Once a borrower starts to fall behind on mortgage payments, the lender may elect to start the foreclosure process on the home. Under Illinois law, the foreclosure process must follow a specific set of steps before the lender gains legal possession of the home, even if the borrower is unable or unwilling to fight the foreclosure.
After the first and second missed mortgage payments, the bank will generally try to contact the borrower to see why the borrower has not been making payments on the home loan. Depending on the lender and the household’s personal situation, this may be a time to renegotiate the mortgage payments in order to halt the foreclosure process.
If the borrower misses three mortgage payments in a row, the foreclosure process will likely continue. The lender can start the legal process of suing for possession of the home. The local sheriff will generally serve the foreclosure papers on the borrower. If the sheriff is unable to locate the borrower for service, the foreclosure notice will appear in the local paper to provide public notice of the impending foreclosure.
At this point, the borrower may need to investigate whether the Home Affordable Re-modification Program (HAMP) is an option. The Federal government established HAMP as a way to help consumers who would like to save their homes from foreclosure.
After receipt of a foreclosure notice, the borrower generally has 90 days to repay all of the remaining mortgage plus court fees. This period of time is called the right of reinstatement. After those 90 days have passed, the borrower will need to appear in court if he or she cannot repay the mortgage. If the homeowner loses, the court will issue a judgment of foreclosure which explains that the borrower no longer legally owns the home. However, the borrower may still have a redemption period during which the borrower can pay the remainder owed on the mortgage plus court costs; a successful repayment at this time would likely allow the borrower to regain the home. The redemption period can last from three to seven months, depending on whether the borrower continues to live in the home or not.
If a borrower is unable to pay the mortgage within those three to seven months, the lender must check to see if the homeowner qualifies for HAMP. If HAMP does not apply, the lender can then post a notice of the impending sale of the home in the real estate section of the local paper for at least three consecutive weeks.
At approximately eight to ten months after the homeowner receives service of the Notice of Foreclosure by the sheriff, the court will confirm the foreclosure sale of the home. However, the borrower may be able to fight the sale for one of the following reasons:
- The notice was not given in a legal way.
- The sale terms were unreasonable.
- The foreclosure sale was conducted in a dishonest way.
- The lender violated requirements set forth under HAMP.
Approximately nine to twelve months after the lender serves the borrower with the foreclosure notice, the borrower might lose the legal right to reside in the home unless he or she has successfully challenged the foreclosure process. At this point, the foreclosure process is likely over. The state will record the foreclosure deed and the deed will become public record.
The foreclosure process takes several months and provides opportunities for a distressed homeowner to fight losing a home. Although homeowners might face an uphill battle, they do have legal options.