Illinois Supreme Court Issues Ruling In Foreclosures

On February 22, the Illinois Supreme Court released new rules targeting abuses in the foreclosure process. The rules are effective  March 1, 2013

The changes in Illinois foreclosure practice are embodied in new Supreme Court Rule 99.1, dealing with requirements for mortgage foreclosure mediation programs in the Circuit Courts and counties; new Supreme Court Rule 113 which sets out required practice, procedure and notice obligations by the lender
as plaintiff; and new Supreme Court Rule 114, which requires a lender to attest that it has complied with the requirements of any loss mitigation program which applies to the specific home loan. Without the affidavit, a judge many deny entry of a foreclosure judgment.

The three new rules address requirements for foreclosure mediation programs; practice, procedure, and notice obligations for lenders; and a new procedural requirement that forces lenders to attest to any loss mitigation efforts before obtaining a judgment.

The new rules are intended to “promote fairness in home foreclosure proceedings, curb abuses in the system, provide lenders finality when…foreclosure is necessary and ensure homeowners who have been thrown out of work during the years of a troubled economy are aware of their  rights and where to turn for help,” according to Chief Justice Thomas L. Killbride.

The rules were drafted by a 14-member committee which included judges, bank attorneys, a public interest attorney, and a law professor. The rules enhance the notices provided to homeowners during the foreclosure process — they will now receive notices when a default judgment is entered. Homeowners will also receive a notice before the property is taken to sale. These two events are perhaps the two most crucial events in a foreclosure lawsuit because they are tied to time-sensitive events.

For example, after a default judgment is entered, there is a 30-day window in which to vacate the judgment. After the 30-day period, it can be much more difficult to vacate a default judgment. Additionally, once a judgment is entered, the 90-day right of redemption begins to run. This three-month window is useful for homeowners seeking a loan modification or other loss mitigation remedy.

The sale date is also important. Even once the right to redeem has expired, homeowners can still file a Chapter 13 bankruptcy designed to reinstate their mortgage. However, that ability expires once the sheriff’s sale is conducted. Knowing when the sale will take place gives homeowners an absolute deadline for seeking relief in the U.S. Bankruptcy Courts.

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