Last week, I gave an update on the status of foreclosure mediation ordinances in St. Louis City and St. Louis County that are currently being challenged in the courts by lenders in Missouri. On the other side of the river in Illinois, the Illinois Supreme Court has adopted new rules allowing its courts to adopt foreclosure mediation programs that would force lenders to offer court-approved mediation to borrowers who are facing foreclosure on their homes.
The court rules in Illinois, set to kick-in on May 1, allow Illinois circuit courts to adopt foreclosure mediation programs. Similar to the ordinances in St. Louis, the rule will force lenders to notify borrowers of the availability of the mediation program. The borrower can then elect to participate in the mediation or allow the foreclosure to continue in the court. If the borrower decides they want to participate in the mediation, the lender is obligated to participate as well. However, if an agreement cannot be reached during mediation, the lender is still free to proceed with the foreclosure.
Illinois, like Missouri and all other states, has faced a large increase of foreclosure proceedings over the past few years. Mediation programs offer the lenders and borrowers a chance to keep the foreclosure out of the court system. Mediation can often times allow for a solution or agreement to materialize without the adversarial setting of a courtroom. The goal of the rule and mediation programs is to offer the possibility of another chance that families across the state of Illinois would be allowed to remain in their homes and avoid foreclosure.
Another court rule about to go into effect in Illinois requires lenders, at minimum, to attempt to inform borrowers of any programs available in their county that may help to avoid expense in the foreclosure process. This includes notifying the borrower of any free or low-cost legal services available to them and requiring the lender to participate in any program chosen by the borrower. However, the rule requires the borrower to file an appearance or answer to the lender’s complaint. Without doing this, the lender is not required to consider any loss-mitigation programs.
The new Illinois rules were originally set to go into effect on March 1. However, the court delayed implementing the new rules to determine if they should be applied to cases that are already pending in Illinois courts. Either way, the foreclosure process in Illinois is set to become a little more borrower friendly on May 1. The new rules in Illinois should help to curb the effects of the increase in foreclosure proceedings on Illinois courts and offer borrowers a chance to avoid foreclosure and to remain in their homes.
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