The Second District Court of Appeals Holds Standing is a Defense and Provides Powerful Tools for Defendants Diligently Pursuing the Defense

In the case of US Bank Trust National Association v. Lopez, 17 IL App (2d) 160967, the Second district re-affirmed the ruling in Deutsche Bank v. Gilbert, 2012 IL App (2d) 120164, and held (hopefully once and for all) that a Plaintiff in a foreclusre must have standing on the date of the filing of the lawsuit in order to proceed with a lawsuit. However, the Court also held it was a Defendant’s burden to show that the Plaintiff lacked standing when the suit was filed. The Court held that once standing has been properly stated, the burden will shift to a plaintiff to refute this evidence or demonstrate a question of fact. See Lopez

In Lopez, the Court rejected self-serving affidavits of a Plaintiff and statements by Plaintiff’s counsel as evidence of standing once the burden had shifted. See e.g. Lopez. However, the court did require a Defendant to produce enough evidence in order to properly shift the burden to Plaintiff. In this case, the court held a Defendant must proceed with diligence in defending a lawsuit and obtaining the necessary, and sufficient, facts and evidence utilizing the discovery process. This fact was made clear by the same Court in the case of US Bank Trust National Association v. Hernandez, 17 IL App (2d) 160850. In Hernandez, the lawsuit was filed on January 2, 2014. In that case there existed an assignment dated January 16, 2014 from HUD to the Plaintiff. Because the assignment post-dated the lawsuit, the Defendant challenged standing on the basis that there was a material issue of fact with regards to whether the bank had the debt on the date of filing and pointed to the assignment as evidence in support of the argument.

Even though the evidence clearly demonstrated a possibility the bank did not have proper rights to the note on the date of filing, the Court found that the mere existence of an assignment was not sufficient to overcome the presumption of ownership conferred by an endorsement and went into great detail about the burden of a Defendant of providing as much history as necessary to demonstrate that the transfer of the Note did not occur before the Complaint was filed. Hernandez at ¶22

In fact, Hernandez made it clear that in order for a Defendant to proceed with a case, the Defendants could have, through depositions or interrogatories, definitively shown when Plaintiff obtained an interest in the mortgage and that it is a Defendant’s duty to make this effort and not simply point to assignments as evidence. Id at ¶22

Thus, the standing defense is alive and well in Illinois, but it is a Defendant’s duty to investigate a Plaintiff’s allegations in its Complaint and a Defendant cannot simply sit back and rely on documentation filed with a lawsuit unless the evidence is clear like in the Deutsche Bank or Lopez cases.Defendants thus should, through counsel, engage and utilize the powerful tools of interrogatories, requests to produce, requests to admit, and depositions made available to them in the Supreme Court Rules to investigate the claims made by a Plaintiff. If they do so, then the courts have made clear through these rulings, then they will be adequately protected from Plaintiff’s attempting to file lawsuits on debts that they do not actually own and have no rights to proceed on when the Plaintiff files a lawsuit. These are tremendously powerful rulings that no defendant in a foreclosure lawsuit should ignore.

If you are facing a foreclosure issue, please contact Drake Shunneson today. You can contact him at (815) 385-6840 or Email him at drake@dlfirm.com to discuss what he can do to assist you!

NOTICE:

The materials provided are for informational purposes only and should not be viewed as legal advice. It may also be viewed as advertising material. You should contact your attorney directly, or Drake Shunneson, to obtain advice to any issue or problem. This article, by itself, does not create any attorney-client relationships and the opinions are those of the individual author and do not reflect the opinions of any law office or law firm the author is, or was, associated with or any other individual attorney, entity or individual.

Regulation X and how it helps sellers sell their homes through a short sale

Regulation X and how it helps sellers sell their homes through a short sale:

If you owe your mortgage company more than your house is worth then you are underwater, but you can still sell the property short of the amount you owe through what is called a short sale. In order to sell your home in a short sale you have to get a contract for the sale of your property and your bank has to approve the contract. This often results in a waiver of deficiency to you and lets you walk away from the property without owing the bank anything.

However, short sales can be tricky as it is not unusual for sellers to have a tremendously difficult time obtaining short sale approval from the banks. In my personal experience, some banks, through their mortgage servicing companies, often delay giving a seller an approval by making incessant demands for additional, duplicative, or other unnecessary documents. In my personal experience, a bank may also avoid giving an approval by simply ignoring the short sale application until the buyer cancels the deal or the bank is successful in getting a foreclosure judgment against the sellers and sells the property.

Fortunately, due to the Dodd-Frank Act and Regulation X, the servicing companies are now required to acknowledge a complete short sale loss mitigation application and respond to them within 30 days of receipt of a complete short sale application. Under Regulation X, these servicing companies must respond to demands that they correct errors in demanding unnecessary documentation and cannot simply ignore applications. While working at Diamond & Lesueur, PC, I have seen multiple banks approve short sale applications once our office has used Regulation X to demand the servicing companies correct errors involving unnecessary documentation demands, for ignoring a complete application, or other servicing errors. Sellers should be aware that they have rights when it comes to getting the banks to approve their short sale applications through this wonderful borrower friendly law.

NOTICE:

The materials provided are for informational purposes only and should not be viewed as legal advice. It may also be viewed as advertising material. You should contact your attorney directly, or Drake Shunneson, to obtain advice to any issue or problem. This article, by itself, does not create any attorney-client relationships and the opinions are those of the individual author and do not reflect the opinions of any law office or law firm the author is, or was, associated with or any other individual attorney, entity or individual.

New Illinois Senate Bill 0192 Gives License To Banks to Go After Illinois Homeowners In Foreclosure

On January 18, 2017, Senator Pamela J. Althoff introduced a bill in an effort to essentially eliminate the due process rights of individuals in Illinois foreclosure courts. This bill, Senate Bill 0192, which is available here: http://www.ilga.gov/legislation/BillStatus.asp?DocTypeID=SB&DocNum=192&GAID=14&SessionID=91&LegID=100107 mandates that when a foreclosure lawsuit is filed, the bank essentially is presumed to have the right to take your property away upon offering evidence of (1) the mortgage and (2) the note (i.e. any proof of a mortgage debt). The bill attempts to place a huge hurdle upon individual’s in distressed homes including a requirement that an individual that owes money on a mortgage prove that he made payments on a debt. The only way to challenge the bank is in a court house through the complicated court systems. If a person who owes a debt on a mortgage is not successful in navigating the complicated legal system, then they will “waive” the right to challenge the banks claims. I want that to really sink in with the reader. If you don’t know how to use the legal system (and most don’t without a lawyer), then the bank can win the lawsuit, even if what they say is not true.

For example, let’s say that you have been making payments on your mortgage loan for years. However, one day you come home to find that the bank is telling you that you haven’t paid the mortgage, even though you have. A bank eventually files a lawsuit based on its false representations and attaches a copy of the mortgage and note that you signed with the original bank. This bank isn’t even a bank that you’ve ever heard of. Without a lawyer, you show up and try explaining to the judge what is going on. The judge tells you to file an “Answer.” Without the assistance of counsel, you do the best you can, but you do it wrong by failing to raise a defense of standing and failing to raise applicable defenses based on your payment of the loan. Based on my experience working with clients 99% of the time, they do it wrong. You hire a lawyer because the bank just won’t stop suing you. An experienced lawyer comes in and tries to unwind your answer to argue that, in fact, you paid your mortgage and the bank should not be suing you. At this point though, if this law is passed, it doesn’t matter because you “waived” this issue.

Also, because all a bank has to do is attach a mortgage and note to the lawsuit, this new bank has now put the burden on you to raise a defense that it is not even the bank that should be suing you. Your experienced lawyer issues discovery and demands this new bank provide documents and proof that it actually obtained rights to your mortgage. This new bank refuses and argues that it has “proven” that it can take your home by attaching the mortgage and note to the lawsuit it filed. Your lawyer goes to the judge to ask that the judge force the bank to give you information and documents. The new bank tells the judge that you did not file a defense of “standing” and that, because of the new law, they don’t have to give you any documents and the judge agrees. Your lawyer is now stuck. Your lawyer needs the documents to challenge the bank’s ability to file the lawsuit. There is also no other good way for your lawyer to find out this information or get the documents because the bank is the only place that has the information and documents. Trust me, the bank is also not going to help you out by just giving you these documents.

So, in the end, even though you paid the bank the mortgage and even though this new bank that you’ve probably never even heard of is suing you, you lose your home and end up owing the bank a ton more money in late fees, fees, court costs, and in their lawyer’s legal fees.

Also, to be clear, this is not an outlandish hypothetical situation. There are people in this state that are presented with these situations, including clients I have represented.

It is also not a situation that wasn’t contemplated when the bill was introduced. According to a source that spoke with Senator Pamela Althoff herself, the senator introduced the bill when a bank’s attorney in her district called her and complained and asked that she propose language to help large corporate banks foreclose on people easier.

I wonder if this Senator would agree that the bank’s lawyers primary concern about making it easier for the large corporate banks to take people’s homes away should not be a priority deserving of her time and effort?

Our justice system may not be perfect, but one thing that both the bank’s attorneys and a foreclosure defense attorney did is swore to the U.S. Constitution and the Illinois Constitution. It is a fundamental principle and right of the people of this great state, and of our nation, to not be deprived of life, liberty, or property, without due process of law. This bill is nothing less than an attempt by the big corporate banks to deprive all people in the state of Illinois of that most fundamental and sacred right.

To call and complain to the Senator please call 217-782-5923. To call and complain to her staff attorney please call 217-782-6205

NOTICE:

The materials provided are for informational purposes only and should not be viewed as legal advice. It may also be viewed as advertising material. You should contact your attorney directly, or Drake Shunneson, to obtain advice to any issue or problem. This article, by itself, does not create any attorney-client relationships and the opinions are those of the individual author and do not reflect the opinions of any law office or law firm the author is, or was, associated with or any other individual attorney, entity or individual.

What is a consent foreclosure in Illinois and how is it like a Deed-in-Lieu of foreclosure

Illinois is a judicial foreclosure state. This means that in order to obtain a property back after a default on a mortgage and note, the bank must sue the borrower in state court by filing a foreclosure lawsuit. This can be an arduous, expensive, and time consuming endeavor for the banks. If the bank wins, then the homeowner can often be found liable for a “deficiency,” which is the difference between the amount owed on the note and what the bank manages to get paid in the foreclosure lawsuit after a court-approved judicial sale. For example, if you owe your lender $200,000 and the property is eventually sold at a judicial sale for $120,000, then you could possibly be on the hook for $80,000.00.

Sometimes our clients want to avoid the lengthy court process, return the property to the bank, and walk away without a deficiency judgment. Often, we advise our clients already in the lawsuit that a good way to do this is through a provision of the Illinois Mortgage Foreclosure Law (IMFL) called a consent foreclosure.

This process is similar to a Deed-in-Lieu of foreclosure, which allows for individuals to turn the property over to the bank without going through a foreclosure. However, unlike some Deed-in-Lieu of foreclosures, a consent judgment is a state law that provides that, upon agreement of the parties, a party can walk away from the home without owing the bank any deficiency. It is also done through the court system, thus sometimes avoiding long negotiations with the banks. This means that, if you have a capable attorney who can appropriately negotiate a consent foreclosure/consent judgment on your behalf, you will give the bank back the property and not owe the bank anything.

Our clients like a consent foreclosure because it allows for them to move on with their lives without the burden of a possible deficiency judgment hanging over their head and, often, allows for them to avoid bankruptcy. The banks like a consent foreclosure because it avoids future legal costs, fees, and the possibility of losing the property if the defendant is successful in his, her or their foreclosure lawsuit.

The only potential downside is that there could be tax implications from the forgiven debt. While Congress has provided relief from this tax debt in the past, it has failed to adequately address this issue in recent years. However, whatever the tax implications, it is often well worth it to avoid a potential deficiency of tens, if not hundreds, of thousands of dollars in debt.

If a lender has already sued you, do not wait to consider your options. An experienced attorney can help you in your time of need and help you reach your goals.

If you, or someone you know is struggling with overwhelming debt and needs a fresh start, call us today! We are devoted to giving you a fresh start, while protecting important property in the face of overwhelming debt. Contact us for a free phone consultation to better inform you prior to talking to an attorney, or anyone else making promises about your financial future. Located in Illinois with meeting locations throughout the Chicagoland area, we have ability to meet with you at any convenient Chicagoland location from 9:00 a.m. to 5:00 p.m., Monday-Friday. However, evening and weekend appointments are available upon request by calling 847.693.9120.

NOTICE: The materials provided are for informational purposes only and should not be viewed as legal advice. The materials also mainly concern Illinois foreclosures. It may also be viewed as advertising material. You should contact us directly, or your attorney, to obtain advice to any issue or problems. This article, by itself, does not create an attorney-client relationship and the opinions are those of the individual author and do not reflect the opinions of any Law Office or any other individual, attorney, entity or individual.