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It is important for a homeowner to understand that defaulting on the mortgage will not result in an immediate eviction from the premises as can be the case, for example, when a tenant fails to pay the rent. The Illinois foreclosure law provides for a series of opportunities spread out over approximately a year in which the borrower can remedy the problem before contemplating moving out of the home. To begin with, the lender is unlikely to send a notice of default before at least two or three payents have been missed. These days, in my experience, it can be even longer than that. If the borrower does not then make up the missed payments, the next step would be for the lender to send what is known as a Notice of Acceleration, which informs the borrower that the entire unpaid balance is now due and that the lender intends to initiate foreclosure if the default is not immediately cured. By now, three-five months have probably passed since the initial default. A month or two later, a complaint initiating a lawsuit for foreclosure is likely to be filed and served on the homeowner. The date of service (the day the summons and complaint are actually served on the borrower) is the first important date to the homeowner. This is because that is the day that the clock begins to tick on the homeowner's right to reinstate the loan. For the next 90 days, the homeowner may offer to pay up all of the arrears payments together with accumulated fees and the lender is required to accept the payment and dismiss the foreclosure action. The next important date to the homeowner occurs seven months after the complaint is served. This is when the right to redeem the loan, that is, to pay it off entirely through, for example, a refinance, expires Again, the lender is required to accept this payoff and terminate the foreclosure action if the amount due is tendered on time. We are now approximately one year from the date of the original default. If the redemption period expires without the homeowner paying off the loan, a judicial sale of the property will be held followed a few weeks later by an order confirming the sale and giving the homeowner thirty days to vacate the premises. This timetable applies in normal times, which these are not. These days this process is likely to take closer to eighteen months from beginning to end. So, I hope you can see that there is little reason to panic when you miss those early payments. The important thing is to realize that there is plenty of tie to devise a coping strategy, whether it be selling the property (possibly a short sale), a loan modification of some sort or a refinance of the existing debt into a lower interest rate loan. Be pro-active. Don't just let the process roll over you. I will discuss your various options in forthcoming posts and it can often be helpful to consult a knowledgable attorney, especially if you will be entering into negotiations with a lender.
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