When you don’t pay your mortgage in Illinois, your lender is entitled to foreclose. The lender must follow strict requirements under both Illinois and federal law. Don't ignore demands or legal papers you get from a mortgage lender or its attorney. You may have substantial rights, but only if you defend yourself.

Before a lender can foreclose, it must first give you a notice of default as provided in your mortgage and note. In addition, the lender must give you the 30-day notice required by the Fair Debt Collection Practices Act. This gives you the opportunity to object to the claimed amount due. The lender must verify the amount due before proceeding.

The lender may then file a complaint against you in court. A sheriff or other process server will deliver a copy of the summons and complaint. Don't ignore it. If you don't file an appearance or answer by the date specified, the court could enter a default judgment against you (which means that your mortgage may be automatically foreclosed).

In order to respond to a mortgage foreclosure, consider what your objectives are:

  • Short sale: avoid deficiency
  • Modification agreement: keep the house and change the mortgage terms
  • Mortgage issue: maybe you are the victim of a predatory mortgage
  • Bankruptcy: maybe you should consider bankruptcy under Chapter 7 or 13

What to do after you receive a mortgage foreclosure notice

Determine what the house is worth today. Determine what you owe on the house. Decide whether keeping the house makes economic sense. If so, you need to get more money from somewhere. Consider the following options:

  • Increase your income or cut expenses
  • Get help from a relative or friend
  • Try to renegotiate the mortgage

You may also contact various credit counseling services, many of which might be set out in the notice that comes with the summons.

What to do when you receive a complaint

Don't ignore the complaint. Instead, do the following:

  • Go to court and file your appearance.
  • Ask the court for additional time in which to find an attorney.
  • Find an attorney who understands mortgages.
  • Get your documents together, including:

    • All documents from the origination of the loan-preferably exactly as you received them
    • A complete history of all payments on your loan
    • All correspondence with your loan servicer (the company to which you've sent your payments)
  • Get your plan ready

An attorney can file an answer, a motion, or even a counterclaim for you. The answer will admit or deny the things the lender says in its compliant. A motion might argue that there is something technically wrong or legally insufficient with the complaint. A counterclaim might say that you have claims against the lender, which negate the claims the lender has against you. Your lawyer might even file a cross-claim against someone else, like your mortgage broker, who may have done something wrong. This is a highly technical area of law and it is sometimes very difficult for a borrower to effectively represent him or herself effectively.

Above all, don't default. You will soon face a default judgment and the foreclosure and sale process will accelerate.

Right to reinstate

From the time a mortgage foreclosure is commenced, you have the longer of 7 months or 3 months from the entry of a judgment of foreclosure and sale to reinstate your mortgage loan. This requires payment of all back payments (including costs, expenses, and attorneys fees), to the lender. If you can come up with this money and keep your mortgage current in the future, this may be a good option.

Foreclosure and sale

After the default or other judgment is entered against a homeowner, the mortgage holder still must offer the property for sale at public auction. Proper notice and advertisement must be listed both in the legal and real estate classified sections of a local newspaper. After the sale, the sale must be confirmed before the buyer gets a deed. Only then can you be evicted from your home. In Illinois, the process of foreclosure might take almost a year to complete, from start to finish. If you effectively defend, it could take even longer.

What to do during the mortgage foreclosure response process

Don't ignore anything. Defending your foreclosure will delay the process. You may have meritorious (money-related) options. Lenders often will negotiate terms favorable to you in order to minimize the cost and expense of a foreclosure to them. Work with your lawyers, cooperate with them, and make any required court appearances. It's also important to follow your lawyer's instructions about payments.

Bankruptcy may be an option

One advantage of bankruptcy under Chapter 13 is that it will stop the foreclosure process while you try to organize a plan for repaying your debts and mortgage arrears. You may be able to litigate claims against your lender in the bankruptcy court as well. Chapter 7 may also be an option. With Chapter 7, you may be able to discharge any deficiency judgment in the foreclosure and remain in your home for several months.

Mortgage Rescue Scams

People will try to get you to deed your house to them so that you can lease it back and maybe improve your credit and buy it back someday. These are scams and frauds. Avoid them at all costs. Never deed your house to anyone just because you are involved in a mortgage foreclosure.

What the foreclosure process may cost

If you hire a lawyer, you should expect to pay reasonable attorney fees. This is money worth spending, especially if you have equity in your home. Attorneys' fees depend on their experience and areas of expertise. Do not be shy about discussing fees. If you can't afford the proposed fee arrangement, tell the attorney what you can afford. You may be able to work out an arrangement that works for both of you. Chances are the attorney fees will be less than the mortgage payments you had been making previously.

Additional resources:

Illinois Legal Aid: Mortgage Foreclosure: What to Do When It Happens and Where to Get Help

American Bar Association: Illinois Mortgage Foreclosure And Eminent Domain Procedures

Related Legal Guides:

Bankruptcy vs. Foreclosure