How Does Illinois Foreclosure Work?
You are a couple of months behind on your mortgage, and now you are facing threatening calls and emails from the bank. You are worried they will start the foreclosure process and that, soon enough, they will kick you out of your home. How much time do you have? What is the foreclosure process like? Below, we address these questions and discuss the foreclosure process in Illinois. If you are a homeowner in Illinois with concerns about your mortgage, speak with a knowledgeable Illinois residential real estate lawyer to discuss your options.
The Default and Foreclosure Process in Illinois
If you miss a single mortgage payment, you are not at risk for foreclosure. Your loan likely includes a grace period of ten or fifteen days, after which period the loan servicer will assess a late fee. The late fee will likely be around 5% of your overdue payment. The promissory note should include the precise details concerning the grace period and the late fee.
Once you miss a few payments, you are likely to start getting calls and/or letters reminding you about your overdue payments. It is important to respond to those notices and make a decision about your next steps. If you continue to miss payments, you do risk foreclosure. You might be able to pursue options including loan modification, forbearance, or a payment plan; a residential real estate attorney may be able to help you negotiate some debt relief. Once you reach the 90-day point on past-due payments, your mortgage lender will likely declare your mortgage to be in default.
Once your loan is in default, your lender will usually send you a notice explaining as much. The notice will often declare the default, explain actions that would resolve the default (i.e., repaying the past-due amounts), establish a deadline for corrective action (typically, 30 days from the date of the letter), and explain that failure to correct the default will result in acceleration of the loan and potential foreclosure proceedings.
If the borrower still fails to address the defaulted mortgage, the lender can begin foreclosure proceedings. Under federal law, your loan servicer must wait until you are at least 120 days behind on your payments before pursuing foreclosure. A common scenario, then, would be receiving a notice of default at 90 days and then having 30 days to cure the default before foreclosure proceedings are begun.
In Illinois, foreclosure is a judicial process, meaning that the lender must file a lawsuit in state court against the borrower. They must serve a summons and copy of the complaint on the borrower, and serve anyone with a recorded lien on the property, including second mortgage holders, holders of judgment liens, and tax lien holders (i.e. the IRS). The borrower then has the chance to file a response to the complaint. If they file no response, the court will issue a default judgment for the lender. If the borrower responds with an answer, then the case will proceed. The court will either resolve the matter for the borrower or defendant on summary judgment or let the case proceed to trial.
If the court finds in favor of the lender, the court will issue a judgment of foreclosure against the borrower. Illinois borrowers benefit from a redemption period at that point, during which they have the chance to repay the debt plus certain costs and interest to reclaim the property. The property cannot be sold during the redemption period. The redemption period for residential property typically lasts the later of either three months from the date of judgment or seven months from the date of service of the complaint.
At the end of the redemption period, the borrower must post a notice of sale in the local newspaper and notify the owner/borrower of the sale in advance. The lender can then conduct a sale, selling to the highest bidder. If the sale proceeds are less than the outstanding amount on the loan, the lender can pursue an additional deficiency judgment against the borrower for the remaining amount.
If you have legal questions concerning a matter of Illinois real estate law, get experienced and talented legal help by contacting the Chicago residential and commercial real estate lawyers at MacDonald, Lee & Senechalle in Hoffman Estates at 847-310-0025 and in Des Plaines at 847-298-5030.