Illinois Foreclosure Laws

In the state of Illinois the only entity which may be used in a foreclosure is the judicial. This means that it has to pass through the courts, non-judicial foreclosures are not allowed, and mortgage agreements are not allowed to contain a power of sale clause. The mortgage lien is the primary instrument of security used for the underlying loan and ensures the property is the security for the loan.

In this state a foreclosure takes a very long time compared to others and typically takes as long as 210 days, if not contested. There are no statutory rights of redemption and deficiency judgments are allowed for the lender to recover any shortfall between the sale of the property and the amount owed on the loan subject to fair market value. Any sheriff or judge within the county where the property is situated may sell the property at the foreclosure sale.

Although only the judicial process of foreclosure is used in the state of Illinois, lenders have a number of options available to implement this. The two main instruments used are the “Deed in lieu of foreclosure” and the “Consent foreclosure”.

The deed in lieu of foreclosure entails the borrower giving his deed to the lender, but this can only happen if the lender agrees. If this is the case the deed is terminated and the property transferred to the lender, under no circumstances is the lender allowed to pursue a deficiency judgment.

With a consent foreclosure the courts enter a judgment which states that mortgage has been satisfied and the lender take ownership of the property, together with the title. In this instance the home owner has no recourse to rights of redemption and the lender cannot pursue any deficiency judgment. Illinois statues also allow for the “common law” strict foreclosure methodology.

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