Below you will find what I was able to learn by going into the forum on this site that describes the state laws for Illinois. While it appears that a lender could go after your mother's assets, I would suggest that before you start worrying about that the lender be contacted about the potential of structuring the resolution as a "consent foreclosure." The good news for the lender is there is no right of redemption, meaning they would not have to wait the redemption period to sell the property (sure beats the 210 day timeline suggested below). The good news for your mom is that they can't go after a deficiency judgment if the transaction is structured in this manner.
I would follow this path or alternatively the deed-in-lieu process defined below which may be a first attempt before suggesting a "consent foreclosure. Know that there are certain specific assets that are exempt from execution (including typically retirement income). As always I suggest hiring a lawyer skilled in real estate and debt collection practices to review your parents' situation.
Take care,
Daniel
Illinois Foreclosure Law Summary
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: No
- Primary Security Instrument: Mortgage
- Timeline: Typically 210 days
- Right of Redemption: No
- Deficiency Judgments Allowed: Yes
Lenders in Illinois have a number of options available to them to foreclose on a mortgage in default.
Judicial Foreclosure
A notice of the lenders intent to foreclose must be given to the borrower, and any other person entitled by Illinois statutes to receive notice, at least thirty (30) days prior to the courts judgment of foreclosure.
If the court finds in favor of the lender and issues a notice of sale, the sale will be conducted on the terms and conditions specified in the notice of sale, provided they meet the minimum standards provided in the Illinois Statutes.
The sheriff or any judge within the county where the property is located may conduct the sale. The borrower has no rights of redemption after the foreclosure sale.
Deed in Lieu of Foreclosure
If the borrower has defaulted on the mortgage and the lender agrees, the borrower may simply give the deed to the lender and his interests in the property securing the deed will be terminated. If the lender agrees and accepts the deed, they may not seek to obtain a deficiency judgment against the borrower at any time afterward.
Consent Foreclosure
In this type of foreclosure, the court enters a judgment satisfying the mortgage by giving absolute title to the property secured by the mortgage to the lender. The borrower has no rights of redemption after this type of foreclosure judgment has been rendered and the lender may not file for a deficiency judgment.
Lenders may also foreclose on a mortgage in default by using the common law strict foreclosure method, but Illinois law does not permit non-judicial power of sale foreclosures.