 Illinois Loan Modification Guidelines
When you develop a definite plan of action with well-timed, well-informed
steps, you can stop the foreclosure process and save your home. We have
outlined the foreclosure process for the state of Illinois.
Judicial Foreclosure Available: Yes
Non-judicial Foreclosure Available: Yes
Preferred Method of Foreclosure
Judicial. Illinois does not allow power of sale non-judicial foreclosures.
They are explicitly banned by statute. Instead, foreclosure is done by
filing a lawsuit. The suit may seek either strict foreclosure or a foreclosure
under the Illinois Mortgage Foreclosure law. The latter approach is much
more common that strict foreclosure. A new procedure also exists to speed
up the judicial foreclosure under the Illinois Mortgage Foreclosure Law
called "consent foreclosure." The Illinois Mortgage Foreclosure
law spells out in detail what must be included in the lender's lawsuit
(petition) for foreclosure. If the lender strictly observes the requirements
for proper petition, then it is possible for the lender to win the lawsuit
by motions without having to go to trial.
Consent Foreclosure
A consent foreclosure will vest all the borrower's rights and title and
the lender free and clear of all claims (except liens of the U.S. Government)
including rights of reinstatement and redemption of any junior lien holder
who was properly joined and who failed to object. Upon objection, the court
may hear such evidence as required and enter an order that title vests
subject to the lien, or if the junior lien holder pays the balance on the
mortgage plus any additional interest, within 20 days of the entry of a
court order commanding the same, then the junior lien holder can redeem
the property. The final judgment in a consent foreclosure must recite the
lender's waiver of right to any personal judgment for a deficiency and
will bar a deficiency against not only the borrower, but any co-borrower
or other person who is liable for the mortgage.
Parties
Illinois has rather elaborate requirements about who must and who may
be party to the lawsuit. A person who must be party to the lawsuit is a
necessary part, a persona who may be party is permissible party., The borrower
and any other person obligated on the note are necessary parties. Permissible
parties include the owner of the loan note and any trustee. A few others
such as tenants or other persona in possession, guarantors, the State of
Illinois, the U.S. government, a mechanic's lien claimant, an assignee,
and any other mortgagee or person with any claim to title may be joined.
Any person joined retains any lien or claim. A non-record claimant must
come forward or lose out. Other complicated rules govern interventions,
or entry of outside parties to the lawsuit.
Plaintiff's Complaint (Lender's Lawsuit)
The lender must begin the lawsuit by filing a plaintiff's complaint (also
sometimes called a petition) and having it served on the borrower. The
complaint must include the following:
- The nature of the instrument on which foreclosure is sought, whether
it is a mortgage, a trust deed or another instrument.
- The date of the mortgage, the lender's and borrower's names, the
date and place of recording and the book and page number or document
number.
- The ownership interest subject to the mortgage, such as fee simple,
etc.
- The amount of the original indebtedness, including subsequent advances.
- A legal description of the property.
- A description of the default, including the balance due, the date
of the default and any further information on the default.
- The name of the present owner
- The names of the persons who are joined as defendants and whose
interests are sought to be terminated.
- The names of any persons who are joined as defendants and whose
interests are sought to be terminated.
- The names of any persons who are to be personally liable for a deficiency.
- Any facts that justify a shorter redemption period than seven months
from the service (or publication) of the summons or three months from
the entry of judgment of foreclosure. (The statute suggests a shorter
period would be justified if the real estate had a value of less than
90 percent of the amount owed on the loan.)
- A statement that the right of redemption has been waived, if it
has been
- Facts to support attorney's fees
- Facts to support the appointment of a receiver, if desired by the
lender.
- A statement that the lender will accept title in lieu of any other
action against the borrower, if the lender so desires.
The lender should conclude by asking for a judgment of foreclosure and
sale, an order shortening the redemption period (if requested), a personal
judgment of a deficiency (if requested), a personal judgment for a deficiency
(if requested) and an order granting possession. If these allegations are
made, as described above and supporting documents such as copies of the
note and deed of trust are attached, then the lender's complaint will be
deemed to include the allegation necessary for a foreclosure.
Special Matters
Special matters can be included in judgment, if requested in addition
to the allegation previously described. These would include a request for
a sale by sealed bid, a manner of sale other than a public auction, any
fees to a broker or auctioneer, any signs to be placed on the property,
the newspaper or newspapers in which the notice of sale shall be published,
the formats of the ads, the requirements that title insurance be provided
at the foreclosure sale and such other matters as the court approves to
ensure the most favorable commercial price for the type of real estate
involved.
Regular Sale
If requested and agreed to by the parties, the property can be sold to
the first person who offers in writing to buy the real estate for such
commercially reasonable terms as the parties may agree to, and the court
shall then offer the sale in such a matter , subject to its subsequent
confirmation after it is closed. The advantage of this procedure is that
a broker could be employed to find a buyer at a decent price, which would
be better than what the property would get at a sheriff's auction. The
court must confirm the sale.
Notice of Sale
If the property is to be sold by sheriff's auction, then a notice of sale
must be published and include the following:
- The name, address and telephone number of a person who can be contacted
regarding the purchase of the real estate.
- The real estate must be described
in terms of its common address (other than a legal description), its
legal description, and its improvements.
- The times the property can be
inspected prior to the foreclosure sale.
- The date, time and place of
the foreclosure sale including the terms of the sale.
- The case title,
case number and court in which the foreclosure lawsuit is filed.
- Any
other information required by the court.
The notice must be published in the usual newspaper for legal notices
in that county once a week for three consecutive calendar weeks, the first
such notice must be 45 days prior to the sale and the last notice not less
than seven days prior to the sale.
If the sale is to be adjourned more than 60 days, then notice must be
republished, if less than 60 days, the person conducting the sale can announce
the date, time and place for the adjourned sale.
Sale Procedures
After the sale, the borrower gets a receipt that the property has been
sold. Once the sale price is paid, certificate of sale shall be issued
to the buyer. A duplicate of the certificate must be recorded. Upon confirmation
of the sale by the court, a deed may be given to the buyer at the foreclosure
sale. The confirmation hearing can also provide for a deficiency.
Redemption
The right to redemption may be waived by the borrower in the mortgage
instrument, or after the commencement of foreclosure by written consent
filed with the clerk of the court, but only if the lender thereupon waives
the right to a deficiency. However, waivers signed prior to July 1, 1987,
may still be valid. Otherwise, the borrower has the right to redeem the
property within seven months from the date the lawsuit to foreclose was
filed, or three months after the date the judgment was entered by the court.
Other creditors have six months to redeem. The redemption period may be
extended by the court. If a bankruptcy court stays (delays) the redemption,
then under Illinois law, the redemption runs to 30 days after the stay
expires, or the normal period minus the period of the stay whichever is
longer. In any case, whether bankruptcy is involved or not, a notice of
the intent to redeem must be filed with the court 5 days before the redemption
rights are exercised. The amount to redeem the property shall be that specified
by the court in its judgment ordering foreclosure. The redemption amount
shall be paid to the court clerk. If there is no objection, the clerk will
give a receipt for the redemption amount, and the lender must then furnish
the borrower with a release of the mortgage or satisfaction of the judgment.
If there is an objection, the court will promptly hold hearing and rule
on the objection. A special right to redeem exists if the lender attempts
to sell the property at foreclosure for less than the court-specified amount.
The borrower can then redeem at the price for which the lender tried to
sell the property.
Reinstatement
The borrower has the right to reinstate the loan within the first 90 days
after being served with the lawsuit.
Possession
One of the most frightening features of the Illinois foreclosure law is
that the lender can obtain physical possession of the premises during the
foreclosure lawsuit and prior to entry of a final judgment. In fact, at
an early stage in the lawsuit, upon request of the lender and for good
cause show such as damaging the property or abandonment, the court can
put the lender in possession of the property and evict the borrower. The
court must be satisfied there is a reasonable probability that the lender
will prevail upon a final hearing of the case. However, an existing tenant
cannot be evicted, but the lender can collect the rents. A receiver may
be appointed to take charge of the property and the rents. Foreclosure
buyers can obtain possession within 30 days. Otherwise, a lender can obtain
possession from the borrower 30 days after the confirmation of sale.
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