In this article, we will discuss the laws and procedures for an Illinois foreclosure and answer the following questions:
- What happens when mortgage payments are missed?
- What does the home foreclosure process look like in Illinois?
- Can a home foreclosure be reversed in Illinois?
- What happens if the house is sold in foreclosure but the previous owners still live there?
What Happens When Mortgage Payments are Missed?
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.
What Does the Foreclosure Process Look Like In Illinois?
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.
Can a Home Foreclosure Be Reversed In Illinois?
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:
- Reinstatement before the sale of the home. Under Illinois law, borrowers have up to 90 days after they have been served with a summons, been made aware of the sale by publication or otherwise submitted to the jurisdiction of the court, to pay the past due mortgage payments plus all costs and fees.
- Redemption Period. Illinois foreclosure law has a redemption period during which the homeowner can pay off the total debt, including principal amount left on the loan, and any other interest, costs, and fees acquired by the lender in the process of bringing the case to litigation. In Illinois, the sale of the home cannot take place until the redemption period has expired either seven months after serving the complaint or three months from the date of judgment. The redemption period can be shortened if the property is abandoned or other specific criteria are met.
- Foreclosure Mediation. Certain counties in Illinois offer foreclosure mediation. In Illinois counties with foreclosure mediation, the lender must follow the rules of mediation before moving forward with a foreclosure. To learn more about potential foreclosure mediation in your Illinois county feel free to give us a call at 630-324-6666.
What Happens If a House Is Sold In Foreclosure But the Previous Owners Still Live There?
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.
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