Sunday, January 11, 2015

FYI: Ill App Ct Rejects Borrower's Challenges to Foreclosure, Including Claims of Payment and Absence of Default

The Illinois Appellate Court, First District recently affirmed a foreclosure judgment, rejecting the borrower’s arguments that:  (a) the borrower had made payments on the mortgage loan, and was not in default;  (b) the foreclosure complaint failed to comply with the requirements set forth in 735 ILCS 5/15-1501, et seq. (“Illinois Mortgage Foreclosure Law”);  (c) the mortgagee’s affidavits were not based upon the personal knowledge of the affiants, and failed to include the documents on which the affiants relied in making their statements.


A copy of the opinion is available at:


Mortgagee filed a complaint to foreclose mortgage alleging that the mortgagor had not met any of her monthly mortgage payment obligations that year and was thus in default of her mortgage.  Mortgagor neither admitted nor denied that she had failed to fulfill her mortgage obligations and had defaulted on her mortgage.


Subsequently, Mortgagee filed a motion for summary judgment, arguing that none of mortgagor's filings created any genuine issue of material fact as to the default on her mortgage and that it was thus entitled to judgment as a matter of law. Mortgagee's motion was supported by affidavits completed by two of its employees: Affiant #1 and Affiant #2.


Affiant #1 averred that she was the authorized servicing agent with respect to the mortgage and was familiar with the business records that Mortgagee made in the regular course of its business. Based on those documents, Affiant #1 affirmed that Mortgagee had not received all of the payments that it was due pursuant to the mortgage.


Affiant #2 executed an "affidavit of amount due," in which he identified $511,744.04 as the total amount "due and owing" to Mortgagee. He explained that the calculation was based on his "review of books and records with respect to Defendant's loan." He further explained that "[i]n the ordinary and regular course of its business, Mortgagee utilizes the Lender Processing Service, Inc., to process and store its customer information and to calculate the amount due and owing on any note at any given time.


Additionally, he affirmed that Mortgagee utilizes the Program in the ordinary and regular course of its business to track and maintain the amounts due and owing from the Borrower on the mortgage loan at issue in this case. Affiant #2 further averred that it was Mortgagee’s regular practice to make the records at the time the events occurred by people with firsthand knowledge of the events or from practices that are standard in the mortgage servicing industry.


Mortgagee also submitted a copy of the demand letter that it sent to Mortgagor as well as business records reflecting payments that had been made and applied to the mortgage balance as well as the amounts due and owing.


In response, Mortgagor challenged Mortgagee’s affidavit, arguing that Mortgagee had not submitted any admissible evidence.  She also submitted her own affidavit, in which she averred she made mortgage payments on specific dates.  However, Mortgagor submitted no exhibits supporting her affidavit.


The trial court granted summary judgment in Mortgagee’s favor and also entered a judgment of foreclosure and sale. At the judicial sale that followed, a subsequent motion was filed for an "Order Approving Report of Sale and Distribution and for Possession" of the premises, which the circuit court granted.


On appeal, Mortgagor disputed the propriety of the trial court's order granting Mortgagee's motion for summary judgment and its subsequent order granting possession of the property following the judicially approved sale of the property.


First, Mortgagor argued that Mortgagee was not entitled to a judgment of any kind because its complaint failed to comply with the requirements set forth in section 15-504 of the Illinois Mortgage Foreclosure Law.


Mortgagee argued that it "substantially complied with the suggested form complaint," set forth in subsection 15-1504(a) of the Illinois Mortgage Foreclosure Law and maintained that the minor variances between the complaint and the form complaint contained in the Illinois Mortgage Foreclosure Law exist only because its complaint against Mortgagor was specifically tailored to the facts and circumstances pertaining to her mortgage and the default thereof.


As you may recall, Illinois foreclosure proceedings are governed by 735 ILCS 5/15-1501 et seq.  Section 15-1504 of the Illinois Mortgage Foreclosure Law sets forth the pleading and service requirements to initiate mortgage foreclosure actions. 735 ILCS 5/15-1504. Subsection (a) provides that a "foreclosure complaint may be in substantially the following form" and identifies various types of relevant information that may be included in the complaint, if appropriate, including: a copy of the mortgage and the mortgage note, "[i]nformation concerning [the] mortgage," such as the date of the mortgage, the names of the mortgagor and mortgagee, the amount of indebtedness, and a statement as to defaults, and also requests for relief.  735 ILCS 5/15-1504(a).


The Appellate Court found that Mortgagee’s complaint contained all pertinent information concerning the mortgage at issue, including the date of the mortgage, the identification of the parties to the mortgage, a legal description of the mortgaged premises, and statements as to Mortgagor’s default. Moreover, Mortgagee identified itself as the current legal holder of the mortgage and requested a judgment of foreclosure and sale of the property.  Additionally, Mortgagee attached copies of the note and mortgage to the complaint.


The Appellate Court noted that, to satisfy the pleadings required by the Illinois Mortgage Foreclosure Law, a complaint "need contain only such statements and requests * * * as may be appropriate for the relief sought." 735 ILCS 5/15-1504(b). The appellate court found that Mortgagee's complaint was tailored to the specific facts and circumstances of the mortgage and default and the specific relief it sought, and accordingly, the appellate court found that it satisfied the pleading requirements of the Foreclosure Law. See, e.g., US Bank, National Ass'n v. Avdic, 2014 IL App (1st) 121759, ¶¶ 35-37.


Next, the Appellate Court considered Mortgagor’s argument that based on the pleadings before the trial court, genuine issues of material facts exist and thus, the trial court erred in granting 's motion for summary judgment. 


Specifically, Mortgagor argued that she neither admitted nor denied that she failed to meet her mortgage obligations and that the affidavits in support of Mortgagee’s motion for summary judgment did not comply with statutory requirements.  Mortgagor also argued that Mortgagee failed to establish a proper foundation for the business records that it also submitted in support of its motion for summary judgment and that those records should not have been considered by the trial court.


Mortgagee responded that the affidavits and documentary evidence that it submitted in support of its motion for summary judgment met the requirements of Illinois Supreme Court rules and conclusively established that Mortgagor had not satisfied her mortgage payment obligations. Moreover, it argued that Mortgagor failed to contradict the information contained in its filings with any competent evidence.


The Appellate Court noted a mortgagee establishes a prima facie case for foreclosure with the introduction of the mortgage and note, after which the burden of proof shifts to the mortgagee to prove any applicable affirmative defense.  Farm Credit Bank of St. Louis v. Biethman, 262 Ill. App. 3d 614, 622 (1994).


In this case, Mortgagee sought foreclosure of the mortgaged property based on Mortgagor's default on her mortgage obligations. To substantiate its claim of default and its entitlement to judgment, Mortgagee submitted copies of the mortgage and note at issue to the trial court. It also submitted affidavits completed by several of its employees who provided specific details regarding the default.


As you may recall, affidavits submitted in connection with summary judgment proceedings are governed by Illinois Supreme Court Rule 191. Avdic, 2014 IL App (1st) 121759, ¶ 21. Rule 191(a) provides in pertinent part:


"[a]ffidavits in support of and in opposition to a motion for summary judgment under section 2-1005 of the Code of Civil Procedure *** shall be made on the personal knowledge of the affiants; shall set forth with particularity the facts upon which the claim, counterclaim, or defense is based; shall have attached thereto sworn or certified copies of all documents upon which the affiant relies; shall not consist of conclusions but of facts admissible in evidence; and shall affirmatively show that the affiant, if sworn as a witness, can testify competently thereto."


Ill. S. Ct. R. 191(a).


The Appellate Court found that the affidavits at issue provided details pertaining to the mortgage default. Both affiants indicated that they were familiar with the terms of the mortgage and the records Mortgagee completed with respect to that mortgage.


The Mortgagee’s affiants both confirmed that Mortgagor had not complied with her mortgage obligations and further identified $511,744.04 as the amount "due and owing.” The affidavits establish that the statements were based on the personal knowledge of Mortgagee’s business procedures as well as their review of records relevant to Mortgagor's mortgage.


One affidavit confirmed that those records were maintained in the ordinary course of business and satisfied the foundational requirements for the admission of those business records. See Ill. S. Ct. R. 236(a). The specific business records on which the affiants relied upon were also submitted by Mortgagee in support of its motion for summary judgment. Accordingly, the Appellate Court concluded that the Mortgagee’s affidavits satisfied the requirements set forth in Rule 191(a) as the statements contained in the affidavits were based upon the personal knowledge of the affiants and the affidavits were accompanied by the documents on which the affiants relied in making their statements. See, e.g., Avdic, 2014 IL App (1st) 121759, ¶¶ 26-27.


On the other hand, the Appellate Court noted that Mortgagor’s affidavit was not supported by relevant documentation that her mortgage payments were timely made.  See Ill. S. Ct. R. 191(a). Moreover, based the purported payments that Mortgagor listed in her affidavit, she made no mortgage payment in December 2008, and thus there was no genuine issue of material fact that she defaulted on her mortgage obligations.


The Appellate Court also found that Mortgagor’s answer to the foreclosure complaint was insufficient to preclude the entry summary judgment. In her answer, Mortgagor claimed to have no knowledge as to whether she failed to make certain payments and defaulted on her mortgage obligations; however, it is well-established that "[i]n order to prevent the entry of a summary judgment, the nonmoving party must present a bona fide factual defense and not hide behind equivocations and general denials." Koukoulomatis v. Disco Wheels, Inc., 127 Ill. App. 3d 95, 101 (1984).


The Appellate Court held that Mortgagee presented sufficient evidence to establish a prima facie case that Mortgagor defaulted on her mortgage obligations and that foreclosure was warranted, and that there was no issue of material fact precluding summary judgment in Mortgagee’s favor.


Finally, the Appellate Court found that the judgment of foreclosure and sale of the property and an order of possession, were also proper.  Section 15-1508(b) of the Foreclosure Law provides that a circuit court "shall" enter a judicial order approving the judicial sale of foreclosed property unless it finds that: (i) proper notice of the sale was not provided; (ii) "the terms of sale were unconscionable"; "the sale was conducted fraudulently"; or "justice was otherwise not done." 735 ILCS 5/15-1508(b) (West 2010).


Mortgagor did not dispute the propriety of the sale and review of the record confirmed there were no grounds to reverse the trial court's order.   Accordingly, the Appellate Court held that the trial court did not err in entering an order of possession against Mortgagor.






Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
The Loop Center Building
105 W. Madison Street, 18th Floor
Chicago, Illinois 60602
Direct: (312) 551-9320
Fax: (312) 284-4751
Mobile: (312) 493-0874


Admitted to practice law in Illinois





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