you are served, the clock starts ticking. You have 9 months, if not longer, in your home. If you file an appearance and an answer in the case, then the bank cannot get a default
judgment against you. It must file a motion for summary judgment. Once the bank obtains a judgment, it must wait 90 days to conduct a sheriff’s sale of your home. After that is done, the bank must get the court’s approval. Once the sale is approved, you still have an additional 30 days in your home. Hiring an Illinois mortgage foreclosure defense attorney can extend that timeline.
For example, your attorney may issue written discovery requests to the bank. The bank must respond before it can move its case forward. This gives you the opportunity to get information that may bolster your defenses. It also gains you valuable time that can be spent working towards a graceful solution to a difficult situation. What’s more, having an attorney involved can help you extend the lifetime of your case in the end stages—when you may be working out a solution like a short sale or a loan modification and need a little more time to finalize the deal.
There are a few ways to resolve a foreclosure case. The best option depends on your specific situation. Some people may decide that since their home is worth less than the value of the loan, it’s not worth keeping. Requesting a deed-in-lieu of foreclosure or a consent foreclosure may be your best option. You may even be able to get a cash for keys deal. These options let you leave the home on a negotiated timeframe. They also result in the bank waiving any deficiency it may be able to claim against you.
It may be that you want to try and keep your home. In some situations, it may be possible to do so by filing a Chapter 13 bankruptcy. If you file early enough, it may be possible to pay off the past due mortgage amount while also paying the current amount. Many people can’t make that option work. You can also work with the bank to try and obtain a loan modification. If the terms are favorable, then you may be able to get your mortgage back on track and your foreclosure case dismissed.
A final solution is to sell your home—either for a full payoff or as a short sale. Both options can help you exit a property either as a first option or as a last-resort plan. Finding the right solution for you is a vital part of planning a foreclosure strategy.
O'Flaherty Law is happy to meet with you by phone or at our office locations in: