Page 27 - Sharp-Hundley 2012

Mortgage Law Roundup

Sharp Thinking

No. 69 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. August 2012

Defendant Must Raise “Standing” Challenge Early or It Is Waived

Defendants in mortgage foreclosure cases must raise challenges to the plaintiff’s standing early in the
litigation or those challenges are waived, a panel in the Illinois Appellate Court has reiterated. Rejecting
challenges to Mortgage Elec. Reg. Systems, Inc. v. Barnes, 406 Ill.App.3d 1 (2010), the panel said the
plaintiff’s lack of standing is an affirmative defense which must be raised by the defendant and noted the
unfairness of allowing foreclosure defendants to “rais[e] a standing defense so late in the case in an
attempt to further evade their financial commitments.” Nationwide Advantage Mort. Co. v. Ortiz, 2012 IL
App (1st) 112755. See also Wells Fargo Bank, N.A. v. Watson, 2012 IL App (3d) 110930, rejecting a
mortgagor’s attempt to litigate the plaintiff’s standing to foreclose the mortgage as a part of eviction
proceedings which followed the foreclosure.

Defendant in Ortiz raised the standing issue, along with other challenges, at the sale confirmation
stage. The court rejected the additional challenges also, finding, among other things, that “unless there is
evidence of mistake, fraud, or violation of duty by the officer conducting the sale, mere inadequacy of
price alone is not sufficient cause for setting aside a judicial sale.” See also Sewickley, LLC v. Chicago
Title Land Trust Co., 2012 IL App (1st) 112977, discussed below.

Publication Jurisdiction Requires Proof of Prerequisites

Ortiz’ teaching on the last point needs to be viewed in light of Deutsche Bank Nat’l Trust Co. v.
Brewer, 2012 IL App (1st) 111213, which reaffirms that the court must have acquired jurisdiction over
defendant in order for its judgment and resultant sale to be valid. In Deutsche Bank the plaintiff based
jurisdiction on publication service, but the court noted that the requirements for such service must be
“strictly complied with”. Because publication service was based on affidavits that merely claimed
“attempts were made” at personal service, but did not claim the attempts were made by the affiants
themselves, the court said the prerequisites for publication service were not met. The judgment was
vacated and the case remanded for further proceedings.

General Order May Provide for Special Process Servers

The presiding judge of the Cook County Circuit’s chancery division had authority to grant a law firm
blanket authority to use special process servers in mortgage foreclosure actions, three appellate court
cases in Chicago have ruled.

Moreover, in a portion seemingly inconsistent with Deutsche Bank, discussed above, OneWest Bank,
FSB v. Markowicz, 2012 IL App (1st) 111187, upholds as sufficient the plaintiff’s resort to publication
notice upon conclusory, non-specific allegations that personal service had failed and defendant could not
be found on due inquiry.

By unpublished General Administrative Order (“GAO”) – not published court rule – the chief judge of
Cook County’s chancery division (not the chief judge of the Circuit Court, see Ill. S. Ct. R. 21(c)) has since
2007 provided law firms handling foreclosure cases in that division could apply for and receive a standing

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