Legal Question in Real Estate Law in Illinois

A "deed in lieu" ("DIL") agreement is a potentially tricky arrangement between you and your bank. The bank is giving you the option of returning the property "in lieu" of their filing a foreclosure against you. A DIL SHOULD take care of ALL issues - monthly payments, property taxes, insurance, upkeep, etc. One of the potentially BIGGEST issues for you is how much the house will be valued against the mortgage debt. If the house is valued less than the mortgage debt, you could also wind up in a situation where you have "cancellation of debt" income, and it could come this year instead of next. I can not strongly enough urge you to have a lawyer involved because what you are suggesting tells me you have no clue what this DIL could mean. Could be a relatively good thing; could screw things up for you.

Not sure what you mean by putting your home up for sale under deed of lieu. A deed in lieu of foreclosure means you are conveying the property to the bank which holds your mortgage, so there would be no sale. Perhaps you mean you are going to attempt a short sale? This means that you will be selling the house for less than you owe, and will negotiate with your lender to accept this lesser amount. Keep in mind that the lender is not obligated to do so, but many will, especially lately. If this is what you are attempting to do, your obligation to make your payments does not change, you are still obligated to make them. Whether you can set up a payment plan is up to your lender.