Laws Regarding Foreclosure of Property in Illinois

Chicago outpaced New York and Los Angeles in foreclosures during part of 2010.

Foreclosures are undertaken in the United States by either a judicial or nonjudicial process, which is specified in state law. In Illinois, foreclosures can only be pursued through the judicial process -- that is, through court action. While delineating the process as it relates to the lender and borrower, Illinois state law also spells out regulations pertaining to tenants who might live in a property under foreclosure.

Process

In an Illinois foreclosure, the lender begins the process by filing a "Complaint to Foreclosure Mortgage" in court and serving the complaint on the borrower. The borrower has an opportunity to answer the complaint within 30 days. If there is no answer, the lender asks the court for a default, which is an expedited approval for the foreclosure. If the borrower answers the complaint, he is given an opportunity to bring his defense to court. If and when a foreclosure is granted, the borrower is given between 30 and 90 days to redeem the property -- that is, to reclaim it by repaying the mortgage balance plus lender's fees and court costs. At the end of the redemption period, assuming the property has not been redeemed, it is sold at a sheriff's sale.

Time Frame

Real estate website RealtyTrac notes that an Illinois foreclosure could legally occur within a 90-day time-frame. The Illinois Housing Development Authority notes that the process actually takes about 13 months. However, mortgage and title service company LPS reports that foreclosures in the United States were averaging 492 days near the end of 2010. This figure also includes time frames from states that use the quicker nonjudicial process, as well states like Illinois that use the often slower judicial process.

Deficiency Judgment

A deficiency judgment is a court judgment against a borrower for any unpaid debt. In a foreclosure, a deficiency judgment is for the difference between what the borrower owned the lender and the amount of money the lender received for the foreclosed property upon the sale. Some states prohibit deficiency judgments after foreclosures. Illinois does not.

Legislated Tenants' Rights

If the court assigns the property to a receiver during the foreclosure process, which may happen if the borrower has abandoned the property or is otherwise not maintaining it, the receiver may not raise a tenant's rent without court approval. If the property is not purchased at the foreclosure sale and the lender takes title to the property, it must notify tenants within 21 days that it is the new owner, and it must inform them of their right to contact a lawyer or legal aid to understand their legal rights.

References

• RealtyTrac: Illinois Foreclosure Laws
• Illinois Housing Development Authority: Foreclosure Q & A
• LPS Mortgage Monitor: November 2010 Mortgage Performance Observations
• Connecticut General Assembly; Comparison of State Laws on Mortgage Deficiences and Redemption Periods; James Orlando; July 2010
• National Housing Law Project: State and Local Tenant Protections