Illinois Foreclosure

There are two (2) types of foreclosures in Illinois: 1) Consent Foreclosure and Judicial Foreclosure.

Both are used in the state for specific purposes.

1) CONSENT FORECLOSURE

A consent foreclosure is when a bank either by filing a complaint or a motion agrees to:

1) Waive any and all rights to a personal judgment against all homeowner and guarantors.

2) The offer is made in the complaint or by motion with notice to all parties.

3) All lenders expressly consent by answer to the complaint.

4) No other party objects to the entry of judgment.

OBJECTION TO CONSENT JUDGMENT

Any party with an interest in the mortgaged real estate can object to the consent judgment. If an objection is lodged:

1) a hearing is ordered

2) The objecting party must show good cause why judgment should not be entered ( loss of lien)

3) Judge will then determine the required amount to redeem the property and keep it out of foreclosure.

4) Judge will give the objecting party 30 days to redeem and get title vested to it.

The order is for the objecting party with the least priority to pay up the line. Failure of the objecting party to pay allows the court to order objecting party to pay interest and costs including attorney fees for the 30 day delay.

2) JUDICIAL FORECLOSURE

The complaint is filed in the court and must contain the following information:

1) Name of the parties: Required parties are the lender and all homeowners, other parties are:

a) All parties with a possessory interest in the real estate.

b) Spouse of owner who has waived the homestead.

c) Guarantors of the note

d) State of Illinois

e) United States ( IRS liens etc)

f) Any assignee of the mortgage or the property

g) Any holder of a mechanics lien

If a party is not named in the foreclosure, they may intervene at any of the following times:

1) Any time prior to the entry of judgment.

2) 30 days after notice has been given.

3) By courts discretion prior to the sale date.

4) After sale but before order confirming sale: Here the lien holder only receives a claim on the proceeds of the sale not any interest in the real estate.

2A) WHAT IS CONTAINED IN THE FORECLOSURE COMPLAINT

In each foreclosure complaint the following information must be included in the complaint:

1) Name of the parties

2) Copy of the mortgage will be attached.

3) Copy of the promissory note will be attached.

4) Nature of the mortgage instrument.

5) Date that the mortgage was entered into.

6) Name of bond and homeowner

7) Date and location of the recording of the mortgage

8) Legal and common description.

9) Statement of the default

10) Name of the present owner

11) Name of all persons joined in the action to terminate their interests

12) Name of person?s bank is looking for a deficiency judgment against.

13) Facts supporting a shorter period of redemption from seven months from date of service of summons or publication or three months from the entry of judgment

Reasons for a shorter period of redemption

1) Nonresidential Real estate ( 5 family or more)

2) Abandonment

3) Value of the house is less than 90% of the amount owed.

REDEMPTION AND REINSTATEMENT PERIOD

REINSTATEMENT RIGHTS

The homeowner is allowed to reinstate the loan in default up to 90 days after service upon all parties by paying the outstanding bills.

If the court finds that the homeowner has reinstated then they are barred from reinstating again on the same mortgage for 5 years.

The homeowner can waive the right to reinstate only after the commencement of a foreclosure complaint. The waiver must be done in writing and the bank must waive the deficiency judgment.

REDEMPTION RIGHTS

The owner and a senior lien holder can redeem the property prior to the auction. The redemption period is the later of:

1) 7 months from the date of service of the complaint.

2) 3 months from the date of judgment.

There are two (2) exceptions to the periods listed above they are:

1) 60 days after judgment if the court finds the value of the real estate is 90% of the judgment amount. See consent foreclosure.

2) 30 days after the judgment if the property has been determined to be abandoned.

The redemption period can be extended by order of the court. It must be a specific order.

SPECIAL RIGHTS TO REDEEM WHEN BANK WINS THE BID

If the bank wins the bid, the previous owner shall have a special right to redeem the property for a period of thirty days after the confirmation of sale.

REQUIREMENTS TO REDEEM PROPERTY

The homeowner must pay the attorney for the bank the required amount within the period of redemption.

If the bank refuses to accept payment or if the owner objects to fees, then the owner shall pay the full amount into court along with a written statement specifying the objection.

The clerk will then forward to the bank all nonobjected to funds. The clerk will then give a receipt to the owner redeeming the foreclosure and file the receipt in the foreclosure record. The bank must then promptly furnish the owner with a release.

Objection Procedure

1) Clerk holds the amount objected to.

2) Hearing is scheduled

3) Court makes order determining what needs to be paid

Right to possession of the property

1) Prior to the entrance of the judgment and up to 30 days after the confirmation of the sale the property will be occupied by the homeowner.

2) After the appeal period 30 days after confirmation of sale property to the high bidder.

3) The court that confirmed the sale can hear and grant a supplemental petition for possession. ( kick out of prior tenant)

Conclusion:

Basically the foreclosure procedure takes about eight months from the filing of the complaint to the confirmation of the sale in this state. Certain advantages need to be taken into account. They are:

1) The auction is not the last say on the property. We can and should chase the homeowner up to the confirmation of sale.

2) In the event that the bank wins a bid we have 30 days from the confirmation of the sale to talk with the homeowner and make a deal.

3) Judicial foreclosure state we will need a lookup specialist in the court house.

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