Several Illinois Foreclosure Provisions Sunset . . . But Will They Rise Again?
November 22, 2016
Certain borrower-friendly amendments to the Illinois Mortgage Foreclosure Law (IMFL)—added at the beginning of the recent foreclosure crisis—were scheduled to sunset (i.e., automatically repeal) in 2016 or early 2017. For instance, Illinois’ statutory requirement for the mailing of a Grace Period Notice (GPN) before initiating a foreclosure suit was first enacted in April 2009. See 735 ILCS 5/15-1502.5. For those familiar with Illinois foreclosure law, the GPN is similar to a notice of default—lenders and servicers must and do send them before initiating foreclosure proceedings, but borrowers rarely, if ever, “receive” such notices based on the popularity of foreclosure defenses based on the GPN.
The statute was amended in June 2013 to include an automatic sunset effective July 1, 2016. The date came and went, but the legislature took no further action, and the GPN statute has since lapsed. The sunsetting of the GPN requirement is likely due, in part, to the decreased foreclosure volume across the industry. Lenders and servicers are, for the moment, no longer required to mail a GPN to borrowers before initiating foreclosure proceedings.
But the GPN statute was only the first of several provisions of the IMFL scheduled for either direct or implicit repeal in the near future. Section 15-1507.1 of the IMFL requires successful bidders at judicial sales to pay a fee of 0.1% of the sale price up to $300 to fund the Abandoned Residential Property Municipality Relief Fund. 735 ILCS 5/15-1507.1. This fee provision was originally scheduled to become inoperative earlier this year, but the legislature recently extended the deadline to January 1, 2017. There has been no further legislative action and the provision is scheduled to sunset on March 2, 2017.
Whereas some provisions of the IMFL have sunsetted, others have been extended. Section 15-1508(d-5) of the IMFL, which provides a mechanism for borrowers to vacate sales held in violation of HAMP guidelines, was originally only applicable to actions filed on or before December 31, 2015. 735 ILCS 5/15-1508(d-5). But on July 28, 2016—over six months after the original deadline—the legislature amended the statute with a December 31, 2016 deadline to coincide with the end of HAMP.
The Illinois legislature’s uneven treatment of various provisions of the IMFL requires lenders, servicers, and their counsel to remain cognizant of future legislative action (or inaction). While the Illinois legislature allowed the GPN requirement to sunset, there is no guarantee that other statutory provisions will be allowed to end as originally scheduled, as after-the-fact extension or renewal is always an option. These examples serve as an important reminder that even when such statutes sunset, they may certainly rise again.