Knowing Illinois foreclosure laws is crucial, especially if you missed that first mortgage payment. This is a scary moment, especially if you don’t know what will happen.

The good news is that now things have changed.

State of Illinois laws requires servicers to mitigate losses to borrowers during the foreclosure process in Illinois. They also have to comply with strict laws when signing a promissory note.

In doing so, you get these rights:

  • Receive a notice “breach letter.”
  • Depending on the county, you can apply for loss mitigation.
  • Get a chance to respond in court.
  • Other actions we will review in this article.

We will dive into each step so that you will be more informed and know your rights.

Preforeclosure in a nutshell

As the name suggests, preforeclosure happens before foreclosure and after you fall behind in your payments. Servicers may begin charging you late fees and inspection charges.

Servicers will also have to notify you about how to prevent foreclosure. They will send you a “breach letter” that notifies you that you are in the preforeclosure stage.

Federal Mortgage Service Laws and Foreclosure Protection:

(12 C.F.R. § 1024.30, 12 C.F.R. § 1024.39, 12 C.F.R. § 1024.40).

If the property is your primary residence, servicers must contact you no later than 36 days after you miss a payment. They must do this to discuss loss mitigation options with you, such as mortgage forbearance, repayment plan, or a loan modification option.

Once you reach 36 days, the lender starts calling you about your missed payments. After 45 days, they have to notify you in writing.

The breach letter:

The “breach letter” is a letter from the lender that notifies you that you are in default.

The foreclosure start period:

Federal law states that servicers cannot begin foreclosure until you are 120 days past due on your payments.

Foreclosure process in Illinois

The foreclosure process becomes judicial after you default on your loan in Illinois.

Judicial foreclosure process:

(735 Ill. Comp. Stat. § 5/15-1504.5).

You have 30 days to answer the summon complaint. The summons is a lawsuit the lender files asking the court to begin the foreclosure process.

The lender also gives you a “summons complaint” notice highlighting your rights during the foreclosure process.

Foreclosure mediation:

While a great option, foreclosure mediation is only available in some counties in Illinois. You will receive a default judgment if you do not respond to the suit, allowing the lender to move forward with the sale.

You can also choose to go through the litigation process. In this, the lender can ask the court to go in their favor through a summary judgment.

Foreclosure sale:

At the sale, the lender can bid up to the amount owed on the loan plus any accrued fees. The complete bid is known as a credit bid. If no one bids on the property, the bank owns the property. Bank-owned properties are known as Real Estate Owned (REO).

You are entitled to the excess proceeds If a third-party overbids and wins.

Moving out after Foreclosure:

(735 Ill. Comp. Stat. § 5/15-1701, 735 Ill. Comp. Stat. § 5/15-1508)

After the court confirms the foreclosure, you have up to 30 days before the county can legally evict you.

4 Ways to stop foreclosure in Illinois:

  • Reinstating the loan
  • Redeem property before the sale
  • Go through the loan modification process
  • Start bankruptcy process
  • Sell your home

1. Reinstating Loan

You can reinstate the loan if you are the borrower in Illinois. You will have up to 90 days to do so after you are served a summons.

2. Redeeming the Property

Redemption Period: No later than seven months after the complaint is served. This period can be reduced.

Special Rights: You have up to 30 days to redeem your property if the bank made the purchase or if the third party paid less than all the debts owed.

3. Loan Modification Process

Consider a loan modification if you can’t afford your mortgage payments in Illinois. Contact your lender, be honest about your financial situation, and fill out an application with financial documentation. If you qualify, your lender will propose new loan terms. Review carefully before signing, make your new monthly payments on time and in full, and work closely with your lender.

4. Filing bankruptcy

An “automatic stay” goes into effect right when you file for bankruptcy. This immediately stops the sale. It also stops the lender from collecting debts for some time.

Illinois deficiency Judgement Laws

(735 Ill. Comp. Stat. § 5/15-1508).

If the borrower serves in the foreclosure lawsuit, the lender may collect the difference owed on the mortgage. This is known as a deficiency.

Illinois foreclosure status and resources

You can find state resources through your official state website. You can visit the Library of Congress legal research site for federal resources.

More Resources:

You can visit the M.H.A. Website or Consumer Financial Protection Bureau for additional resources.

Getting Help:

It’s always recommended to seek help from a professional that knows Illinois foreclosure laws. Talk to a foreclosure attorney when you face this issue or need help.

5. Sell your home

If you’re struggling to keep up with mortgage payments in Illinois, selling your home may be a viable option to avoid foreclosure.

Being transparent about your financial situation and any outstanding debts is important. With the right price, you may be able to sell your home quickly and avoid the damaging effects of foreclosure on your credit and financial well-being.

You can reach out to a real estate agent to sell your property. However, if you want to fast-track the sale of your home, let us know how we can help. We can provide you with a free, no-strings offer for your property. Schedule a free walkthrough of your home today by calling us at 847-710-7093

Illinois Foreclosure Laws Final Thoughts

If you are tired of dealing with Illinois foreclosure laws and just want to sell your home, let us know how we can help. Our company, Creative Smart Investments, LLC has extensive experience purchasing foreclosure homes at a fair value and ensuring sellers can remove this stressor from their life. Contact us today for more information at 847-710-7093 about how to sell your home.