Illinois Eases State-Wide Foreclosure Notice Requirements... but Beware of Local Ordinances Still at Play

Previously, under the Illinois Mortgage Foreclosure Law, lenders and servicers foreclosing on a residential property were required to send a notice of foreclosure to the municipality where the property is located, and for properties located in Chicago, to send a notice to the respective Alderman of Ward.[1] Illinois repealed this provision in June 2023, however, which will make the initial filing of foreclosures in Illinois move a bit faster.

But even with this amendment at the state level, this is the perfect time to remind lenders and servicers in Illinois to ensure that they continue to comply with existing registration requirements at the municipal level. Many municipalities across Illinois require mortgagees of both residential and commercial real estate to comply with local ordinances for properties in foreclosure, such as requiring mortgagees to register and regularly inspect properties while foreclosures are pending.

A few examples of these local ordinances can be seen in the cities of Aurora, Rockford, North Chicago, and East Peoria. Within 14 days of filing a foreclosure action in Aurora, the lender must pay a semi-annual $250.00 registration fee and register the property, certify that the property has been inspected within the immediately preceding 30 days, and state whether the property is vacant or abandoned and provide evidence of same.[2] If the property is not vacant, the local ordinance creates an ongoing duty for the lender to inspect the property every 30 days to determine if the property becomes vacant.[3] Rockford has similar requirements that require the foreclosing lender to register and inspect the property within 30 days of initiating foreclosure proceedings to determine the occupancy status, along with paying a semi-annual registration fee.[4] And if the property if not vacant, the lender must inspect the property every month throughout the duration of the foreclosure.[5]

In North Chicago, the lender must register the property within 10 days of filing a foreclosure action and pay the semi-annual registration fee of $300.[6] The property must be inspected every 30 days regardless of whether it is vacant, but if the property is vacant, a property manager must be designated to inspect, maintain, and secure the property.[7] Finally, in East Peoria, the lender has 15 days after initiating foreclosure proceedings to register the property and pay the semi-annual $250 registration fee.[8] Failure to comply with the above requirements can result in penalties ranging from $50.00 to as high as $750.00 per day, per violation.

These are only a few examples of local ordinances imposing additional duties on foreclosing lenders and servicers in Illinois. When preparing to file a foreclosure here, it is important for lenders and servicers to partner with their trusted Illinois advisers to identify and comply with the various municipality-specific requirements throughout the state to avoid monetary penalties.

[1] 735 ILCS 5/15-1503.

[2] Code of Ordinances, City of Aurora, Illinois, § 12-505.

[3] Id.

[4] Code of Ordinances of the City of Rockford, Illinois, § 17-69.

[5] Id.

[6] City Code of the City of North Chicago, § 12-12-5.

[7] Id.

[8] Code of the City of East Peoria, Illinois, 1975, §§ 9-10-4, 9-10-6.