Every Day Counts

Posted by AFDA - February 18, 2013 - For Home Owners - No Comments
30 Day Grace Period Notice Letter

Does 30 days make a difference? The Illinois legislature believes it does. Through July 2013, it is against the law to file a foreclosure lawsuit without first sending a Grace Period Letter via regular U.S. Mail to the property address. (735 ILCS 5/15-1502.5.)

The law applies when the homeowner meets the following criteria:

  1. The homeowner occupies the property as their primary residence (i.e. the house where you live is the one that is being foreclosed upon).
  2. Within 30 days’ of the Grace Period Letter having been sent (not when it was received), the homeowner meets with a HUD Counselor to discuss possible repayment options. (The national helpline is 800-569-4287 or go to www.hud.gov).
  3. The HUD Counselor (not the homeowner) submits a Response Letter to the lender within 30 days’ of the Grace Period Letter.
  4. The debt has not been discharged in bankruptcy.

The Response Letter from the HUD Counselor must be dated (to prove it was sent in time) and contain language that the homeowner met with and is working with the HUD Counselor. It would be prudent to have the letter include this language:

“The homeowner, through its HUD counselor, respectfully requests that no lawsuit be filed for at least another 30 days pursuant to 735 ILCS 1502.5.”

Technically, the additional 30 days starts on the date the HUD counselor sends the Response Letter. However, Illinois courts have interpreted the statute to reflect that the lender must wait 60 days from the date of the Grace Period Letter before filing the lawsuit. (Boyd v. U.S. Bank, NA [N.D. Ill., 2011]).

How does a homeowner know if the correspondence received is a Grace Period Letter? The easiest way to recognize it will be that it clearly states “GRACE PERIOD NOTICE” at or near the top of the page in large type.

Courts have been reluctant to dismiss a prematurely filed lawsuit. In Aurora Loan Service, LLC v. Pager, (2nd Dist. 2012), the homeowner’s attorney argued that the statute requires that the letter come from the mortgagee, not another entity. While technically correct, the Appellate Court held that since the letter was sent and the information in the letter was correct, the statutory requirements had been met. Moreover, the law requires that the Grace Period Letter need only be sent, not received. Trial courts have consistently rejected the affirmative defense brought when a copy of the letter is provided.

While the burden is on the homeowner to take action, why not meet with a HUD counselor? They can help you navigate the process – and may even have access to special programs available for homeowners in distress. When it comes to keeping your home — Every Day Counts!

Karen S. Coffey
Coffey at Law, LLC

Karen S. Coffey, owner of Coffey at Law, LLC, concentrates her practice in the areas of real estate closings, estate planning, and FREST – (Foreclosure Representation to Extend Stay Time).

You can reach Karen at (773) 316-7619, kcoffey@coffeyatlaw.com, or Coffey at Law.