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Illinois Judicial Foreclosure Available: Yes Non-judicial Foreclosure Available: Yes Preferred Method of Foreclosure Judicial. Illinois does not allow power of sale
non-judicial foreclosures. They are explicitly banned by statute. Instead,
foreclosure is done by filing a lawsuit. The suit may seek either strict
foreclosure or a foreclosure under the Illinois Mortgage Foreclosure law. The
latter approach is much more common that strict foreclosure. A new procedure
also exists to speed up the judicial foreclosure under the Illinois Mortgage
Foreclosure Law called "consent foreclosure." The Illinois Mortgage
Foreclosure law spells out in detail what must be included in the lender’s
lawsuit (petition) for foreclosure. If the lender strictly observes the
requirements for proper petition, then it is possible for the lender to win
the lawsuit by motions without having to go to trial. Consent Foreclosure A consent foreclosure will vest all the borrower’s
rights and title and the lender free and clear of all claims (except liens of
the U.S. Government) including rights of reinstatement and redemption of any
junior lien holder who was properly joined and who failed to object. Upon
objection, the court may hear such evidence as required and enter an order
that title vests subject to the lien, or if the junior lien holder pays the
balance on the mortgage plus any additional interest, within 20 days of the
entry of a court order commanding the same, then the junior lien holder can
redeem the property. The final judgment in a consent foreclosure must recite
the lender’s waiver of right to any personal judgment for a deficiency and
will bar a deficiency against not only the borrower, but any co-borrower or
other person who is liable for the mortgage. Parties Illinois has rather elaborate requirements about
who must and who may be party to the lawsuit. A person who must be party to
the lawsuit is a necessary part, a persona who may be party is permissible
party., The borrower and any other person obligated on the note are necessary
parties. Permissible parties include the owner of the loan note and any
trustee. A few others such as tenants or other persona in possession,
guarantors, the State of Illinois, the U.S. government, a mechanic’s lien
claimant, an assignee, and any other mortgagee or person with any claim to
title may be joined. Any person joined retains any lien or claim. A non-record
claimant must come forward or lose out. Other complicated rules govern
interventions, or entry of outside parties to the lawsuit. Plaintiff’s Complaint (Lender’s Lawsuit) The lender must begin the lawsuit by filing a
plaintiff’s complaint (also sometimes called a petition) and having it served
on the borrower. The complaint must include the following: The nature of the instrument on which foreclosure
is sought, whether it is a mortgage, a trust deed or another instrument. The date of the mortgage, the lender’s and
borrower’s names, the date and place of recording and the book and page
number or document number. The ownership interest subject to the mortgage,
such as fee simple, etc. The amount of the original indebtedness, including
subsequent advances. A legal description of the property. A description of the default, including the
balance due, the date of the default and any further information on the
default. The name of the present owner The names of the persons who are joined as
defendants and whose interests are sought to be terminated. The names of any persons who are joined as
defendants and whose interests are sought to be terminated. The names of any persons who are to be personally
liable for a deficiency. Any facts that justify a shorter redemption period
than seven months from the service (or publication) of the summons or three
months from the entry of judgment of foreclosure. (The statute suggests a
shorter period would be justified if the real estate had a value of less than
90 percent of the amount owed on the loan.) A statement that the right of redemption has been
waived, if it has been Facts to support attorney’s fees Facts to support the appointment of a receiver, if
desired by the lender. A statement that the lender will accept title in
lieu of any other action against the borrower, if the lender so desires. The lender should conclude by asking for a
judgment of foreclosure and sale, an order shortening the redemption period
(if requested), a personal judgment of a deficiency (if requested), a
personal judgment for a deficiency (if requested) and an order granting
possession. If these allegations are made, as described above and supporting
documents such as copies of the note and deed of trust are attached, then the
lender’s complaint will be deemed to include the allegation necessary for a
foreclosure. Special Matters Special matters can be included in judgment, if
requested in addition to the allegation previously described. These would
include a request for a sale by sealed bid, a manner of sale other than a
public auction, any fees to a broker or auctioneer, any signs to be placed on
the property, the newspaper or newspapers in which the notice of sale shall
be published, the formats of the ads, the requirements that title insurance
be provided at the foreclosure sale and such other matters as the court
approves to ensure the most favorable commercial price for the type of real
estate involved. Regular Sale If requested and agreed to by the parties, the
property can be sold to the first person who offers in writing to buy the
real estate for such commercially reasonable terms as the parties may agree
to, and the court shall then offer the sale in such a matter , subject to its
subsequent confirmation after it is closed. The advantage of this procedure
is that a broker could be employed to find a buyer at a decent price, which
would be better than what the property would get at a sheriff’s auction. The
court must confirm the sale. Notice of Sale If the property is to be sold by sheriff’s
auction, then a notice of sale must be published and include the following: The name, address and telephone number of a person
who can be contacted regarding the purchase of the real estate. The real estate must be described in terms of its
common address (other than a legal description), its legal description, and
its improvements. The times the property can be inspected prior to
the foreclosure sale. The date, time and place of the foreclosure sale
including the terms of the sale. The case title, case number and court in which the
foreclosure lawsuit is filed. Any other information required by the court. The notice must be published in the usual
newspaper for legal notices in that county once a week for three consecutive
calendar weeks, the first such notice must be 45 days prior to the sale and
the last notice not less than seven days prior to the sale. If the sale is to be adjourned more than 60 days,
then notice must be republished, if less than 60 days, the person conducting
the sale can announce the date, time and place for the adjourned sale. Sale Procedures After the sale, the borrower gets a receipt that
the property has been sold. Once the sale price is paid, certificate of sale
shall be issued to the buyer. A duplicate of the certificate must be
recorded. Upon confirmation of the sale by the court, a deed may be given to
the buyer at the foreclosure sale. The confirmation hearing can also provide
for a deficiency. Redemption The right to redemption may be waived by the
borrower in the mortgage instrument, or after the commencement of foreclosure
by written consent filed with the clerk of the court, but only if the lender
thereupon waives the right to a deficiency. However, waivers signed prior to
July 1, 1987, may still be valid. Otherwise, the borrower has the right to
redeem the property within seven months from the date the lawsuit to
foreclose was filed, or three months after the date the judgment was entered
by the court. Other creditors have six months to redeem. The redemption
period may be extended by the court. If a bankruptcy court stays (delays) the
redemption, then under Illinois law, the redemption runs to 30 days after the
stay expires, or the normal period minus the period of the stay whichever is
longer. In any case, whether bankruptcy is involved or not, a notice of the
intent to redeem must be filed with the court 5 days before the redemption
rights are exercised. The amount to redeem the property shall be that specified
by the court in its judgment ordering foreclosure. The redemption amount
shall be paid to the court clerk. If there is no objection, the clerk will
give a receipt for the redemption amount, and the lender must then furnish
the borrower with a release of the mortgage or satisfaction of the judgment.
If there is an objection, the court will promptly hold hearing and rule on
the objection. A special right to redeem exists if the lender attempts to
sell the property at foreclosure for less than the court-specified amount.
The borrower can then redeem at the price for which the lender tried to sell
the property. Reinstatement The borrower has the right to reinstate the loan
within the first 90 days after being served with the lawsuit. Possession One of the most frightening features of the Illinois foreclosure law is that the lender can obtain physical possession of the premises during the foreclosure lawsuit and prior to entry of a final judgment. In fact, at an early stage in the lawsuit, upon request of the lender and for good cause show such as damaging the property or abandonment, the court can put the lender in possession of the property and evict the borrower. The court must be satisfied there is a reasonable probability that the lender will prevail upon a final hearing of the case. However, an existing tenant cannot be evicted, but the lender can collect the rents. A receiver may be appointed to take charge of the property and the rents. Foreclosure buyers can obtain possession within 30 days. Otherwise, a lender can obtain possession from the borrower 30 days after the confirmation of sale. |
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