Homeowners are still facing foreclosure in Illinois and the rate keeps rising.
The foreclosure process is governed by Illinois statute. Specifically, the Illinois Mortgage Foreclosure Law lays out all of the steps a lender must follow in order to foreclose on home.
In order for a mortgage holder to initiate a mortgage foreclosure there must be a default on the terms of the mortgage. The most common cause for default is the failure of the homeowner to make their monthly payments. However, if you read your mortgage there are other events that can trigger a default. For this guide we will only consider the act of non-payment triggering default. After the second missed payment lenders are to send notice to the borrower that they have 30 days to contact a housing counselor. After a third missed payment the lender usually sends a notice of acceleration to the borrower informing of their intent to foreclose. It depends on the lender but sometimes the borrower can fall behind more than 3 or 4 payments before the foreclosure process begins. This is especially true is the borrower is attempting a loan modification.
The Foreclosure Case
The lender must file a Complaint to Foreclose in order to start the foreclosure process. The requirements of the complaint are set out very specifically in the statute and must contain all of the elements. The summons of a foreclosure complaint has to include whats called the "
Once the case is filed and all necessary parties are named the defendants must be served a copy of the complaint. The Service of Summons is governed by the Illinois Code of Civil Procedure. But generally every attempt must be made to personally serve the complaint on the defendants by the Sheriff or Special Process Server. If personal service is unable then the plaintiffs can seek service by publication. The summons of a foreclosure complaint has to include a " Notice to Homeowners" This notice includes a brief statement of your rights as a homeowner during a foreclosure case. Among those rights are your right to stay in the home until a court rules otherwise; your right to resinstate the loan; or your right to redeem the property
As the homeowner you have the right to bring the mortgage current within 90 days after you receive the summons. Reinstatement means payment of past-due amounts, including all accumulated principal, interest, escrow, costs and fees, to bring the account current. The right to reinstate is only available once every five years under the same mortgage.
Redemption is different than reinstatement. It means that as a borrower you have the right to sell, refinance, or payoff the loan currently being foreclosed upon. This means payment of all amounts due to the lender, including the full principal balance, all accumulated interest, fees, and costs. The redemption period ends seven months from the date the mortgagor was served with summons or by publication or three months from the date of entry of the judgment of foreclosure, whichever is later.
Judgment of Foreclosure
If you fail to Answer the Foreclosure Complaint the lender can obtain a default judgment. Even if an Answer is filed many lenders move to strike the answers for being insufficient. Or they may may file a Motion for Summary Judgment alleging that there is no issue as to the facts of the case and that they are entitled to judgment as a matter of law. The time frame for entry of a Judgment of Foreclosure varies it can be as soon as a 90 days from filing the complaint to 24 months or longer depending on if a successful defense to the complaint is asserted.
Order of Sale
Once a Judgment for Foreclosure has been entered it will include all of the relevant dates. Specifically, the property cannot be sold until after the right for redemption has expired. As stated above, the redemption period is either 7 months from service of summons or 3 months from entry of judgement for foreclosure, whichever is later.
After the reinstatement rights and redemption rights have expired the property can be sold at auction in a judicial sale. Notice of the sale must be given to all parties in the action who have appeared and have not been found in default for failure to plead. The notice of sale must also be published, running in the newspaper for at least 3 consecutive weeks, between 45 and 7 days prior to the sale. Lenders must be careful to follow these procedures closely or else risk having the sale overturned. However, if the procedures are followed and the property is successfully sold to the highest bidder then the next step is initiated and that is to finalize the sale through the Court.
Motion to Confirm Sale
The property does not automatically become the new purchasers until after the sale is confirmed by the court. In order to confirm a sale the lender files a petition with the court to confirm the judicial sale. The court must confirm the sale unless it finds: 1) that notice of the sale was not proper, 2) the terms of the sale were unconscionable, 3) the sale was conducted fraudulently or 4) that justice was otherwise not done. An order of possession will also be entered and stayed for 30 days. Personal liability for any deficiency (any left over debt not satisfied by the sale) can be sought at this time. The order confirming the sale is the final order in the foreclosure case for appeal and other motion deadline purposes. The recent trend is that most lenders do not seek deficiency judgments at these hearings but merely reserve their right to do so at a later date. From a practical standpoint most residential homeowners do not have enough assets to warrant the time and effort to seek a deficiency judgment and then enforce it so it is often not even sought. Instead many lenders issue a 1099-C forgiving the debt. However, this is not to say that all lenders do this or that things may change in the future.
Special Right of Redemption
Many times the lender initiating the foreclosure complaint buys back the property at the judicial sale. If this is the case it triggers another right for the borrower called a special right of redemption. A right of redemption that applies if the purchaser of residential property at a foreclosure sale is the mortgagee and if the sale price is less than the total amount of principal, interest, costs, and attorneys' fees. Under those circumstances, the mortgagor has a special right to redeem up to 30 days after the foreclosure sale is confirmed by paying the sale price, all additional costs incurred by the mortgagee set forth in the report of sale and confirmed by the court, and interest at the statutory judgment rate from the date the purchase price was paid.
Possession of Property
The new owner of the property can take possession after the stay of enforcement expires. If the borrower is still in the property then the new owner may enforce the order of possession through use of the Sheriff by eviction. If the indivicual in possession of the property is a tenant that has resided at the premises since before the foreclosure case was initiated then the new owner must file a forcible entry and detainer action.
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