Before the peak of the foreclosure crisis in 2010, federal and state laws governing mortgage servicers and foreclosure procedures were relatively limited and favoured foreclosing lenders. Federal and state legislation now extensively regulates loan servicing and foreclosure processes. The majority of laws also protect borrowers.
Servicers must generally offer borrowers loss mitigation options, account for each foreclosure stage, and rigorously adhere to foreclosure regulations. In addition, most people who take out a loan to buy a home in Illinois sign a promissory note and mortgage. In addition to federal and state legal safeguards.
In an Illinois foreclosure, you’ll almost certainly be granted the following rights:
So, if you’re a homeowner in Illinois who has fallen behind on your mortgage payments, don’t be surprised. From missing your first payment through a foreclosure sale, learn about each stage of the Illinois foreclosure process. Once you understand the procedure, you can make the most of your position and, ideally, save your home or get through it with as little stress as possible.
What Is a Breach Letter and What Does It Mean?
Before the lender can accelerate the loan, many Illinois mortgages have a provision that requires the lender to send you a notification, generally referred to as a “breach letter,” advising you that the loan is in default. You have a chance to remedy the default and prevent foreclosure with the breach letter.
When Does Foreclosure Usually Begin?
According to federal law, with a few exceptions, the servicer can’t start a foreclosure unless you’re more than 120 days behind on payments. Most homeowners will have plenty of time to submit a loss mitigation application to the servicer within these 120 days.
What Is the Illinois Foreclosure Process?
If you fail to make your mortgage payments in Illinois, your home will be foreclosed judicially.
What is the Process of Judicial Foreclosure?
When a lender files a lawsuit seeking a court judgment enabling a foreclosure sale, it is known as a judicial foreclosure. The lender serves you with a summons, complaint, and a notice informing you of your rights and where you can receive aid during the foreclosure process. Most persons have 30 days to respond to the lawsuit.
Mediation in the Case of Foreclosure
In some Illinois counties, including Cook County, foreclosure mediation is offered.
If you don’t reply to the lawsuit, the lender will likely request and secure a default judgment, allowing it to proceed with a foreclosure sale. However, if you opt to defend the foreclosure lawsuit, the case will proceed to trial. The lender may then request summary judgment from the court. Because there is no debate regarding the critical features of the case, a summary judgment motion asks the court to give a sentence in favor of the lender. If the lender receives summary judgment—or if you lose at trial—the judge will enter a decision and order your home to be auctioned at auction.
The Foreclosure Auction
The first notice of the foreclosure sale must be published not more than 45 days before the sale, and the prior information must be published not less than seven days before the deal in a newspaper for at least three consecutive weeks, once every week. The lender’s attorney must deliver notice of the sale via electronic service (e-mail) to those defendants appearing of record who have e-mail at least ten business days before the sale and by mail to any defendants not appearing of record.
The lender normally makes a credit bid during the auction. The lender has the option of bidding up to the whole amount owing, including charges, or bidding less. In some states, such as Illinois, the lender can get a shortfall judgment against the borrower if it is the highest bidder at the auction but bids less than the entire amount. The property is referred to as “Real Estate Owned” if the lender is the highest bidder (REO).
However, if a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in excess proceeds—that is, money above and beyond what’s required to pay off all the liens on your property—you’re entitled to the extra cash.
Illinois’ “Consent Foreclosures”
Under Illinois law, the borrower and the lender can agree to a “consent foreclosure,” which is essentially a mechanism to expedite the foreclosure process. The court issues a foreclosure judgment against the borrower, and the borrower agrees to vacate the property.
The principal advantage of accomplishing a consent foreclosure is that the lender usually relinquishes its ability to seek a deficiency judgment. However, one disadvantage of a voluntary foreclosure is the potential tax ramifications of the forgiven debt. The IRS treats forgiven debt as income. Unless an exclusion or exception applies, the homeowner may have to pay taxes on the forgiven amount if the lender forgives the deficiency.
How long do you have to vacate your home after foreclosure in Illinois?
After the court confirms the sale, you (the foreclosed homeowner) have 30 days to reside in the house.
In Illinois, How Can I Stop a Foreclosure?
Reinstating the loan, redeeming the property before the sale (or for a limited time after the sale, in some cases), or filing for bankruptcy are all options for stopping a foreclosure. Of course, if you can work out a loss mitigation plan, such as a loan modification, you can avoid foreclosure.
The Loan is Being Reinstated
According to Illinois law, the borrower has 90 days to restart the debt after being served with a summons, published, or otherwise submitted to the court’s authority. On the other hand, most loan servicers allow the borrower to restart at any time before the sale.
For information on foreclosure defense call us at (877) 399 2995. We offer litigation document review support, mortgage audit reports, securitization audit reports, affidavit of expert witness notarized, and more.