Why would a bank go through foreclosure rather than a deed in lieu?

Your question is interesting. Banks are dazed and confused about this whole "great recession". They were never properly equipped to deal with this crisis. To answer your question is nearly impossible based on the limited information. What is most pertinent is which bank is it? Your question is very fact specific, however, I will venture the following: Banks often like progressing through the foreclosure process on the hope that the borrower will at some point come to his or her "senses" and want to take it out of foreclosure, which was what happened so typically before. They still have not adjusted. They do not want the property back, they want the money. Given enough time they believe the borrower will find a solution. I am not trying to just get your business here, but visit Sulaimanlaw.com for a nice little dissertation on the subject. Consider the Deed In Lieu of Foreclosure. Essentially you will be giving the property back to the bank in exchange for a full release. Failing that you would try a consent foreclosure, essentially the same thing but it is done through the court. Both procedures are outlined in the Illinois Mortgage Foreclosure Act. Please hire competent counsel to achieve this goal. It would sound that these are good options for the Borrower, however the Bank is often left holding the bag.