How to navigate Illinois Foreclosure Law
In today’s uncertain economy many families are unable or will soon be unable to make their mortgage payments. The clients who come to my law practice for counseling are mortified with the thought of being thrown out of their house through foreclosure. To compound their fears homeowners who have missed a mortgage payment or a few payments are fearful that any day the sheriff will knock at their door and force them to leave their home.
Fortunately, in Illinois a homeowner who has missed a mortgage payment, or two payments, or even three payments will not immediately have to move out of their homes. In Illinois missing a mortgage payment is not the end of living in your home. It is only the beginning of the long process of foreclosure (in Illinois), A process where missing a mortgage payment will not result in immediate eviction from their home.
Certainly, missing a mortgage payment is cause for concern, however, it is not the end of the world. Further, understanding Illinois foreclosure law can help homeowners have less anxiety and make better decisions about their future living accommodations.
Illinois Law: Mortgages in default can be reinstated
Good news, under Illinois law if a mortgage goes into default a homeowner can reinstate their mortgage. Reinstatement is effected by curing all the defaulted payments (paying the missed payments) and; paying all costs and expenses associated with the default (usually back interest, late payment penalties, and attorney’s fees). The reinstatement payments must be made within 90 days from the notice of default.
If the missed payments along with the interest, penalties, and attorney fees are paid in the 90 days prior to the notice of default the mortgage document shall remain in force as if no acceleration or default had occurred. 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 homeowner can redeem their mortgage from the foreclosure process. When the mortgage on residential real estate is foreclosed on the homeowner is granted a redemption period in which to stop the lawsuit for foreclosure and retain their home.
In Illinois the homeowner has 7 months to redeem their home from the date the homeowner is served with a summons for foreclosure or served by publication. See 735 ILCS 5/15-1603.
To redeem their home from foreclosure the homeowner must pay the following:
The amount specified in the judgment of foreclosure which shall consist of
a) all principal and accrued interest secured by the mortgage and due as of 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 and other administrative fees.
In my bankruptcy practice, I often counsel with clients who have missed one or two mortgage payments. They are afraid the sheriff will be knocking on their door to evict them from their home.
Fortunately, Illinois foreclosure laws allow homeowners (through reinstatement or redemption) the ability to retain their home and gives the homeowner who has missed mortgage payments ample time to “save” their home.
What to expect if you miss a mortgage payment (don’t worry)
Generally, the mortgage lenders, large banks and corporations that do mortgage lending are bureaucracies and are generally unable to foreclose if you have missed a single mortgage payment. This systemic inability to take action is frustrating, but is actually beneficial if you have not made a mortgage payment recently.
At my law firm Thinking Outside the Box Inc. our experience has been that the mortgage company probably won’t even notice you until you have missed three or four payments, (generally). We often have clients who have missed three to five payments and have had no contact with the lender regarding the missing payments. We have observed that if you miss three or four payments and you will get a letter of default stating you have thirty days before the mortgage company will file a suit for foreclosure.
Next, your mortgage company will task a local law firm to file a lawsuit to foreclose on your home in the state courts.
DO NOT 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 ultimately lose your home in foreclosure generally you will not have to leave your home for 9 to 12 months from the time you stopped making mortgage payments.
What should I do if I cannot make my mortgage payments or in the near future cannot make my mortgage payments?
Step One: Make the decision
The most important decision to make is “can I afford the home I am living 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 away your money on a house that you will ultimately lose.
If long term, you will be able to make up the missed payments and keep current on the subsequent payments then you can keep the home… if long term you cannot make up the missed payments and at the same time continue to make the normally scheduled payments then you cannot keep the home.
Step Two: Pick your optimal strategy
KEEP YOUR HOME: If you decide you can keep the home call your lender and make a plan to cure the arrears. If you need time, you can file a Chapter 13 bankruptcy. Under Chapter 13 bankruptcy the Court forces your mortgage company to let you make up the missed payments over time (3 or 5 years). Filing a Chapter 13 bankruptcy will also stop the foreclosure process.
GIVE YOUR HOME BACK TO THE LENDER: If you come to the decision that long term you cannot afford your home, you will have to let it go back to the lender. Since you have already missed some payments, the foreclosure process will take its natural course. After you miss three or four payments the lender will file a lawsuit for foreclosure, from the point you are served with the lawsuit Illinois law allows you to continue to live in the home for 7 more months (without having to make a payment). This grace period gives you the time to save money in anticipation of moving.
UNDECIDED WHETHER TO KEEP HOME: If you are undecided whether you can afford to keep your home here is the optimal strategy. It does not make sense to continue mortgage payments if your financial situation is uncertain making you unable to choose one of the previous two strategies. Immediately stop making mortgage payments, but do not stop making payments and spend the money. Stop making payments and put your normally scheduled payments into a savings or checking account. Then if your finances improve take the savings pay off the missed payments and fees and keep your home. If it ultimately turns out that your finances do not improve, allowing you to keep the home, you will have some money to help fund your move and make a deposit on a more affordable rental.
If you are having trouble making your mortgage payments, do not be overly concerned. If you miss a payment or a few payments you will not lose your home immediately. Illinois foreclosure law will allow you to restore or redeem your home and give you a fair amount of time to do it.
Finally, this article is general foreclosure information based on Illinois Law, however it cannot replace the advice of an experienced bankruptcy attorney who practices law in the state where you live.
Thinking Outside the Box, Inc.
Jon Dowat Attorney at Law
4320 Winfield Road Suite 200
Warrenville, IL 60555
630-225-9840 or 630-780-8474