Illinois Foreclosure? Do Not Panic! You May Have More Time Than You Think

For some, a "house" is simply a set of bricks and you can be equally happy in one set as another. For others, a "home" is the platform for major life activities: neighborhood, schools, friends, family, and a sense of place. In Illinois, you cannot be forced from your home unless your lender or the loan servicer first:

• Sues you for foreclosure
• Wins the court case
• Causes your home to be sold at auction
• Causes the judge to approve the sale and orders you to move.

With minimal participation on your part, the entire court foreclosure process generally takes at least seven months. If you actively participate in the case, the entire process can take far longer. Okay, take a deep breath!
 
You may have defenses to the foreclosure court case and/or counterclaims against the lender or the loan servicer. Some defenses or claims are technical in nature and will not, intuitively, come to mind. They will need to be unearthed in consultation with an attorney experienced in foreclosure defense or anti-predatory mortgage lending. Some consumer-borrower claims and defenses are based on traditional contract principles, some are based on federal or state statutes, and some are emerging, cutting-edge theories (such as the loan servicer's failure to properly process the borrower's application for loan modification under the federal Home Affordable Modification Program or HAMP). As the world of financial transactions has become more complex, so have the potential claims and defenses of consumer-borrowers.   

If you, the borrower, desire to keep your home and can afford to do so (even with help), then you may have a number of options available to you. Some options are exercised within the context of a court foreclosure case and some are independent of the foreclosure lawsuit. For example, under Illinois law, you have the right of "reinstatement" (getting the account current by paying all past due amounts, including certain costs and fees) and the right of "redemption" (paying the delinquent loan in full, plus certain costs and fees). These are different methods for paying for and keeping your home, regardless of whether the lender or servicer agrees. There are different requirements, time frames, and dramatically different costs between the two. Other home-keeping options include:

• Entering into a repayment arrangement through negotiation or mediation
• Undergoing a loan modification through one of the state or federal programs
• Buying-out your current lender by refinancing with a different lender
• Seeking protection from foreclosure by filing for bankruptcy (usually under chapter 13 of the federal Bankruptcy Code).

If you don't desire to keep your home or simply cannot afford to do so, then there are orderly ways for effectively cutting your losses. Mechanisms such as "short-sale" and "deed-in-lieu of foreclosure" can be helpful in the right circumstances, but can be sticky and complicated (especially where "private mortgage insurance" or PMI is involved) and may need the aid of a lawyer to accomplish properly. In the context of a foreclosure lawsuit before the Circuit Court, Illinois law has a powerful tool, called "consent foreclosure," that may enable you to give up your home with no further obligation. And while bankruptcy is generally thought of as a way of keeping your home, it can be an effective way to give up your home while reorganizing all of your financial affairs in an orderly process.    

THE TAKE AWAY MESSAGE: Foreclosure can be dramatic and stressful. But you may have more time than you think: time to properly defend the case, time to identify alternatives for keep your home, time to identify and implement strategies for cutting your losses effectively. Use the time wisely. Consult with a foreclosure defense attorney early-on to find out your options, the consequences of those options, and the time frames for accomplishing them.