Legal Question in Real Estate Law in Illinois

It would depend on which names are on the deed and the title. In any case, she has no rights simply because she is the heir to a debtor. If your wife-to-be had failed to make a payment, the lender could seek a payment from his estate until the estate was probated, if he had not already made it. When he died he lost his status as co-signer. At the time the estate leaves probate he is completely out of the picture, and his heirs with him.

Her late father probably co-signed so she could get the loan. He might have been entitled to something had he been on the tile/deed but just being a co-signer gives responsibilities without much in the way of rights. By the time he passed away your fiancee had probably established enough of a credit history that the lender did not ask to have him replaced. Yes, they knew he died. They keep track.

Before getting an attorney - I don't try cases - look at the papers. You'll have to take them to the lawyer anyway. She may be bluffing, but "If you will have peace, you must prepare for war."

It is possible. Likely, to do the loan, they had to have both parties in title. Depending on the form of title taken, she may now be the sole title holder or share title with the estate.

Possible, yes. Ownership is one thing; being a borrower/mortgagor is another. But why was she on the mortgage if she didn't own some interest in the house? That doesn't make a lot of sense unless she simply co-signed the loan for his benefit. Time to see an attorney and lay all the cards on the table to figure this out.