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Foreclosure Questions & Answers

Q: What is foreclosure?
A: Illinois is a judicial foreclosure state governed by the state statute of the Illinois Mortgage Foreclosure Law (IMFL). Foreclosure in Illinois is a judicial process by which your real estate is legally taken from you by the court due to your failure to pay the outstanding balance due to your lender.

Q: If I am behind on my mortgage payments will I lose my property?
A: If you fail to take any action you may lose your property. Not only can you face the loss of your property, but you may also face the loss of any equity in your property. You may be liable for a deficiency judgment, an amount the lender may claim if a public auction of your property does not bring enough money to pay the lender in full of the amount the lender alleges you owe. Furthermore, your credit will be affected which may prevent you from refinancing or purchasing another property in the near future. 

Q: Do I have any options if I am facing foreclosure?
A: If you are currently facing foreclosure, options are still available to you. However, you must take action immediately to preserve your rights and enforce options that may still be available to your and your family in order to protect your property.  

If you are behind in your mortgage and your lender has not filed a foreclosure action against you and the property, you should immediately inform your lender of the difficulty you face in paying your mortgage and ask your lender for a workout agreement. You should communicate through your lender's loss mitigation department, not through the lender's foreclosure department. The lender will require you to provide evidence of your financial hardship to help the lender assist you. There are a wide range of workout agreements available. Be sure to explore all options with your lender to prevent the filing of a foreclosure action and to save your property. 

If your lender has already filed a foreclosure action you must immediately decide whether or not you are interested in saving the property itself. If you do not desire to retain the property you should immediately consider selling the property. If you have equity in the property the sale of the property may be your best option. However, if there is no equity in the property and/or you are having difficulty selling the property, you should consider speaking with your lender regarding a short sale. A short sale is the sale of the property for less than the amount you owe the lender. A short sale must be approved by your lender. The short sale process may take a couple of months so you should begin the process immediately by contacting your lender and requesting a short sale package. If a potential purchaser has already made an offer to purchase the property from you, you should immediately forward that offer to your lender for approval. You should realize that a short sale may have tax consequences and seek professional help before making any rash decisions.

If you do not desire to retain the property you may also want to consider a deed in lieu of foreclosure, as well as bankruptcy. A deed-in-lieu is the process in which you deed the property to the lender in exchange for the lender releasing you from any personal liability related to the property. You should consult with an attorney regarding a deed-in-lieu or bankruptcy options.

If you desire to retain the property you must either reinstate the loan by paying all past due amounts owed to the lender; 2) redeem the loan by paying the full debt to the lender, such as through a refinance; 3) settle a workout agreement with the lender; or 4) workout of your debt through a chapter 13 bankruptcy. 

You may also have affirmative defenses due to violations made by your lender during the lending process, the servicing of your mortgage loan, and the like. Such violations may be federal and/or state violations. These violations are complex and time sensitive. You should consult with an attorney regarding these affirmative defenses to ensure those defenses are truly available to you. 

In whatever you decide, you should speak with an attorney regarding your options and to ensure you are choosing the option that is best for your situation.

Q: I have received numerous telephone calls, flyers on my door, and letters from people claiming to be able to help me in my foreclosure. Should I respond?

A: The filing of a foreclosure action by your lender is of public record. Therefore, many companies and real estate investors routinely watch the court foreclosure filings. Although some people or companies may be able to help you, most cannot. Most have proven to be scam artists which is one of the many reasons why foreclosure filings continue to rise each month. Even if you believe a company or person can help, you should certainly seek counsel before making any decisions.

Q: How much time do I have?
A: Typically, if you are late on your mortgage your lender will send you a notice of default if you are 30 or more days late. If you continue to miss your payments, most lenders will forward your file to their foreclosure attorney after you have missed three consecutive payments. The foreclosure attorney will begin to prepare all the necessary court documents to file the foreclosure action against you and the property. If you have not resolved the matter in the time it takes the foreclosure attorney to review your file and draft court documents (about 30 days), the foreclosure attorney will file the foreclosure complaint against you. It can take up to 60 days for you to be served with the summons (notice of the foreclosure action against you). Sometimes service is improper so you should be sure to discuss how you were served with your attorney. 

You have 30 days after service of summons to file your appearance and answer with the court. Your failure to act and file the necessary responses will lead to a default judgment against you. The redemption period will expire 7 months after service of summons or 3 months after entry of the default judgment, whichever is later. the redemption period is the Upon expiration of the redemption period the lender may sale the property through public auction. Typically, public auction is a day or two after the redemption date. At public auction your property is sold back to the lender or to a third party bidder. Your lender asks the court to confirm the sale. At such time you are given 30 days to exit the property or you will be foreced out through eviction. You should understand that your rights in the property are terminated upon the expiration of the redemption period. Thus, if you were unable to take action before the redemption period began, it is imperative that you take action before the expiration of your redemption period to best protect your interest in the property.

This is if you fail to act. If you act and diligently participate in the foreclosure action the time period of foreclosure action depends upon if you have any affirmative defenses. You should speak with an attorney for more information for each case is different. 

You may still have options after the expiration of the redemption period if your lender failed to abide by the IMFL. You should consult with an attorney. 

This time frame may be shortened if you do not live in the property and if the property is abandoned.