Understanding Illinois Foreclosure Law
Navigating the Illinois Foreclosure Law
In today’s uncertain economy, many families are unable or soon will be unable to make their mortgage payments. Clients who come to my law practice for advice are mortified at the thought of being thrown out of their home through foreclosure. Compounding their fears, homeowners who have missed a mortgage payment or a few payments fear that one day the sheriff will knock on their door and force them out of their home.
Fortunately, in Illinois, a homeowner who has missed a mortgage payment, or two payments, or even three payments, will not have to immediately move out of their home. In Illinois, missing a mortgage payment is not the end of living in your home. It’s just the beginning of the long process of foreclosure (in Illinois), a process where failure to pay the mortgage will not result in immediate eviction from your home.
Certainly, a mortgage default is cause for concern, however, it is not the end of the world. Additionally, understanding Illinois foreclosure law can help homeowners have less anxiety and make better decisions about their future home.
Illinois Law: Delinquent Mortgages Can Be Reinstated
Good news, under Illinois law, if a mortgage goes into default, the homeowner can reinstate their mortgage. Reinstatement is made by correcting all delinquent payments (paying back payments) and; pay all costs and expenses associated with the breach (generally back interest, late payment penalties, and attorney fees). Replacement payments must be made within 90 days of notification of default.
If the late payments along with interest, penalties, and attorney fees are paid within 90 days prior to the default notice, the mortgage document will remain in effect as if there had been no acceleration or default. See 735 ILCS 5/15-1602.
Illinois Law: Mortgages in Foreclosure Can Be Redeemed
More good news, under Illinois law, if a home goes into foreclosure, the owner can redeem their mortgage from the foreclosure process. When residential real estate is foreclosed, the homeowner is given a redemption period in which he can stop the foreclosure lawsuit and keep his home.
In Illinois, the owner has 7 months to redeem their home from the date the owner is served with a foreclosure order or served by publication. See 735 ILCS 5/15-1603.
To redeem your home from foreclosure, the homeowner must pay the following:
The amount set in the enforcement order, which will consist of
a) all principal and accrued interest secured by the mortgage and due on the date of judgment.
b) all costs allowed by law, this would include late payment penalties, additional interest from the date of judgment to the date of redemption, attorney’s fees and other administrative fees.
In my bankruptcy practice, I often counsel clients who have missed one or two mortgage payments. They are afraid that the sheriff will knock on his door to evict them from his house.
Fortunately, Illinois foreclosure laws allow homeowners (through restitution or redemption) the ability to keep their home and give a homeowner who has missed mortgage payments ample time to “save” your home.
What to expect if you miss a mortgage payment (don’t worry)
In general, mortgage lenders, big banks, and corporations that make mortgage loans are bureaucracies and usually can’t foreclose if you haven’t made a single mortgage payment. This systemic inability to take action is frustrating, but it’s actually beneficial if you haven’t made a mortgage payment lately.
At my law firm Thinking Outside the Box Inc., our experience has been that the mortgage company probably won’t even notice until you’ve missed three or four payments (usually). We often have clients who have missed three to five payments and have had no contact with the lender regarding the missed payments. We have seen that if you miss three or four payments and receive a default letter stating that you have thirty days before the mortgage company files a foreclosure lawsuit.
Next, your mortgage company will commission a local law firm to file a lawsuit to foreclose on your home in state court.
DON’T WORRY. You have 90 days to reinstate your mortgage if you are in default or 7 months to redeem your mortgage if you go into foreclosure.
Even if you eventually lose your home to foreclosure, you generally won’t have to leave your home for 9 to 12 months from the time you stop making your mortgage payments.
What should I do if I am unable to make my mortgage payments or in the near future am unable to make my mortgage payments?
Step one: make the decision
The most important decision to make is “can I afford the house I live in?” Some of our clients have paid thousands of dollars to their mortgage company only to later lose their home. Be honest with yourself, don’t throw your money away on a house that you will eventually lose.
If it’s long term, you’ll be able to make up the late payments and keep up with subsequent payments, then you’ll be able to keep the house… if it’s long term, you won’t be able to make up the late payments and still keep going doing normal. scheduled payments, then you can’t keep the house.
Step Two: Choose Your Optimal Strategy
KEEP YOUR HOME: If you decide you can keep the home, call your lender and make a plan to clear up the arrears. If you need time, you can file a Chapter 13 bankruptcy. Under Chapter 13 bankruptcy, the Court requires your mortgage company to allow you to make up missed payments over time (3 or 5 years). Filing a Chapter 13 bankruptcy will also stop the foreclosure process.
RETURN YOUR HOUSE TO THE LENDER: If you decide that you cannot pay for your house in the long term, you will have to return it to the lender. Since you have already missed some payments, the foreclosure process will follow its natural course. After missing three or four payments, the lender will file a foreclosure lawsuit, from the time he receives the lawsuit. Illinois law allows you to continue living in the house for an additional 7 months (without having to pay anything). This grace period gives you time to save money before you move.
UNDECIDED WHETHER TO STAY HOME: If you are not sure if you can afford to keep your home here is the optimal strategy. There is no point in continuing mortgage payments if your financial situation is uncertain and you cannot choose one of the two strategies above. Immediately stop making mortgage payments, but don’t stop making payments and spending the money. Stop making payments and put your normally scheduled payments into a checking or savings account. Then, if your finances improve, take the savings, pay off late payments and fees, and keep your home. If it eventually turns out that your finances don’t improve, allowing you to keep the house, you’ll have some money to help finance your move and put down a deposit for more affordable rent.
If you’re having trouble making your mortgage payments, don’t worry too much. If you miss a payment or multiple payments, you won’t lose your home right away. Illinois foreclosure law will allow you to restore or redeem your home and give you a good amount of time to do so.
Finally, this article is general information about foreclosures based on Illinois Law; however, it cannot replace the advice of an experienced bankruptcy attorney who practices law in the state where he lives.
Thinking outside the box, Inc.
Attorney Jon Dowat
4320 Winfield Road Suite 200
Warrenville, IL 60555
630-225-9840 or 630-780-8474