What a mess I am sorry to hear you are going through all of this. Well you have two problems, the fist one is if it is actually falls into foreclosure you are going to take a bigger hit on your credit. Here you were doing the right thing and the bank is being a PIG. Second part, so far Illinois so far on the primary loans have not gone after the debt. However, they have up to 10 years to do so. If you have a second mortgage, beware. I have heard of second mortgages perusing
I highly recommend the law offices of Gardi and Haught at 939 N Plum Grove Rd Schaumburg, IL 60173 (847) 944-9400. Ask to speak to a short sales specialist.
Gardi and Haught have a staff dedicated just for negotiating short sales. They take ZERO dollars from you for a normal short sale. They get paid from the proceeds the bank receives.
Your case may be a little different if they have to stop the foreclosure first. They are excellent and will not take your case unless they feel they will get you to close and out of the mess.
Best of luck.
Not to scare you even more, but I'm starting to see this happen more and more often, banks are not walking away.
Feel free to contact me at anytime, we've been able to help borrowers in the same situation.
disclosure: This is not legal advise.