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The Foreclosure Process in Illinois

Illinois homeowners are fortunate that Illinois is a judicial foreclosure state. In non-judicial foreclosure states, a lender does not have to file a lawsuit before foreclosing on a home. In those states, it is much more difficult to defend against a foreclosure action. The foreclosure process in Illinois is governed by the Illinois Mortgage Foreclosure Law (IMFL). The IMFL dictates the format of the complaint and provides homeowners with specific protections and remedies. This section describes the basic foreclosure timeline and specific time-sensitive remedies.

Title Theory States vs. Lien Theory States

Illinois is a lien theory state. Simply put, this means that when you take out a mortgage loan, the mortgage exists as a lien against your property. You have legal title to the property, and the bank merely asserts an interest in the property based on its loan. In other states, like Massachusetts, they subscribe to the title theory. In title theory states, the bank holds legal title to your home until you pay off the balance of your mortgage loan. Generally, states with a judicial foreclosure process tend to be lien theory states. The judicial foreclosure process serves as the mechanism for transferring title from the homeowner to the party that purchases the property at a sheriff’s sale. States that subscribe to the title theory tend to be non-judicial foreclosure states. In those states, lenders are not required to engage in a lengthy court process before proceeding to a sale of the property. Since the lender owns legal title to the property, it can freely dispose of the property once it has complied with the terms of its own state’s foreclosure laws.

Beginning the Case

A lender cannot begin a foreclosure case unless you are in default on your mortgage. The three most common events of default are failing to pay your property taxes, failing to maintain homeowner’s insurance on the property, and failing to make principal and interest payments as set forth in the loan documents. Assuming there is a default and that a lender has taken all of the proper pre-filing steps, such as providing written notice of acceleration to the borrower, the first step in beginning a foreclosure case is filing a foreclosure complaint and issuing a summons. Once a summons is issued, lenders will give the summons to either the county sheriff or a special process server to have the summons served on the borrower. If your home is currently subject to a foreclosure suit, but you were never served with a summons, your foreclosure defense attorney should file a motion to quash service. However, your attorney should verify that you were not served via publication. Service via publication is allowed when the lender is unable to serve you by traditional means. It is highly unlikely that you will actually read the published notice of the lawsuit in the newspaper. In a situation where service was obtained by publication, you may still be able to quash service if the lender made no attempt to obtain personal service, made defective attempts to obtain service, or otherwise violated the statute that governs service via publication. A defective attempt at obtaining service would be, for example, sending the sheriff’s deputy or process server to the wrong address.

Types of Service: Personal Service and Deficiency Judgments

On January 9, 2012, the Illinois Appellate Court for the First Appellate District, which sits in Chicago, Illinois, clarified a previously unaddressed issue: can a foreclosing lender obtain a deficiency judgment against a borrower who was served with a summons via substitute service? Substitute service, also known as abode service, occurs when a process server serves a summons to a defendant’s home address, but leaves the summons with a resident of the property who is over 13 years of age.

For example, Bank of America files a foreclosure lawsuit against Jack Stone related to his home in Wheaton, Illinois. Bank of America’s attorneys attempt to serve a copy of the summons and complaint upon Jack via the DuPage County Sheriff. However, Jack is not home when the sheriff arrives. Instead, the deputy gives a copy of the summons and complaint to Jack’s 15 year old son, Steve. The deputy explains to Steve what the summons is and also deposits a copy in the U.S. Mail, postage prepaid, which arrives at the Stone household a few days later. This would be proper abode or substitute service in Illinois.

According to the Illinois Appellate Court for the First Appellate District, this is proper personal service as “personal” is defined in the Illinois Mortgage Foreclosure Law. If the foreclosing lender obtains substitute/abode service on a defendant homeowner, the lender may pursue a deficiency judgment. [i] If the defendant homeowner never appears in court, and the lender obtains service by publication, the lender cannot obtain a personal deficiency judgment.

Assuming that you were properly served with the summons and a copy of the complaint, you have 30 days to file an appearance in the lawsuit and file a responsive pleading, which could be a motion to dismiss or an answer to the complaint, among others. Although judges generally allow defendants to respond to the complaint after the 30 day mark, the longer you wait to get involved in your case, the less likely it is that you will be allowed to respond. For example, if you ignore the summons and do nothing, the lender will eventually obtain a default judgment against you.

Thirty days after the default judgment is entered, it becomes extremely difficult to vacate the default judgment and fight the lawsuit. Although foreclosures are taking a long time to complete, doing nothing in court is the worst-possible plan. Keep in mind that even if you are attempting to obtain a loan modification, the bank will proceed forward with the foreclosure lawsuit. To fully protect your rights, you must defend against the foreclosure lawsuit. Simply applying for a loan modification is not enough. If a bank employee tells you that applying for a loan modification will delay the foreclosure case, then that person is lying to you. If the bank employee tells you that you do not have to hire an attorney or go to court during the pendency of your case, they are misleading you. Staying in touch with the bank and its employees will not stop a foreclosure lawsuit from progressing forward.

Responding to the Complaint

Once you or your attorney has filed an appearance in the case, you must respond to the complaint. In some cases, it may make sense to file a motion to dismiss the complaint. For example, if you are making payments on a permanent loan modification and are no longer in default, the case should be dismissed. Any permanent loan modification will provide for the repayment of your missed payments, which means that you are no longer in default. Depending on the preferences of the judge hearing your case, it may make more sense to file and answer with affirmative defenses and/or counterclaims.

An affirmative defense is a set of facts that either defeats the lender’s claim or that mitigates the amount of money you owe to your lender. Affirmative defenses can range from claiming a lack of standing to sue to claiming a setoff to the loan balance. Counterclaims are claims that you can assert against the lender where you are generally seeking damages for the lender’s misconduct. Counterclaims are a lawsuit-within-a-lawsuit and could just as easily be brought as a separate lawsuit against your lender. They set forth specific facts and apply those facts to an alleged violation of the law. Illinois courts require that all claims are pled with specific facts; general allegations are insufficient to support a counterclaim or an affirmative defense in Illinois. Although it is possible to handle this stage of litigation without an attorney, it is not advisable. The Illinois Code of Civil Procedure, the statute that sets forth the rules of engagement for any civil matter in Illinois, such as foreclosures, is technical and best administered by qualified professionals. However, some individuals have successfully defended their own matters before Illinois courts to varying degrees of success. To assist those who chose to go it alone, we have included in the appendices of this text critical definitions of the terms that a non-attorney needs to know to address a foreclosure action. However, relying on that alone is ill-advised.

An Example of an Affirmative Defense

Earlier in this section, we discussed some of the available defenses to a foreclosure lawsuit. Those defenses are normally brought as affirmative defenses and are included in conjunction with the answer to the complaint. One of the most common affirmative defenses is that the lender lacks the standing to bring the foreclosure lawsuit. This defense is most commonly used when the party suing is not the original lender. The defense will allege that, based on the face of the plaintiff’s complaint and exhibits, the plaintiff has failed to establish that it has the power to enforce the mortgage and note against the homeowner. If the plaintiff cannot establish that it had the power to enforce the mortgage and note against the homeowner when the case was filed, then the case must be dismissed.

An Example of a Counterclaim

Earlier in this section, we discussed the idea of a constructive contract. In a situation like that of Morgan, the marketing executive from Plainfield, a wise attorney would file a counterclaim against the lender alleging that it is in breach of its contract with the homeowner. A counterclaim based on facts like Morgan’s would establish the facts that gave rise to the constructive contract. A proper counterclaim would then lay out the applicable statutory or case law that creates the constructive contract. The counterclaim would then establish specifically how the lender breached the contract and plead a specific harm that the homeowner has suffered.

In the case of a constructive contract, the counterclaim would allege that by filing the lawsuit and failing to properly apply the modified loan payments to the loan balance, the lender breached the loan modification agreement. It would further establish that these breaches caused multiple injuries to the homeowner. For example, the damage to the homeowner’s credit score caused by inaccurate reporting to the credit bureaus, the emotional distress caused by the lawsuit, and any fees or penalties charged by the lender would all be valid damages that a homeowner can assert against the lender. Morgan can even ask the court to order the lender to pay Morgan’s attorney’s fees.


Soon after you have responded to the foreclosure complaint, you will want to issue discovery. Discovery is an orderly process that allows you to ask questions, request admissions of fact, and request the production of documents from the parties to a lawsuit. The lender is also entitled to discovery, and lenders will issue discovery requests in some cases. This is also the phase of litigation where you have the opportunity to depose live witnesses. Depositions in foreclosure cases are rare, but there are situations where they are appropriate. For example, if the lender is building its case based on the affidavit of one of its employees, you may want to depose that employee to ascertain whether the statements in the affidavit are accurate. Given the general disarray of most lender’s files, it can take a significant amount of time to receive discovery responses from your lender. If a lender takes too long in responding to discovery, your attorney may file a motion to compel to obtain a court order directing the lender to respond.

The Right of Reinstatement

The IMFL provides for a specific right of reinstatement. [ii] In order to reinstate your loan, you must repay any missed payments and any costs and expenses required by the mortgage. You cannot be required to repay the amount of principal due as a result of the lender accelerating your loan. This right expires 90 days from the day you were served or from the date you voluntarily submitted to the court’s jurisdiction (filing an appearance before being served). If you reinstate your loan within the 90 day period, the case against you must be dismissed because you are no longer in default. Although this option is available to every homeowner, not many many people are able to take advantage of it. Homeowners who receive large periodic bonuses at work or who have a family member willing to help can use this remedy to end their foreclosure and move on with their lives. Reinstatement is one of your rights under the law, but it can only be exercised once every 5 years. If you reinstate your loan in 2011, you cannot exercise the right again until 2016.

Andre Godwin, Hinsdale, Illinois: An Example of a Reinstatement

Andre works as an enterprise data solutions salesman for IBM. He fell behind on his mortgage in early 2011. His monthly mortgage payment is $1,500. After missing four payments, his lender filed a foreclosure lawsuit against him. At the time the lawsuit was filed, Andre owed $6,000 in missed payments, plus the fees and costs assessed to him pursuant to the terms of his note. His total reinstatement amount was $9,000. Fortunately for Andre, he is a salesman who receives periodic bonuses. Shortly after the foreclosure action was filed, Andre received a bonus payment of $11,000. Andre consulted with a foreclosure defense attorney who, based on the fact that his home was not underwater, advised him to exercise his right to reinstate his loan. Andre’s attorney contacted the lender’s attorneys and requested a current reinstatement figure. After making a payment of $9,350, which included interest and fees that had accrued since the suit was filed, Andre properly reinstated his loan. The lender then dismissed its lawsuit.

Motions for Summary Judgment

After discovery is completed and once the right to reinstate has expired, it is likely that the lender will file a motion for summary judgment. If you have outstanding affirmative defenses, this type of motion should generally fail. Some motions for summary judgment may be brought as a combined motion that attacks your defenses and then requests a judgment. A motion for summary judgment claims that, when all of the facts on the record are taken in the light most favorable to the non-moving party, there is no genuine issue of material fact left for the court to decide. The non-moving party is the party who has not filed the motion for summary judgment.

In some situations, the borrower may be able to file a motion for summary judgment. The most common reason for a homeowner to move for summary judgment is because the lender has failed to establish that it has the standing to sue. If you are being sued by a lender who is not your original lender and all of the documents presented to you in the complaint and via discovery do not indicate that the party suing you has the right to enforce the note against you, then you have a solid basis for summary judgment. This course of action is advisable for many reasons, but chief among them is securing a more predictable outcome for the borrower. If the party suing the borrower has no right to sue, or has failed to prove that it has the right to sue, then the issue is best resolved as soon as possible. This effort may assist in securing a swift settlement.

Melvin Gibbs, Chicago, Illinois: A Motion for Summary Judgment

Melvin Gibbs is a structural engineer and local musician who lives in the Wicker Park neighborhood of Chicago, Illinois. Melvin and his attorneys have been fighting his foreclosure case since early 2010. When the case was first filed, First Fidelity National Lending Association was the plaintiff. Attached to the complaint were a mortgage and note made in favor of Internet Lending Corp, Inc. The note and mortgage were not indorsed and there was no assignment of mortgage on file. After Melvin’s attorneys issued their discovery requests, First Fidelity’s attorneys filed an amended complaint. The amended complaint named National Country Servicing as the plaintiff. Attached to the amended complaint were the same copies of the mortgage and note that had been attached to the initial complaint.

Five months later, National Country Servicing’s attorneys responded to Melvin’s discovery requests. In their responses to Melvin’s discovery requests, the bank’s attorneys included the same copies of the mortgage and note that had been attached to both complaints. The bank refused to make the original mortgage and note available for viewing by Melvin’s attorneys. After a lengthy battle in court, the judge ordered the bank to produce the original documents.

When Melvin’s attorneys viewed the original mortgage and note, there was a major difference between the original documents produced outside of court and the copies that had been produced with National Country’s complaint. The original documents included a blank indorsement signed by the now infamous Linda Green, Vice President of Internet Lending Corp, Inc. Melvin’s attorneys filed a motion for summary judgment against National Country Servicing based on the bank’s lack of standing to bring the lawsuit.

The bank argued that since it was in possession of a blank indorsed original note, it was the lawful holder of the note and had standing to sue. Melvin’s attorneys argued that while the bank was currently in possession of a blank indorsed original note, there was no question of material fact that the bank was not in possession of the same document when the lawsuit was filed. After all, had the indorsed note been in the bank’s hands when the lawsuit was filed, a copy of the indorsed note would have been attached to the original complaint. After both sides had submitted briefs supporting their positions, the court heard oral arguments on Melvin’s motion for summary judgment. The court found in Melvin’s favor and entered summary judgment against the bank. Shortly thereafter, Melvin was offered a permanent loan modification. Melvin accepted the permanent loan modification and achieved his goal.

Default Judgment

In most mortgage foreclosure cases, lenders obtain judgment by default. This is because most people do not defend against the lawsuit. In other cases, lenders will tend to obtain a judgment via a motion for summary judgment. It is extremely rare to see a foreclosure case go to trial. If your lender obtains a judgment against you, the case is still not over. In order to complete the foreclosure, your lender must conduct a valid sheriff’s sale and have that sale confirmed by the court. By law, this cannot happen the day after a judgment is entered. The date that the judgment was entered is critical, as will be explained below.

The Right of Redemption

The Illinois Mortgage Foreclosure Law (IMFL) provides for a right of redemption. [iii] This means that after a judgment is entered against you, you have 90 days to pay off the full balance of the judgment amount, which can include interest, court costs, and attorney’s fees. The date of the judgment is critical; even if you file a bankruptcy or file a separate lawsuit against your lender, this 90 day period continues to run. The IMFL is very clear on this point. [iv] Once the right of redemption has expired, it cannot be revived.

The redemption amount will consist of the full value of the loan, costs and penalties, as well as the lender’s attorney’s fees. Most borrowers don’t have the funds to redeem – if they did, they likely would not be in foreclosure in the first place. However, fortunes can change. In the event that you find yourself with the ability to redeem your mortgage, you can exit the foreclosure lawsuit with your loan paid in full. For all practical purposes, the right of redemption provides some extra breathing room before the lender can proceed with a sheriff’s sale. Until the right of redemption has run, a sale cannot be conducted.

The Sheriff’s Sale and the Motion to Confirm Sale

After the right of redemption has expired, the lender is free to proceed with a sheriff’s sale. A sheriff’s sale is an auction typically held at the courthouse in the county where the property is located. For example, a piece of real estate located in Yorkville, Illinois would be subject to a sheriff’s sale conducted at the Kendall County courthouse. At the auction, the winning bidder is generally required to pay 25% of its bid immediately, with the remaining balance due in 24 hours. The terms of the sale will vary depending on the company conducting the auction. The sale is not final until it is confirmed by a judge. Before the sale is confirmed, the winning bid is simply an irrevocable offer to buy the property.

Before the sale can be conducted, the lender must comply with the notice and advertisement provisions of the IMFL. The sale must be advertised in a newspaper in the county where the property is located. The advertisements must run for three consecutive weeks, not more than 45 days before the sale is scheduled, and not less than seven days before the scheduled sale. If the lender fails to meet this requirement, any sale that is held may be set aside by the court. However, unless the homeowner objects to the confirmation of sale, the judge may not notice the error and approve the sale.

If the sale was conducted properly, and there is no objection to the confirmation of the sale, the judge will confirm the sale of the property. After the sale is confirmed, there is a 30 day stay on the buyer’s right to possess the property. Some judges will extend this period to 60 or 90 days if special circumstances warrant an extension. Judges will not extend this period without being asked, so it is important that you, at the very least, attend the confirmation hearing, even if you have had no involvement in the case up to that point. In the event that you need more time before being forced to vacate the property, you could ask the judge for more time. The judge does not have to grant your request. The judge can deny or approve your request in that judge’s own discretion, but usually over the lender’s objection.

There are four main grounds for objecting to the confirmation of a sheriff’s sale. The first one is that the lender failed to properly provide notice of the sale. This could be based on a failure to advertise the sale for the proper period of time prior to the sale; it could also be based on a typographical error in the advertisement. Objections to the notice of sale can be highly technical, so it is advisable to consult with your defense attorney to determine whether you have grounds to object.

Another basis for denying the confirmation of sale is that the terms of the sale were unconscionable. For instance, if the fair market value of the property is $450,000, and the property is sold for $50,000, it is likely that the sale was unconscionable. This is even more likely when the only party bidding on the property is the lender. Unconscionability is a complex legal concept, and is another basis for objection that is best discussed with an attorney.

A third reason for denying the confirmation of sale is because the sale was conducted fraudulently. If the lender advertises the sale as taking place at the DuPage County Courthouse, knowing that it is going to conduct the sale in another location, this raises both an improper notice issue and a fraudulently conducted or defective sale issue. Another example is where the lender accepts a payoff amount from the homeowner but still proceeds to sale.

The fourth basis for denying confirmation of sale is that justice was not otherwise done. This catch-all provision can involve many different situations. Before the sale is conducted, it may be possible to find someone who is willing to purchase the property. If the buyer is willing to pay the full judgment amount, it may be possible to deny confirmation of sale, especially if the winning bid at auction would result in a potential deficiency against the homeowner. Some affirmative defenses may also be grounds for denying confirmation of sale. For instance, if you are paying on a permanent loan modification, and the lender proceeds to sale, there is a very solid basis for denying confirmation of the sale. Although it is set to expire at the end of 2012, the IMFL also contains a provision that requires denying the confirmation of a sheriff’s sale if the homeowner is being considered for a loan modification under the federal HAMP program when the sale is conducted.

Augie Arnold, Yorkville, Illinois: An Objection to Confirmation of Sale

Augie Arnold is an experienced and successful carpenter who owned and operated a successful new home framing company. At some points during the boom years he had framing contracts scheduled out 12 to 18 months in the future. The downturn in new home construction left his business shaky. After obtaining a foreclosure judgment, Augie’s lender took his home to a sheriff’s sale in August of 2011. At the time, comparable homes in his neighborhood were selling for $300,000. His home was once valued over $600,000. When the sheriff’s sale was conducted, the only bidding party was Augie’s lender. The total balance of Augie’s loan was $475,000. The lender bid a mere $175,000 for Augie’s house. Augie’s attorneys objected to confirmation on the basis that the sale price was unconscionable. Given that the fair market value of Augie’s home was closer to $300,000, and given that the lender’s bid would expose Augie to a $300,000 deficiency judgment, the court denied confirmation of the sale, forcing the lender to begin the sale process over from the beginning.

Post-Confirmation Remedies

Once a sale is confirmed, there is very little that a homeowner can do to unwind the sale. This is especially true because by the time a sale is conducted, the requirements for vacating a judgment are extremely difficult to meet. In general, the primary reason for undoing a confirmed sale is because the homeowner was never served with a summons at the outset of the foreclosure case. Because the constitution guarantees you the right to defend yourself in a lawsuit, if you are not served with a summons, you are being denied that right. While there may be other technicalities that can unwind a confirmed sale, they are few and far between.

The Special Right to Redeem

Once a sheriff’s sale is confirmed, the special right to redeem may apply. The special right to redeem is a statutory remedy created by the Illinois Mortgage Foreclosure Law. [v] If the winning bidder at the sheriff’s sale was the bank that initiated the foreclosure lawsuit, and if the purchase price of the property was less than the redemption value [vi] (the amount needed to pay off the loan to the lender including all fees and costs), then the borrower has 30 days, from the date of confirmation, to exercise the special right to redeem. In order to exercise this right, the borrower must pay the sale price bid at the auction, all additional costs and expenses included in the final confirmation order, and interest from the date that the purchase price was paid. However, the difference remains as a lien on the title.

Much like the right to redemption, this right is very rarely exercised. Most homeowners will not have the funds to match the sale price plus the additional fees and costs. However, it is important to know that this right exists. A sudden financial windfall can turn this remedy into a reality.

Garrett Riley, Romeoville, Illinois: Exercising the Special Right to Redeem

Garrett, a disc jockey at a local radio station, purchased his home in Romeoville, Illinois for $350,000 in 2006. His home is currently worth approximately $200,000. Garrett had been seeking a loan modification to reduce his monthly mortgage payment. A customer service representative from his servicer told him that he had to be in default on his mortgage payments to qualify for the Home Affordable Modification Program.

Garrett did not know the statement was false, so he stopped making mortgage payments. Garrett’s servicer filed a mortgage foreclosure action against Garrett while considering him for the loan modification. Garrett, still hopeful that he would receive his loan modification, did not fight the foreclosure action. The servicer obtained a default judgment against Garrett and took the property to a sheriff’s sale. At the sheriff’s sale, the only bidder was Garrett’s servicer, which bid $200,000 for Garrett’s property.

When the default judgment was entered against Garrett, the redemption value of his property was $325,000. This amount represented his unpaid loan balance plus other fees and costs. Since the servicer purchased the property from itself for less than this redemption amount, Garrett possessed the special right to redeem. Garrett had been saving his mortgage payments in a separate account since he stopped paying his mortgage. With those saved payments, plus a loan from a wealthy family member, Garrett was able to exercise his special right to redeem. As a result, Garrett’s servicer assigned the bill of sale for Garrett’s home back to him, with $125,000 remaining as a lien against Garrett’s property. Although Garrett’s home still has a lien against it, he now has $75,000 in equity in his property and the foreclosure case has been dismissed.

Tenants in Foreclosure – The Rights of the Renter

When a landlord’s rental property enters foreclosure, the tenants may wonder what rights they have during and after the foreclosure process. On May 20, 2009, President Obama signed the “Protecting Tenants in Foreclosure Act of 2009” into law. [vii] The Act provides protections for renters whose landlords are in foreclosure. Under the Act, leases are not terminated by the completion of a foreclosure. Instead, tenants are allowed to stay until at least the end of their leases. Month-to-month tenants must be given 90 days notice before terminating tenancy. However, an exception exists. If the party that buys the property after foreclosure intends to use it as a primary residence, the lease may be terminated with 90 days notice.

[i] See Metrobank v. Frank R. Cannatello, 2012 IL App (1 st) 110529, Case No. 1-11-0529, decided January 9, 2012.

[ii] See 735 ILCS 5/15-1602.

[iii] See 735 ILCS 5/15-1603.

[iv] See 735 ILCS 5/15-1603(c).

[v] See 735 ILCS 5/15-1604.

[vi] This value is established by statute. See735 ILCS 5/15-1603(d).

[vi] PL 111-22.

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