Please note that this answer discusses the Illinois grace period notice requirement, which expired on July 1, 2016, pursuant to a sunset provision. Please see 735 ILCS 5/15-1502.5.

No, you do not have to wait 120 days before mailing the Illinois “grace period notice” to delinquent borrowers, as required by 735 ILCS 5/15-1502.5(c).

The new RESPA servicing rules prohibit servicers from initiating a foreclosure action (by filing a “first notice or filing” in the foreclosure process) until the borrower is more than 120 days delinquent. 12 CFR 1024.41(f)(1)(i). The CFPB’s staff commentary defines a “first notice or filing” as “the earliest document required to be filed with a court or other judicial body to commence the action or proceeding (e.g., a complaint, petition, order to docket, or notice of hearing).” Official Interpretations, 12 CFR 1024, Paragraph 41(f), Comment 1(i).

The Grace Period Notice required by Illinois law is not required to filed with a court to commence a foreclosure action, and therefore it would not be prohibited by the CFPB’s rule. As the CFPB explained when it published its final rule, the 120 day requirement was not intended to chill communications with borrowers during the first 120 days of delinquency. Rather, the CFPB encourages “communication about cure rights or pre-foreclosure loss mitigation assistance or procedures available under State law, even within the first 120 days of a borrower’s delinquency.” 78 Fed. Reg. 60382, 60405 (October 1, 2013).

In other words, you need to comply with both Illinois and federal law, which do not conflict with each other.