Payoff vs Reinstatement in an Illinois Foreclosure

Two numbers, two documents, one confused phone call

An owner in an Illinois foreclosure case usually ends up asking the servicer for "the amount". There is no such thing. There are two figures, they answer two different questions, and they are issued as two different documents.

A reinstatement quote is what it would take to bring the loan current and carry on with it. A payoff quote is what it would take to retire the loan entirely and release the mortgage.

This article is part of our guide to foreclosure in Illinois. Here we are only explaining the two documents, because owners routinely make a decision using the wrong one, and because which one applies to you depends on where your case is.

The reinstatement quote

Reinstatement is bringing the loan back into good standing. The quote covers the missed payments and the amounts the servicer has added while the loan has been in default: advanced escrow, charges the loan documents allow, and the costs the lender has incurred in the case.

Things to know:

It is the owner's right, exercised on the owner's own timetable and the loan's terms. It is not something anyone else does for you, and it is not a favor.
It expires. A reinstatement quote is issued good through a stated date, and it has to be requested again after that.
It is not available forever. Where your case stands affects whether reinstatement is still on the table, which is a question for your attorney and for the court file rather than for an article.
Only the servicer issues it. No third party can compute it, and a number quoted over the phone is not the document.

Request it in writing, keep the request, and read the date the quote is good through before you plan around it.

The payoff quote

A payoff retires the loan. The quote is the whole remaining balance plus interest to a stated date plus the amounts the servicer is entitled to recover, and paying it releases the mortgage.

Things to know:

It is the number a sale is built on. At a closing, what is owed is paid from the sale proceeds by the title company, and the payoff quote is what tells everyone whether the proceeds cover it.
It is dated, and it accrues daily. A payoff good through one date is not good through the next, which is why title companies request an updated one close to closing.
It is larger than the reinstatement figure, ordinarily by a wide margin, because one is the arrears and the other is the entire loan.
It does not include what the county is owed. Property taxes and municipal items are separate, and they also come out of the proceeds at closing.

Which one you need

Ask yourself what you want the outcome to be, and the document follows.

You want to keep the property and can bring the loan current. Reinstatement quote.
You want to sell. Payoff quote, and get it early, because it decides whether a sale nets anything.
You want to refinance. Payoff quote, because the new loan retires the old one.
You do not know yet. Request both. Nothing stops you having both figures in front of you, and having them is how the decision gets made on arithmetic rather than on hope.

Our guide on what happens in an Illinois foreclosure, step by step explains where in the case you are likely to be, and what the summons in a Cook County case means covers the papers that started it.

Getting an accurate figure

Ask in writing. Email or a letter, to the address the servicer publishes for requests rather than to the payment address.
Say which document you want. Use the words "reinstatement quote" and "payoff quote". They are terms of art and the request is routed by them.
Read the good-through date. Then diary it.
Keep every version. Two quotes that disagree are a question worth asking, and you can only ask it if you kept both.
Bring in help if the figures look wrong. A HUD-approved housing counselor reviews an owner's numbers at no charge, and an attorney is the right person for a dispute about what the servicer has added. Illinois Legal Aid Online publishes a plain-language explainer on mortgage foreclosure, and the Consumer Financial Protection Bureau keeps a housing and mortgage resource section covering how servicers are required to handle requests.

For owners whose property sits outside the city, the case is in that county's circuit court and the local steps differ; our page on selling a house in Cook County sets out where those questions sit.

Frequently asked questions

Why is the payoff so much higher than the arrears I expected?

Because a payoff retires the entire loan rather than catching up the missed payments. It includes the remaining principal, interest to the stated date and the amounts the servicer is entitled to recover under the loan documents. If you were expecting a figure close to the missed payments, you were thinking of the reinstatement quote.

Can I get a payoff quote if I am not selling yet?

Yes, and it is a sensible thing to hold. Requesting a payoff quote is free and it is the number every option is measured against. Just remember it is only good through the date printed on it.

What if I disagree with the amounts the servicer added?

Put the disagreement in writing and ask the servicer to itemize the charges. Servicers operate under rules about responding to written requests, and a documented dispute is treated differently from a phone complaint. If it does not resolve, that is the point to take the file to an attorney.

If selling is one of the paths you are weighing

Selling a house as it stands to a private buyer is one option among several. Reinstating the loan and keeping the property, refinancing, working with a housing counselor, or listing with an agent are all still real choices, and which one fits depends on the two figures above and on numbers only you have.

Fair Value Investments is a private buyer purchasing for its own account. We buy houses with loans outstanding against them, and the payoff is settled from the sale proceeds at closing by the title company. If you want to see what a direct sale looks like as a number, our page for owners in a foreclosure case explains how we look at a property in this position. Take whatever number you get to an attorney or an agent and compare it.

Important notice: Fair Value Investments (a d/b/a of Probate Professionals of America, LLC) is not associated with the government, and our service is not approved by the government or your lender. You may stop doing business with us at any time and may reject any offer. If you stop paying your mortgage, you could lose your home and damage your credit rating. We do not provide foreclosure-rescue, loan-modification, or credit-repair services and cannot promise to save your home or stop a foreclosure. For free help, contact a HUD-approved housing counselor at 1-800-569-4287 or consumerfinance.gov/find-a-housing-counselor.

About this article: it is general information written by a home buyer, not by a lawyer or a housing counselor. Fair Value Investments (a d/b/a of Probate Professionals of America, LLC) is a private real-estate investor and home buyer purchasing property for our own account. We are not a licensed real estate broker, not a law firm, not a lender, and not a government agency, and nothing here is legal, tax, or financial advice. Any offer is made at our discretion after we evaluate the property; a cash offer, if made, may be below market value. You are free to consult your own attorney, tax advisor, or a licensed real-estate professional before deciding. There is no fee to receive an offer and no obligation to accept.