Foreclosure in Illinois

How an Illinois foreclosure works, step by step

1. Under federal rules, a servicer generally can't make the first foreclosure filing until the loan is more than 120 days past due.
2. In a home foreclosure, the lender must attach a Homeowner Notice to the court summons. Among other things, it tells you that the people living in the home can stay until a judge enters an eviction order, and that you keep owning the home until the court rules otherwise.
3. After you're properly served with the complaint, you have 30 days to file your Appearance and Answer.
4. You can reinstate, meaning bring the loan current, by paying all missed amounts and the costs the mortgage requires, within 90 days after you're served.
5. For a home, the redemption period ends on the later of 7 months after you're served or 3 months after the judgment of foreclosure. The judgment must list the last date you can redeem.
6. Once the reinstatement and redemption periods are over, the home is sold on the terms the court set in the judgment. The sale notice is published once a week for at least 3 weeks in a row, the first no more than 45 days before the sale and the last at least 7 days before it.
7. After the sale, the court holds a hearing and confirms it, unless it finds that required notice wasn't given, the terms were unconscionable, the sale was fraudulent, or justice otherwise wasn't done.
8. The order confirming the sale gives the buyer possession starting 30 days after the order is entered.

Your two windows: reinstatement and redemption

During the redemption period, you have the right to sell the home, refinance or pay off the loan.

• If the court finds in writing that you reinstated, you can't use reinstatement again on the same mortgage for five years.
• With some exceptions, you can't sign away your reinstatement and redemption rights ahead of time. A waiver like that is void.
• Once a foreclosure has started, you can give those rights up only by written consent filed with the court, and only if the lender gives up any deficiency judgment.
• You have a right to a written payoff statement. Your mortgage company must send it within 10 business days of a written request that includes your name, the property address and your loan number.

In my view, the redemption period is a window worth using. You still own the home, and you can still sell it on your own terms.

How long it takes

Foreclosure generally can't legally start until you're at least 120 days behind. Once it starts, how long you have until the sale depends on your state.

For FHA loans, HUD's time frame runs from the first legal action until the lender has clear title to the home and possession of it. In Illinois, that's 17 months, and the first legal action is a court complaint.

Inside that, the redemption period alone runs to the later of 7 months after you're served or 3 months after judgment. The sale notice can go out before the reinstatement or redemption period ends.

These are official markers, not a forecast. Your case can move faster or slower, so don't count on extra time.

Mediation

In Cook County, homeowners who've received a foreclosure summons can get housing counseling and legal help at no charge through the court's mediation program. The first step is a free meeting with a housing counselor. Outside Cook County, check with your local courthouse to see whether your county has a program.

After the sale: surplus and deficiency

You have the right to ask the court for any money left over from the sale. If there's a surplus, everyone in the case gets written notice of the amount. The money is held until someone gets a court order for it, and if no one does, it can be forfeited to the State.

When the court confirms the sale, it also enters a personal judgment for any deficiency, the amount still owed, if the law allows it, the lender asked for it in the complaint, and it's proven.

Selling while you're behind: the Mortgage Rescue Fraud Act

Under this law, a distressed property is a home with 1 to 6 units that's in foreclosure, at risk of loss for unpaid taxes, or whose owner is more than 30 days behind on a loan secured by it.

• A buyer who approaches a distressed homeowner must use a written contract in at least 12-point bold type, in the language used to negotiate, signed, dated and notarized, before any deed is signed.
• If the deal transfers title, the contract must say in large bold type: "As part of this transaction, you are giving up title to your home."
• You can cancel until midnight of the fifth business day after signing, or until 8:00 a.m. on the last day of the redemption period, whichever comes first.
• A paid distressed property consultant can't collect any fee until every promised service is done.
• Criminal mortgage rescue fraud is a Class 2 felony.

The Homeowner Notice itself tells you that, before any deal with people offering to help you avoid foreclosure, you should contact a lawyer, a government official or a housing counselor.

That includes me. If I make you an offer on an Illinois home, the contract should follow these rules, and you should take it to a counselor before you sign.

Free help in Illinois

• IHDA: saving my home. Foreclosure prevention counseling is free for Illinois homeowners who are having trouble with their home loans, or might soon.
• IHDA: housing counseling programs. Find a counseling agency.
• Illinois Attorney General: homeownership. The Attorney General's homeowner page.
• Illinois courts: mortgage foreclosure forms. The Appearance and Answer forms and instructions.
• Circuit Court of Cook County: mortgage foreclosure mediation. How to start mediation in Cook County.