Illinois Supreme Court Issues New Rules Affecting Mortgage Foreclosures

by Perkins Coie
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The Illinois Supreme Court has issued new court rules that become effective on May 1, 2013, modifying the evidentiary requirements for obtaining foreclosure judgments, among other things.  The rules are the result of the work of a special committee appointed by the court to study, address and unify the procedures used throughout the state in mortgage foreclosure proceedings.  Although the foreclosure crisis in Illinois has generally hit residential properties hardest, most of these new rules are applicable to all foreclosure actions.  Among the new rules are the following:

  • New requirements for all foreclosure complaints: New Rule 113(b) will require a mortgagee to attach to its complaint a copy of the promissory note and all allonges and indorsements thereto.  This applies only to foreclosure actions filed after May 1, 2013.
  • Private foreclosure sales now specifically allowed: Clarifying and unifying procedures statewide, new Rule 113(f)(2) allows a foreclosure sale to be conducted by a private-selling officer as an alternative to sale by the applicable county sheriff's office.  A foreclosure judgment is still necessary prior to a sale by a private-selling officer.  This may speed the time to schedule a sale in some counties.  This applies only to foreclosure actions filed after May 1, 2013.

  • New requirements for affidavits in support of all motions for judgment of foreclosure: New Rule 113(e) considerably expands upon the requirements for prove-up affidavits in support of motions for judgment of foreclosure in all foreclosure cases.  This applies only to foreclosure actions filed after May 1, 2013.  In addition to all previous requirements for such affidavits, the new rule also requires that the affidavits provide the following:

    a. An explanation as to whether the affiant is a custodian of the business records relied upon by the affiant or is a person familiar with that business and its mode of operations, as well as an explanation of how the affiant is familiar with that business and its mode of operations.

    b. An identification of the specific documents, books and records, in addition to the payment history, that the affiant reviewed and/or relied on in drafting the affidavit, including any records transferred from prior lenders and servicers.

    c. The date of transfer from the immediately prior servicer to the current servicer and the name of the prior servicer.  This might be interpreted as including the transfer of servicing between master and special servicers.

    d. A copy of the loan payment history.  This requirement applies in all cases where the mortgagor has appeared.

    e. An identification of all computer software that the mortgagee and/or servicer relies on to record and track debt service payments.  A statement that such software accurately records debt service payments when properly operated and accurately recorded the mortgagor's specific debt service payments.  An identification of the procedure used to process and apply debt service payments received for the loan.  A statement that the mortgagor's debt service payments were received and recorded in such software in accordance with that procedure.

    f. An explanation as to why the records relied upon by the affiant should be considered "business records" under the Illinois Rules of Evidence.

It will be important to identify the appropriate affiant early in the foreclosure process to avoid delays in obtaining a judgment.

  • Loss mitigation affidavit now required for motions for judgment of foreclosure: New Rule 114 requires a mortgagee to file an affidavit prior to, or in connection with, a motion for judgment of foreclosure, stating that the mortgagee has complied with the requirements of any applicable loss mitigation programs that apply to the loan.  This applies to all pending and future foreclosure actions in which a judgment has not yet been entered.  The rule applies in all cases in which the mortgagor has appeared.  Applicable loss mitigation programs include, but are not limited to, the Making Home Affordable Program, the 2012 National Attorney General Settlement, and FHA, VA or USDA insured-loan programs.  Applicable loss mitigation programs also include any "in-house" programs regularly provided by the mortgagee for mortgage loans of the type at issue.  These programs apply to residential properties, but an affidavit certifying that compliance is not required will nevertheless need to be submitted in commercial foreclosures.

View the new rules here.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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