Foreclosure Laws in Illinois (IL)Topic: Foreclosure
Illinois uses only the judicial system. The foreclosure process takes about 1 year.
A judgment can not be made before 90 days, due to the reinstatement period. Because, of the redemption period, a sale will not occur 1-3 months after the judgment is given. Sometimes the judge will even extend the redemption period. A title search is conducted before a lender chooses to foreclose on a mortgage or note. If there are any liens that appear to be more senior than the lender lien, it should be noted before the sale. Or, a purchaser needs to take the property subject to the senior lien. During the foreclosure suit, the junior liens need to be named as defendants in order to ensure free and clear title, at the foreclosure sale. The lender can file a complaint with the court, to foreclose the mortgage, when a borrower becomes in default. Any defendant's and the borrower will be served a complaint. The law in Illinois is such that it allows for a service by publication, if the mortgage holder or any defendant cannot be found. Once this service is publicized, the person has to file an answer. If there is no answer, the court will order a default. The parties might able to litigate the matter if an answer contesting the foreclosure is filed.
If the judgment is in favor in favor of the lender, the borrower has 90 days of redemption, before the sale can take place.
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In order to sell short the bank must have a compelling rsoean to take less than face value for the Note. Injury, death, divorce, in some cases, loss of income, or medical rsoean must be established so the bank can show the investor that this is a compassionate way to take a loss. They also have to show cause with the government for writing off bad debt. Now a lot of people are walking away and there are short sales being done that are contrary to past procedures. The problem is that the investors are out the money. The money is still in the economy, but the people who invested are taking a loss. In most cases after the Notes have been traded at a discount, and some money collected, the losses are pretty tame and that's why they do it. A second problem are the people who are buying the short sales. Many investors are buying into other people's problems. Many home buyers are thrilled to get a 20% discount plus the tax credit and they are signing up for more mortgages from the same banks that are taking the losses. It's all good. The mortgage mill is churning again and the buyers are giving the gift of cash as a down payment. These are the good crop of buyers.Now what if prices decline this year? What if those new investors and buyers lose another 20% in home value? In my opinion you don't want to see short sales. You want the foreclosure process to be the only recourse the bank has. There needs to be a quick and definitive market shift. The sooner this is over the better.
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