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.

The new RESPA servicing rules prohibit servicers from initiating a foreclosure action until “a borrower’s mortgage loan obligation is more than 120 days delinquent.” 12 CFR 1024.41(f)(1)(i). (This requirement applies even to small servicers. 12 CFR 1024.41(j) (“A small servicer shall be subject to the prohibition on foreclosure referral in paragraph (f)(1) of this section. . . .”).) Based on what you have told us, and also based on informal guidance we previously obtained from a CFPB attorney, servicers should look to state law to define when a mortgage loan becomes delinquent.

The most relevant definition of “delinquent” in Illinois law would be in the Code of Civil Procedure’s grace notice requirement. That law defines “delinquent” as “past due with respect to a payment on a mortgage secured by residential real estate.” 735 ILCS 5/15-1502.5(a). If a borrower is delinquent but occasionally makes loan payments, we believe the borrower would continue to be “past due,” unless the borrower makes the full payment necessary bring the loan to current status.