Illinois Foreclosure Laws and Procedures

Learn how the Illinois foreclosure process works.

By , Attorney (University of Denver Sturm College of Law)

Before the foreclosure crisis, federal and state laws regulating mortgage servicers and foreclosure procedures were relatively limited and tended to favor foreclosing lenders. However, federal and state laws now strictly regulate loan servicing and foreclosure processes. Many of these laws give protections to borrowers. Servicers generally must provide borrowers with loss mitigation opportunities, account for each foreclosure step, and carefully comply with foreclosure laws.

Also, most people who take out a loan to buy a residential property in Illinois sign a promissory note and mortgage. These documents give homeowners some contractual rights in addition to federal and state legal protections.

So, don't get caught off guard if you're an Illinois homeowner behind in mortgage payments. Learn about each step in an Illinois foreclosure, from missing your first payment to a foreclosure sale.

What Are My Rights During Foreclosure in Illinois?

In an Illinois foreclosure, you'll most likely get the right to:

  • receive a preforeclosure notice
  • apply for loss mitigation
  • participate in mediation (depending on the county)
  • get notice of the foreclosure and the chance to respond in court
  • receive special protections if you're in the military
  • pay off the loan to prevent a foreclosure sale
  • redeem the property after the sale (in some cases), and
  • get any excess money after a foreclosure sale.

What Is Preforeclosure?

The period after you fall behind in payments, but before a foreclosure officially starts, is generally called the "preforeclosure" stage. (Sometimes, people refer to the period before a foreclosure sale happens as "preforeclosure," too.)

During this time, the servicer can charge you various fees, like late charges and inspection fees, and, in most cases, must inform you about ways to avoid foreclosure, and send you a breach letter (a preforeclosure notice).

When Can a Foreclosure Start in Illinois?

Under federal law, the servicer usually can't officially begin a foreclosure until you're more than 120 days past due on payments, subject to a few exceptions. (12 C.F.R. § 1024.41). This 120-day period provides most homeowners ample opportunity to submit a loss mitigation application to the servicer.

What Is the Foreclosure Process in Illinois?

If you default on your mortgage payments for your home in Illinois, the foreclosure will be judicial.

What Are the Steps Involved in the Illinois Foreclosure Process?

A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. The lender gives notice of the suit by serving you a summons, complaint, and a notice advising you about your rights and how to get help during the foreclosure process. (735 Ill. Comp. Stat. § 5/15-1504.5). Most people get 30 days to file an answer to the suit.

Illinois law also requires the lender to record a notice of foreclosure in the county where the mortgaged real estate is located. (735 Ill. Comp. Stat. § 5/15-1503).

What Happens If You Don't Respond to an Illinois Foreclosure Complaint

If you don't respond to the suit, the lender will ask the court for, and probably receive, a default judgment, allowing it to hold a foreclosure sale.

But if you choose to defend the foreclosure lawsuit, the case will go through the litigation process.

What Happens If You Respond to an Illinois Foreclosure Complaint

The lender might then ask the court to grant summary judgment. A summary judgment motion asks that the court grant judgment in favor of the lender because there's no dispute about the critical aspects of the case. If the court grants summary judgment for the lender—or you lose at trial—the judge will enter a judgment and order your home sold at auction.

Foreclosure Mediation Programs in Illinois

Foreclosure mediation is available in some Illinois counties, including Cook County.

How Do Foreclosure Sales Work in Illinois?

Notice of the foreclosure sale must be published in a newspaper for at least three consecutive weeks, once per week, with the first notice published not more than 45 days prior to the sale and the last notice published not less than seven days prior to the sale. Not fewer than ten business days before the sale, the lender's attorney must send notice of the sale by electronic service (email) to all defendants appearing of record who have email and send notice by mail to all defendants not appearing of record. (735 Ill. Comp. Stat. § 5/15-1507, Illinois Supreme Court Rule 113).

At the sale, the lender usually makes a credit bid. The lender can bid up to the total amount owed, including fees and costs, or it may bid less. In some states, including Illinois, when the lender is the high bidder at the sale but bids less than the total debt, it can get a deficiency judgment against the borrower.

The property becomes "Real Estate Owned" (REO) if the lender is the highest bidder. But if a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in excess proceeds—that is, money over and above what's needed to pay off all the liens on your property—you're entitled to that surplus money.

How Long Do You Have to Move Out After Foreclosure in Illinois?

You (the foreclosed homeowner) can stay in the home for 30 days after the court confirms the sale. (735 Ill. Comp. Stat. § 5/15-1701, 735 Ill. Comp. Stat. § 5/15-1508).

What Are the Options Available for Borrowers During Foreclosure?

A few potential ways to stop a foreclosure include reinstating the loan, redeeming the property before the sale (or after the sale if you get that right), or filing for bankruptcy. Of course, if you can work out a loss mitigation option, like a loan modification, that will also stop a foreclosure.

Or you might be able to work out a short sale or deed in lieu of foreclosure and avoid a foreclosure. But you'll have to give up your home.

Reinstating the Loan

Under Illinois law, the borrower may reinstate the loan up to 90 days after being served with a summons or by publication or otherwise submitted to the jurisdiction of the court. (735 Ill. Comp. Stat. § 5/15-1602). As a practical matter, though, most loan servicers allow the borrower to reinstate at any time before the sale.

Is Illinois a Foreclosure Redemption State?

A "redemption period" is when a borrower in foreclosure may pay off the total debt, including the principal balance, plus certain additional costs and interest, to reclaim the property. In Illinois, the sale can't be held until the redemption period expires.

Redemption period before the foreclosure sale. The redemption period for residential properties expires at the later of either seven months after the complaint is served or three months from the date of judgment. But if the property has been abandoned, the redemption period can be reduced to 30 days from the date of judgment. (735 Ill. Comp. Stat. § 5/15-1603).

Special right of redemption after the sale. Additionally, Illinois law provides a 30-day special right to redeem after the date the sale is confirmed if:

  • the purchaser at the foreclosure sale of residential property was the lender who was a party to the foreclosure or its nominee, and
  • the sale price was less than the total debt (the total debt is the amount of the judgment plus expenses up to the date of redemption). (735 Ill. Comp. Stat. § 5/15-1604).

Filing for Bankruptcy

If you're facing a foreclosure, filing for bankruptcy might help. If a foreclosure sale is scheduled to occur in the next day or so, the best way to stop the sale immediately is by filing for bankruptcy.

Once you file for bankruptcy, something called an "automatic stay" goes into effect. The stay functions as an injunction prohibiting the lender from foreclosing on your home or trying to collect its debt, at least temporarily.

In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months. Or, if you want to save your home, filing for Chapter 13 bankruptcy might be the answer. To find out about the options available, speak with a local bankruptcy attorney.

Are Deficiency Judgments Allowed in Illinois?

The borrower's total mortgage debt sometimes exceeds the foreclosure sale price in a foreclosure. The difference between the total debt and the sale price is called a "deficiency."

For example, say the total debt owed is $400,000, but the home sells for $350,000 at the foreclosure sale. The deficiency is $50,000. In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount—in our example, $50,000—from the borrower.

In Illinois, a lender may obtain a deficiency judgment as part of the foreclosure action, but only if the borrower has been personally served in the foreclosure lawsuit (unless the borrower enters an appearance in the action). (735 Ill. Comp. Stat. § 5/15-1508).

What Are the Potential Consequences of Foreclosure in Illinois?

A foreclosure could result in severe consequences, like lower credit scores, a deficiency judgment (see above), or tax ramifications.

Where to Find More Foreclosure Resources

For more information on federal mortgage servicing laws and foreclosure relief options, go to the Consumer Financial Protection Bureau (CFPB) website.

Getting Help

If you have questions about Illinois's foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney. Talking to a HUD-approved housing counselor about different loss mitigation options is also a good idea.

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