The entire process in Illinois
takes, on average, from the filing of the complaint to the eviction by the
sheriff, nine months. Foreclosure defense in court is seldom successful in
defeating the foreclosure action but may prolong the foreclosure by as much as
24 months. If the property is not residential or is abandoned, the
process can be substantially shortened. The following is an outline of
a typical foreclosure case:
Filing of Foreclosure
Personal Service of Summons
Foreclosure Judgment and
Order of Sale
Expires (90 days after personal service)
Redemption Period Expires
(7 months after personal service or 3 months after judgment, whichever is
Foreclosure Sale Confirmed
Right to Possession Expires
(30 days after foreclosure sale confirmed)
Eviction by Sheriff of Named
Recording of Foreclosure Deed
Why It Matters
The homeowners risk the loss of their home (including any accumulated
equity), a personal judgment for the debt, and the loss of future credit, since
a foreclosure judgment appears on credit reports.
Default: The date of the first missed payment.
Reinstatement: Payment of past-due amounts, including all
accumulated costs and fees, bringing the account current. 735 ILCS 5/15-1602. This right is only available once
every five years. The mortgagor has the right to reinstate the
mortgage within 90 days from the date the mortgagor was served with a
summons or is served by publication or was otherwise submitted to the
jurisdiction of the court.
Redemption: Payment of the full principal balance, all
accumulated interest, fees, and costs. In the case of residential real
estate, 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.
Special 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. 735 ILCS 5/15-1604.
Mortgage: Mortgages for this purpose include real estate installment
contracts of more than five years duration, entered into after July 1,
1987, whose balance is less than 80% of the original purchase price. IMFL
provides the exclusive method for foreclosing on all mortgages. In
addition, the secured party in some UCC actions may elect to use IMFL, if the
security interest is based on the assignment of a real estate installment
contract or the beneficial interests in a land trust.
If the house is not yet in foreclosure, the client should immediately
contact the lender and try to work something out. The client should pay as much
as possible and save any money returned by the lender.
Once the house is in foreclosure, the client should decide if they
can and wish to keep the house or if they wish to move. A realistic and
careful assessment of the client’s income and expenses must be done to
determine if it is feasible to keep the home. If the homeowner is to
keep the house, they must reinstate, redeem, file a
Chapter 13 bankruptcy, or attempt a work out with the
lender. If the homeowner does not want to keep the house,
the client can sell the house, offer a deed-in-lieu of foreclosure,
or file bankruptcy.
Sales: The house can be sold at any point through the final
redemption date. Proceeds are used to redeem the mortgage. This is
a particularly good option for a homeowner who has substantial equity in the
home. An assumption of the mortgage by the purchaser is also
possible. The lender may also agree to a short-sale – a sale for
less than the debt – if the house has been assessed at less than the value of
the debt. A short sale has tax consequences – forgiveness of debt is
income – and buyers should be advised accordingly.
Deed-in-lieu: The client deeds the house to the lender and moves out
in exchange for a release from personal liability on the debt. The
procedures are set forth at 735 ILCS 5/15-1401. There can be no junior liens on the
property for this to work. The Illinois ARDC recommends that the homeowner use
an attorney for the preparation of these documents to avoid chances of
practicing law without a license.
Bankruptcy: If the buyer has enough regular income that they can
bring the mortgage current within 36 months, they may be eligible for a Chapter
13, which would allow them to keep the house. If not, they can file a
Chapter 7, which will allow them to escape personal liability for the
debt. A Chapter 7 will not let the buyer keep their home. A
bankruptcy filing, either Chapter 7 or Chapter 13, will stay foreclosure
proceedings and extend the redemption deadline. Chapter 7 bankruptcy is not an
option if they have filed another Chapter 7 petition in the last eight
years and if a discharge was a granted in the prior bankruptcy.
The client may continue living in the house until after the sale.
Until the sale or a deed in lieu of foreclosure, the homeowner is responsible
for the upkeep of the property.
Unnamed parties, including tenants, who came into possession before the
foreclosure proceedings, cannot have their right to possession terminated by
the Order Approving Sale. The Plaintiff must obtain either a Supplemental
Order of Possession or file a forcible entry and
detainer action. Tenants have no defense to either of these actions,
although they may enter an appearance in foreclosure action if they wish.