A home mortgage is a legal contract between a lender and a buyer that makes the buyer’s home collateral (security) for the loan.
When the buyer (homeowner) does not make payments as agreed, the lender may take the property from the buyer through the legal process called foreclosure. In Illinois, the typical foreclosure takes 6 to 9 months.
When Foreclosure Begins
When your mortgage payment is late for the third time, the lender sends your loan to its lawyer to start the foreclosure process. The lender’s attorney orders a title report, which gives the lawyer the following information:
-- The name of the property owner,
-- Any other unpaid deeds of trust or mortgage loans against the property,
-- Any other restrictions on the property, such as a mechanic’s lien (when the property is used as security for a debt, often by workmen who have done work on your home), and covenants (agreements that dictate how the property can be used).
After the lender’s lawyers review the title report, they write a foreclosure complaint (lawsuit) that alleges you failed to pay the mortgage and, as a result, your property is now the subject of foreclosure (seizure). The lawyers also prepare the related paperwork including a summons, which orders you to appear in court at a specific date and time.
Next, the lawyers file the foreclosure lawsuit in court and serve you with the summons to appear in court. “Service” is the term that means when the lender’s legal paperwork is given to you. At the same time, the lawyers record a “Lis Pendens” with the Recorder of Deeds. This prevents you from selling your home until the foreclosure process is completed.
Then, within 60 days, the sheriff or a process server gives you and all people with an interest in the property the Foreclosure Complaint. If they cannot reach you or the other parties in person, the law allows them to “serve” the parties by publishing a notice in the newspaper.
In 14 days, the lender’s lawyer reviews the court file to make sure all parties have been served. Then the lender’s lawyer files a notice of motion asking that the court enter a Foreclosure Judgment against you. The notice of motion tells you the time and date when you are to appear in court.
How to Reinstate Your Mortgage
After you receive the notice of motion, you have 90 days to reinstate your mortgage loan. You can do this by paying the money you owe on your mortgage, as well as all costs and fees. If you reinstate your mortgage, you cannot do that again for 5 years.
When you appear in court, any of the following can occur:
-- Continuance: You can ask the court for a continuance so you have time to hire a lawyer. A “continuance” means you’re asking the judge to delay his decision and set a new court date;
-- Appearance and Answer: You can ask the court for more time to file an appearance and answer. These are forms you file if you want to represent yourself, rather than hiring a lawyer, and if you think you have a valid defense against the foreclosure proceeding;
-- Trial Date: If the court believes you have a defense available to you, the court could set your case for trial. If you do not have a valid defense, the court may enter a judgment against you. (This will not likely occur at the first court date.)
-- Judgment Against You: If you lose your case at trial -- or if you do not reach an agreement with the mortgage lender -- then the court can enter against you a judgment of foreclosure and sale, meaning you have no ownership interest or rights in the property.
How to Save Your Property
When the court enters a judgment of foreclosure against you, your redemption period begins. This is the time during which you can save your property.
Your period of redemption expires on the latest of these dates:
-- 7 months after the date you were served with the foreclosure complaint, if you live in the home;
-- 6 months after the date you were served if you do not live in the home; or
-- 3 months after the court enters a judgment against you.
To redeem (or save) your home, you must pay the amount of the foreclosure judgment. This includes all money you owe under the mortgage, plus all court costs, lawyers’ fees and taxes.
Before the foreclosure sale can take place, the lender must publish a notice of sale at least 3 weeks in a row, once per week, in a the real estate section of a newspaper “of general circulation”. Most lenders publish the notice in a local newspaper during the redemption period.
The lender is not required to mail you a notice of the foreclosure sale. Then, within 7 days after the redemption period ends, your home is sold at the foreclosure sale.
The Court Confirms the Sale
After the sale, the lender files a motion in court asking the court to confirm the foreclosure sale. In most cases, the court confirms the foreclosure sale unless you can prove one of the following:
-- The lender did not give notice in the manner required by law;
-- The terms of the sale were not reasonable;
-- The sale was fraudulent or dishonest; or
-- Justice was not served.
If the home’s selling price is less than the amount you needed to redeem your property -- and if the lender purchased your home -- then you have a special right of redemption. To redeem your home, you must pay the actual selling price, any other costs and fees approved by the court, plus interest. Your special right to redeem your home ends 30 days after confirmation of the sale.
At the time of confirmation, the court gives the buyer (the lender or a third party) possession of the property. In most cases, the court gives you 30 days from the date of confirmation to leave your home. After the 30 days have expired, you have no legal right to remain in your home. If you do not leave on your own, the lender can ask the sheriff to physically remove you from the property.
After you leave the home, the new owner records a foreclosure deed, which says the foreclosure has taken place. This becomes a matter of public record.
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RICHARD FONFRIAS, J.D.
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