Illinois Mortgage Foreclosure Laws
Illinois amended its Mortgage Foreclosure Law in late 2009 but remains a judicial foreclosure state. This generally means that foreclosures must be administered through court proceedings. Foreclosures can be completed in as little as 90 days but can take far longer if the borrower contests.
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Pre-Foreclosure
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Lenders conduct a title search prior to initiating foreclosure proceedings. The title search will identity any liens senior or junior to the lender's note. All lienholders, regardless of status, must be named in the lender's foreclosure suit to assure that a title free and clear of any encumbrances exists at the eventual foreclosure sale.
Judicial Foreclosure
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The judicial foreclosure process will start with the lender filing a Complaint to Foreclose with the court where the house is. Once filed, the complaint will be served upon the homeowner. The homeowner has 30 days from receipt of the complaint to file an Answer to the Complaint. If no answer is filed, the default order will be entered. If the homeowner files an answer contesting or disputing the foreclosure, then the court will set a hearing date and the matter may even proceed to trial.
Alternative to a Foreclosure
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Illinois law allows a deed in lieu of foreclosure under 735 ILCS 5/15-1401. Upon a default, the lender can accept the deed from the borrower without causing a foreclosure to be entered. Note that the lender must agree to this, and that merely tendering the deed to the lender will not by itself constitute a deed in lieu of foreclosure. Under 735 ILCS 5/15-1402 Illinois also allows for Consent Foreclosures wherein a borrower consents to absolute title vesting with the lender in exchange for the lender waiving rights to seek a personal judgment for deficiency against the borrower.
Sale by Sheriff
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Under Illinois law, a borrower has a 90-day redemption period from the date of a foreclosure order in which she can redeem. This period can be shortened to 30 days if the property is abandoned, or lengthened by court order. Once the redemption period has expired, then the house may be placed for sale. Notice of the sale will be published. Once the auction is completed, a Report of Sale is prepared within 10 days and confirmed by the court.
Contacting the Lender
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With the wave of foreclosures across the nation, it is advisable for a borrower to contact the lender to see if an arrangement can be made. The Home Affordable Mortgage Program (HAMP) is recent federal legislation that provides incentives to lenders willing to modify mortgages or approve a short sale, in which the lender accepts less than the amount due.
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