March 2012 | Volume 5 - Number 2


Update from the ATG Short Sale Coordination Department

Illinois Legislation Requires Lenders to Respond to Short Sale Requests within Ninety Days

by Karen G. Courtney, Managing Attorney, ATG Short Sale Coordination

Karen Courtney photoThe short sale process is complicated and lengthy. Distressed homeowners often experience frustration with the short sale approval process because many lenders do not respond to the homeowner's request for a short sale in a timely manner. Many short sales fail when buyers walk away due to their unwillingness to wait the many months it often takes to obtain short sale approval. A new law in Illinois could bring relief to distressed homeowners.

Effective January 13, 2012, the Illinois Mortgage Foreclosure Law was amended to add new Section 15-1401.1, which requires the mortgagee in a foreclosure of residential real estate to respond to the mortgagor's written request for a short sale within 90 days after receipt of a bona fide written offer to purchase the property that is the subject of the foreclosure proceeding and written request from mortgagor to approve the sale on the terms of the offer to purchase. See735 ILCS 5/15-1401.1(b).

Presumably, if a lender fails to respond within this 90-day period, the borrower could bring a motion before the judge hearing the foreclosure case to compel a response from the lender regarding the request for a short sale. Under Section 15-1401.1(c), however, the mortgagee shall determine whether to accept the mortgagor's short sale offer, and failure to accept the offer shall not impair, abrogate, or affect the status of the foreclosure proceedings, and the 90-day period shall not operate as a stay of the foreclosure proceedings. See 735 ILCS 5/15-1401.1(c). The full text of Section 15-1401.1 provides as follows:

Sec. 15-1401.1. Short sale in foreclosure.

(a) For purposes of this Section, "short sale" means the sale of real estate that is subject to a mortgage for an amount that is less than the amount owed to the mortgagee on the outstanding mortgage note.

(b) In a foreclosure of residential real estate, if (i) the mortgagor presents to the mortgagee a bona fide written offer from a third party to purchase the property that is the subject of the foreclosure proceeding, (ii) the written offer to purchase is for an amount which constitutes a short sale of the property, and (iii) the mortgagor makes a written request to the mortgagee to approve the sale on the terms of the offer to purchase, the mortgagee must respond to the mortgagor within 90 days after receipt of the written offer and written request.

(c) The mortgagee shall determine whether to accept the mortgagor's short sale offer. Failure to accept the offer shall not impair or abrogate in any way the rights of the mortgagee or affect the status of the foreclosure proceedings. The 90-day period shall not operate as a stay of the proceedings.

This amendment does not provide for any monetary penalties for non-compliance, but the hope is that it will incentivize reputable lenders to respond to homeowners' short sale requests in a timely fashion. The process is complicated enough without unnecessary delays.

One possible unintended consequence of this amendment, however, could be that some lenders may simply decline a short sale request without fully evaluating it when faced with a 90-day response time frame and motion to compel. Nevertheless, this amendment gives homeowners a potential judicial remedy to help keep the short sale process moving forward in a timely manner.

Use ATG for Your Short Sales

Short sales are difficult to complete. The process is inefficient and labor intensive. Let us take care of the administrative tasks involved in obtaining short sale approvals so you can focus on doing what you do best—representing your client. Our experienced Short Sale Coordination professionals perform the following tasks:

  • Work directly with attorneys and their clients to assemble and submit documentation in an efficient and timely manner to persuade the lender to agree to the short sale. See our Short Sale Coordination Package.
  • Partner with the Seller's attorney to prepare and submit the HUD-1 Settlement Statement.
  • Communicate with lenders and servicers throughout the short sale process, saving the attorney valuable time.

If the short sale is not approved, we charge no fee! Interested? Have questions? Contact us at or 312.752.1190.


EDITOR'S NOTE: In the event that this communication is disseminated to the consumer in connection with ATG's Short Sale Coordination Services, the consumer is hereby provided with the following disclosures in compliance with the Mortgage Assistance Relief Services Rule (16 C.F.R. Part 322) promulgated by the Federal Trade Commission:







You may stop doing business with us at any time. You may accept or reject the offer of mortgage assistance we obtain from your lender [or servicer]. If you reject the offer, you do not have to pay us. If you accept the offer, you will have to pay us an amount equal to one percent (1%) of the purchase price, or a minimum of $2,000.00, whichever is greater, for our services. ATG is not associated with the government, and our service is not approved by the government or your lender. Even if you accept this offer and use our service, your lender may not agree to change your loan. If you stop paying your mortgage, you could lose your home and damage your credit rating.


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