Thursday, October 1, 2015

FYI: Ill App Ct Holds New Mortgagee May Be Substituted After Foreclosure Sale, Indicates Borrower's Counsel May Be Sanctioned

The Illinois Appellate Court, First District, recently held that a failure to file a motion to substitute plaintiff in a pending foreclosure proceeding prior to the judicial sale did not invalidate the sale.


Also, considering the absence of any meaningful argument advanced on appeal, the Court further ordered counsel for defendant to show cause why he should not be sanctioned.  


A copy of the opinion is available at:


The mortgagee filed a foreclosure action, and a judgment of foreclosure was ultimately entered. Thereafter, the mortgagee transferred servicing to a new mortgagee. 


The new mortgagee appeared at the judicial sale and bid the amount of indebtedness as an opening bid. The property was ultimately sold to a third party.  After the sale was conducted, the new mortgagee was substituted as plaintiff in the underlying action. Notwithstanding, the trial court issued an order confirming the sale.


The sole issue on appeal was whether the change in mortgagee between the date the judgment of foreclosure was entered and the date the sale was conducted, without substituting the new mortgagee as the plaintiff until after the date of sale, entitled the borrower to relief from the order confirming the sale.


As the Appellate Court noted, in considering a motion to confirm a judicial sale of property under the Illinois Mortgage Foreclosure Law, 735 ILCS 5/15-1101 et seq., the sale must be confirmed unless the notice of sale was not given, the terms of the sale were unconscionable, the sale was conducted fraudulently or justice was otherwise not done.  See 735 ILCS 5/15-1508(b); Wells Fargo Bank, N.A. v. McCluskey, 999 N.E.2d 321 (2013). 


Here, the Appellate Court held that the first mortgagee's failure to substitute the new mortgagee as a party-plaintiff in the foreclosure proceedings did not fall into any of the categories set forth in 735 ILCS 5/15-1508.


The Appellate Court held that the fact new mortgagee that had not been substituted as plaintiff in the caption of the foreclosure complaint had absolutely no effect on the manner in which the sale was conducted, and also noted that the borrower failed to articulate how the alleged defect prejudiced her in any way.


Given the property was sold to third parties who submitted the highest bid, the Court found no reason to disturb the trial court's order confirming the sale.


Accordingly, the Appellate Court held that the borrower's appeal was completely without merit.  Considering the lack of merit in any issue raised, and the absence of any meaningful argument advanced on appeal, the Court also ordered counsel for the borrower's counsel to show cause why he should not be sanctioned.





Ralph T. Wutscher
Maurice Wutscher LLP
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Chicago, Illinois 60602
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