• Illinois Extends Homeowner Protection Act
  • July 3, 2013 | Author: Carolyn Artus
  • Law Firm: Weltman, Weinberg & Reis Co., L.P.A. - Chicago Office
  • On June 20, 2013, Illinois Governor Pat Quinn signed into law legislation which extends the Illinois Homeowner Protection Act by three years to July 1, 2016.

    The Homeowner Protection Act, first enacted in 2009, imposed the pre-foreclosure Grace Period Notice requirement. If a residential mortgage becomes delinquent by more than 30 days, the lender must send a Grace Period Notice via first class United States mail, advising the mortgagor that he or she may wish to seek approved housing counseling and providing contact information for the lender and the Illinois Department of Financial and Professional Regulation. The lender cannot file a foreclosure complaint until 30 days after the Grace Period Notice is mailed. If within the 30 days an approved counseling agency provides written notice that the mortgagor has sought counseling services, then the lender cannot file a foreclosure complaint for an additional 30 days. During the additional 30 day period, the mortgagor and/or housing counselor may submit a proposed sustainable loan workout plan to the lender for consideration, including, but not limited to: (1) a temporary suspension of payments; (2) a lengthened loan term; (3) a lowered or frozen interest rate; (4) a principal write down; (5) a repayment plan to pay the existing loan in full; (6) deferred payments; or (7) a refinance of the loan. If the lender accepts the proposed sustainable loan workout plan, it cannot file a foreclosure action as long as the mortgagor is in compliance with the terms of the plan.

    The Grace Period Notice requirement applies only once per subject mortgage and only to mortgagors who occupy the subject property as a primary residence. Further, if the mortgagor filed a bankruptcy action during the term of the subject mortgage, no Grace Period Notice is required.

    The grace period gives mortgagors an opportunity, with the assistance of housing counselors, to avoid foreclosure through loss mitigation. According to the Governor’s office, the Homeowner Protection Act has helped more than 40,000 Illinois families.1

    For a copy of the new law, go here: http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=098-0025.

    1 Illinois Governor Quinn Press Release dated June 20, 2013