Illinois’ Foreclosure Procedures and Laws

If you miss a payment on your Illinois mortgage, the servicer (on behalf of the loan owner, referred to as the “lender” in this article) will start the foreclosure process. In almost half of the states, including Illinois, foreclosing requires the lender to file a lawsuit in court. The way foreclosures work is governed by state law, and both federal and state regulations provide you with rights and safeguards throughout the process.

Illinois Mortgage Loans
If you acquire a loan to buy residential real estate in Illinois, you’ll probably sign two documents: a promissory note and a mortgage. The promissory note is a legal document that includes your pledge to repay the debt as well as the terms of repayment. The mortgage is the legal document that creates a security interest in the property for the lender. If you don’t pay your mortgage, your lender has the authority to sell your house at a foreclosure sale to reclaim the money you owe them.

What Happens if You Don’t Pay Your Mortgage in Illinois?
After the grace period expires, the servicer can normally levy a late fee if you skip a payment. Most mortgage loans, for example, give you a 10 to a fifteen-day grace period before you’re charged late fees. Review the promissory note or your monthly billing statement to determine the grace period and the late charge amount in your scenario.

If you miss a few mortgage payments, the servicer will most likely send you letters and make phone calls to try to collect. In most cases, federal mortgage servicing laws require the servicer to contact you (or attempt to contact you) by phone no later than 36 days after a missed payment to discuss foreclosure alternatives, also known as “loss mitigation” options, and again within 36 days after each subsequent missed payment. The servicer shall notify you in writing after 45 days of a missing payment about possible loss mitigation measures and assign staff to assist you.

What Is a Breach Letter and What Does It Mean?
If you fall behind on your payments, many Illinois mortgages have a provision that requires the lender to issue you a breach letter. This notice informs you that your loan has gone into default. If you do not correct the default, the lender might call the loan due and proceed with the foreclosure.

When do Do Foreclosure Proceedings begin?
Before beginning a foreclosure, the servicer is required by federal law to wait until the loan has been late for more than 120 days. However, in some circumstances, such as if you break a due-on-sale clause or if the servicer joins a superior or subordinate lienholder’s foreclosure action, the foreclosure can start sooner.

Illinois State Laws on Foreclosure
To foreclose, Illinois requires the lender to file a complaint in court. The lender serves you with a summons and complaint, as well as a notice explaining your rights and where you can seek aid during the foreclosure process.

What Happens If You File a Response—Or Don’t
The lender might obtain a default judgment from the court if you do not respond to the legal action. The lender will be able to hold a foreclosure sale due to the verdict. However, if you react to the lawsuit by filing an answer, the case will go to trial. The lender could then ask for a summary judgment from the court. Because the case’s fundamental parts aren’t in question, a summary judgment motion asks the court to award judgment in favour of the lender.

If the lender wins summary judgment—or if you lose at trial—the judge will order the house to be sold in a foreclosure auction. Between 45 and seven days before the sale, a notice of sale must be published three times. The lender’s attorney must send notice of the sale by electronic service (that is, by e-mail, if you have it) to all defendants appearing on record and by letter to all defendants not appearing on record at least ten business days before the sale.

The Foreclosure Auction
Rather than bidding cash at the auction, the lender normally makes a “credit bid” on the property. The lender receives a credit bid up to the amount of the borrower’s debt. The lender will sometimes bid the whole amount of the loan, and other times it may offer less. The highest bidder purchases the property during the auction.

In Illinois, you can reinstate your mortgage before the foreclosure sale.

When a borrower “reinstates” a loan, they pay the missing principal and interest payments, as well as charges. The foreclosure will be stopped if you complete a reinstatement.

You have 90 days under Illinois law to reinstate the mortgage loan after being served with a summons, served by publication, or otherwise submitted to the court’s authority. Many lenders, however, enable debtors to reinstate, provided they promise to do so a reasonable amount of time before the sale.

Keep an eye out for legal changes.
This article will provide you with information about Illinois foreclosure rules, including references to statutes so you may learn more. Because laws change, it’s always a good idea to double-check them. It’s also possible for courts and agencies to change how they interpret and apply the law. Even within a state, some rules can differ. These are just a few of the reasons why you should get legal advice if you are facing foreclosure.

In Illinois, a Deficiency Judgment Following a Foreclosure Sale
A foreclosure sale may not always bring enough money to cover the entire debt balance. A “deficiency balance” is the difference between the sale price and the total debt. Many states, including Illinois, allow the lender to obtain a personal judgment against the borrower for this amount, known as a “deficiency judgment.”

If the complaint is personally served on the borrower, or if the borrower is not personally served but enters an appearance in action, the lender can get a deficiency judgment as part of the foreclosure action in Illinois.