This guide is an attorney's perspective on a very brief overview of how foreclosure works in Illinois before you step into a Courtroom. I originally published this guide as part of my law firm's blog, but I wanted to make sure this critical information reaches a wider audience. This is the "part one" of any step-by-step guide to how the Illinois Mortgage Foreclosure Law operates.
Step One: Missed Payments
Before the Bank can sue you to foreclose your mortgage, it must evaluate you for a loan modification or a short sale under the applicable HAMP or HAFA programs. One of these programs is for loan modifications, and the other is for refinancing. Some readers may also be evaluated under the Freddie Mac Streamline program and simply receive terms sent to their front door.
After two missed mortgage payments, the Bank gives you a 30 day ultimatum to catch up. If you tell them that you are working with a HUD approved housing counselor (of which there are many in the Chicagoland area) you will receive an extra 30 days to get the issues sorted out under HAMP.
It is during this time you'll receive the Grace Period Notice (GPN).
Step Two: The GPN
This is a letter that Illinois law requires that you receive in BOLD 14 point type. If the Bank does not send this letter, it is very difficult for them to continue foreclosure proceedings.
It says the following:
"Your loan is more than 30 days past due. You may be experiencing financial difficulty. It may be in your best interest to seek approved housing counselling. You have a grace period of 30 days from the date of this notice to obtain approved housing counselling. During the grace period, the law prohibits us from taking any legal action against you. You may be entitled to an additional 30 day grace period if you obtain housing counselling from an approved housing counselling agency. A list of approved counselling agencies may by obtained from the Illinois Department of Financial and Professional Regulation."
Step Three: Service of the Summons
Approximately 30 days after the Grace Period Notice (GPN) is sent to you, but no fewer than 120 days after your first missed payment, the Bank could file its foreclosure action.
The county sheriff, or a special process server, will serve you the foreclosure complaint. Typically they come to your home and hand you the papers. If the server comes to your home a few times and cannot find you, the notice of the lawsuit might go into the local papers.
Your time to respond to the Complaint begins 30 days after you are served unless you are in a mandatory mediation county.
Step Four: Mediation Counties
Cook County gives access to housing counselors and foreclosure legal assistance at each judge's respective help desk, and from time to time on the 7th floor of the Daley Center. As of Summer 2016, they can be reached at (877)895-2244 for details.
Kane County has a mandatory opt-out mediation program. You are given a mediation date when you are served, and as long as you appear, you can participate in the court sponsored mediation.
Will County's program is very similar to Kane County's program, but the date to appear for mediation is listed on the Complaint itself.
Lake County's program is an opt-in program where homeowners can use the court-sponsored mediation program so long as they attend an education session offered by the Affordable Housing Corporation within 35 days of receipt of the summons. They can be reached at (847)796-8050.
Step Five: What to do in Mediation
Mediation is a program where you and the Bank should work together to attempt to solve your foreclosure without litigation and the fees it involves.
Mediation is confidential and the mediator cannot force the parties to agree to a result.
When you appear at mediation, you will be given the opportunity to explain to the Bank if you want a loan modification, short sale, deed-in-lieu or a consent foreclosure solution.
Because this mediation session will include an examination of your financial ability to repay the loan if modified, you should contact an approved housing counselor or your mediation program coordinator to see what documents you might need.
Step Six: Mediation Results
If mediation succeeds, you will have reached an agreement with the Bank on whether you will receive a loan modification and retain your home with either a new HAMP modification or some type of trial payment plan. You might have come to terms on short sale figures, or a consent foreclosure, and could agree to give up your home to either a new buyer or back to the Bank if certain conditions are met.
If mediation does not resolve the issues, you will be given a date to appear in the courtroom for the start of litigation. Your date to make your first response to the court will typically be 30 days after the mediation program sends you a letter saying mediation terminated.
Please note, your obligation to the Court will be to file both AN ANSWER and AN APPEARANCE. The appearance is a document that has your address and mailing information on it. The answer is a document that goes line by line through the Complaint and admits or denies the allegations. In some circumstances, you could file a motion to dismiss, which would state that the Complaint is defective for some reason.
All homeowners setpping into a corutroom should really first consult an attorney about any defects in the service of the Complaint or any defects apparent from the face of the Complaint itself. These motions to dismiss are "use it or lose it" and if they aren't brought up at the first possible opportunity, they are typically waived.
Before the 30 day period to file the response passes, the homeowner and her attorney should work together to determine the proper response to a Complaint, and then to file that response. They should also file a proper appearance.
Step Six(A): Reinstatement of the Loan
The final option available to save the home without a victory in court is mandatory reinstatement. It is the only guaranteed option to end the case once the foreclosure starts.
The homeowner does have an absolute right to reinstate the loan within 90 days after receiving the foreclosure complaint. This means a sizeable payment of all missed loan payments, attorneys fees, court costs and all other fees from the escrow account that were incurred during the time that you had been missing payments.
After this point, the homeowner should prepare for the upcoming court battle and difficulties with the foreclosure law in Illinois. It is imparative to have the history of the homeowner's primary bank account and any loan modification documents the homeowner may have signed when discussing the case with the attorney.