If you're a homeowner in Illinois facing the scary prospect of losing your home to foreclosure, don’t be caught off guard. Read on to find out each step in an Illinois foreclosure—from missing your first payment all the way to eviction—and learn about your rights during the process. (For more articles on foreclosure in Illinois, visit our Illinois Foreclosure Law Center.)
When borrowers take out a loan to purchase residential property in Illinois, they typically sign a promissory note and a mortgage.
What is a promissory note? A promissory note is basically an IOU that contains the promise to repay the loan, as well as the terms for repayment.
What is a mortgage? The mortgage provides security for the loan that's evidenced by a promissory note.
If you miss a payment, most loans include a grace period of ten or fifteen days after which time the loan servicer will assess a late fee.
The late fee is generally 5% of the overdue payment of principal and interest. To find out the late charge amount and grace period for your loan, look at the promissory note that you signed. This information can also be found on your monthly mortgage statement. (Learn more about fees that the lender can charge if you’re late on mortgage payments).
If you miss a few mortgage payments, your servicer will probably send a letter or two reminding you to get caught up, as well as call you to try to collect the payments. Don’t ignore the phone calls and letters. This is a good opportunity to discuss loss mitigation options and attempt to work out an agreement—like a loan modification, forbearance agreement, or payment plan—so you can avoid foreclosure. (Learn Ten Steps You Can Take to Prevent a Foreclosure.)
Under federal law, the servicer generally must wait until you're 120 days' delinquent on payments before filing the case in state court to start the foreclosure. This preforeclosure waiting period should give you sufficient time to explore loss mitigation opportunities.
In Illinois, foreclosures are judicial, which means the lender (the plaintiff) must file a lawsuit (a complaint) in state court. The complaint is served to the borrower, along with a summons that typically provides 30 days for the borrower to file an answer.
If you don't respond to the court action within the specified amount of time, the lender can get a default judgment from the court. On the other hand, if you file an answer, the lender can't get a default judgment. Instead, the lender will either:
If the court grants summary judgment for the lender or you lose at trial, the judge will order the home sold at a foreclosure sale.
Foreclosure mediation is available in some Illinois counties.
A "reinstatement" is when the borrower pays the past-due amounts, plus all costs and fees, to bring a delinquent loan current. Illinois law provides that the borrower may reinstate the loan up to 90 days after the borrower has been:
As a practical matter though, most loan servicers allow the borrower to reinstate at any time before the sale.
A "redemption period" is the time period during which a borrower in foreclosure may pay off the total debt, including the principal balance, plus certain additional costs and interest, in order to reclaim the property. In Illinois, the sale may not be held until after the expiration of the redemption period.
The redemption period for residential properties expires at the later of either:
But if the property has been abandoned, the redemption period can be reduced to 30 days from the date of judgment.
Additionally, Illinois law provides a 30-day special right to redeem following the date the sale is confirmed if:
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.
Notice of the sale must also be mailed to the homeowner and any other defendants at least 10 business days before the sale.
At the foreclosure sale, the property will be:
Most properties revert to the foreclosing lender.
In a foreclosure, the borrower's total debt sometimes exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a "deficiency." In some states, the lender can seek a personal judgment (called a "deficiency judgment") against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount from the borrower.
In Illinois, a lender may obtain a deficiency judgment as part of the foreclosure action, but only if the homeowner has been personally served in the foreclosure lawsuit (unless the borrower enters an appearance in the action).
If you don’t vacate the property following the foreclosure sale, the new owner will likely:
While this article provides an overview of how foreclosures in Illinois work, keep in mind that state and federal laws are complicated. To learn more about state and federal foreclosure laws, or to find out if you have any defenses to a foreclosure, consider talking to an experienced foreclosure lawyer. If you have a strong defense to the foreclosure, you might be able to force the lender to start the process over or you might gain leverage in working out an alternative.