Topic: Mortgage Foreclosures
-
When a borrower has been delinquent for at least ninety days, we used to send a letter demanding the entire amount past due, with a lockout preventing payments from processing. Under the latest mortgage servicing amendments that went into effect in October of 2017, can we still send out this letter and refuse to credit loan payments? Will we be able to file a foreclosure action after 120 days of delinquency? We are a small servicer.
—
by
Yes, we believe that your bank may send demand letters and refuse to credit monthly loan payments on a delinquent closed-end consumer mortgage loan, provided that you already have accelerated the loan because of the delinquency. The general rule under Regulation Z for closed-end consumer mortgage loans is that servicers must credit periodic payments covering…
-
Are we required to record a Request for Notice of Sale in Illinois? Is there any specific language that we must include in a notice to a borrower regarding a foreclosure sale? Are we required to send this notice when we are a junior lienholder holding a secondary (rather than primary) lien?
—
by
The Illinois Mortgage Foreclosure Law requires lenders to attach a “Homeowner Notice” to the foreclosure summons when foreclosing on a defaulted residential real estate loan. The statute provides all of the required language that must be included in the notice, which must be provided by the plaintiff in the foreclosure action. If your bank is…
-
Did the Illinois law requiring a Homeowner Notice in foreclosure actions expire?
—
by
No, the Illinois Mortgage Foreclosure Law still requires lenders to attach a “Homeowner Notice” to foreclosure summons when foreclosing on a defaulted residential real estate loan. Among other items, that notice informs borrowers of the right to reinstate the mortgage or redeem the foreclosed property. You may be thinking of the Illinois “grace period notice”…
-
If we make a loan secured by collateral located in another state, do we have to follow that state’s right to cure notice requirements before foreclosing on the out-of-state collateral? If so, do other states’ right to cure notice requirements apply to all types of loans and all types of collateral? Can you recommend a website that provides a list of right to cure notice requirements for each state?
—
by
Yes, we believe that your bank generally should follow the right to cure notice requirements in the state where your collateral is located, ideally in consultation with local bank counsel. Loan agreements routinely include a provision specifying which state’s laws will govern the contract (i.e., a choice of law provision). Our guess is that your…
-
Our core processor notified us that it is updating its standard right to cure notice form fields to include all collateral that secures a loan. Does Illinois require a right to cure notice on delinquent loans? Should we be using this form, along with its upcoming updates?
—
by
No, we do not believe that your bank should rely on a core processor’s standard right to cure form to comply with Illinois law. Presumably, your core processor’s standard right to cure form is used nationwide, without customization for Illinois. But Illinois does not have a single, standard “right to cure” notice requirement for all…
-
We have a question about how to classify a mixed-purpose, multi-unit building under the Illinois Mortgage Foreclosure Law. The building has two single-family residential units and several commercial units. One of the residential units is occupied by the mortgagor. Is the mortgagor-occupied unit considered “residential real estate” under Illinois law? What about the rest of the units? Are they considered “residential real estate” for the purpose of determining pre-judgment possession rights?
—
by
Yes, both the mortgagor-occupied dwelling unit and the other units in the building are “residential real estate” under the Illinois Mortgage Foreclosure Law (IMFL). “Residential real estate” includes multiple-dwelling structures that contain six or fewer single family dwelling units, when at least one of those residential units is occupied by the mortgagor — which appears…
-
We are foreclosing on a collateral assignment of interest in a land trust, which secures a business loan. The land trust owns several 1-4 family homes, which currently are vacant, for purposes of fixing them up and selling them. All of the homes are located in Cook County; some may be located in Chicago. Are these properties covered by Cook County or Chicago’s vacant property ordinances, and what are the costs of registration?
—
by
We believe that both the Chicago and Cook County registration and maintenance requirements would apply to a lender holding a collateral assignment of interest in a land trust, given that the land trust owns vacant residential properties subject to the ordinances. Both Chicago and Cook County’s ordinances impose registration and maintenance responsibilities on holders of…
-
If we believe that a house securing a mortgage has been abandoned, and the borrower has filed for bankruptcy, do we have the right to enter the property and winterize it? Can we request permission from the borrower to enter the property, even if the automatic stay applies?
—
by
We do not recommend contacting the customer or entering the property. The Bankruptcy Code’s prohibition on actions to collect a debt after a borrower has filed for bankruptcy (the “automatic stay”) applies to “any act to exercise control” over the property. Requesting permission to enter the property and entering the property to make repairs or…
-
Since the Illinois grace period notice requirement expired on July 1, 2016, should we stop sending this notice to delinquent borrowers?
—
by
Yes, you are no longer required to send grace period notices to borrowers who became delinquent on or after July 1, 2016. The section in the Code of Civil Procedure requiring mortgagees to send a grace period notice to delinquent borrowers included a sunset date, which automatically repealed the section on July 1, 2016. We…
-
We have a commercial farm loan, and the farmland securing the loan has been the subject of litigation due to title issues for several years (the bank, the title company and the borrower are all parties in the lawsuit). The borrower now has stopped making payments, and we would like to file a foreclosure action. The borrower is a sole proprietor, and his primary residence is located on the land securing the loan. Are we precluded from sending a cure letter to the borrower because of the ongoing lawsuit? Also, are we required to send the homeownership counseling notices?
—
by
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. We are not aware of any prohibition against sending a cure letter to a borrower who also is involved in litigation involving title to the property. While…