Page 24 - John Hundley 2008

owners may reinstate the mortgage by bringing it current within 90 days after receipt of the sum-
mons; (4) owners may sell the home, refinance, or pay off the loan during the redemption period; (5)
owners may petition the court for any excess money that results from a foreclosure sale; (6) because
mortgagees generally do not want to foreclose if that can be avoided,
debtors may call the mortgagee or its attorney to discuss alternatives to
foreclosure; (7) owners are entitled to a written statement of the amount
necessary to pay off the loan within 10 business days of providing certain
information and requesting such a statement; (8) the information in the
notice is not exhaustive, and mortgagors should get advice from a lawyer
or certified housing counselor about rights and options to avoid foreclosure;
(9) if one does not have a lawyer, one may be able to get assistance by
contacting the state bar association or a legal aid organization; and (10)
mortgagors contacted by persons offering to help avoid foreclosure should contact a lawyer, govern-
ment official or housing counselor for advice before contracting with such persons.

P.A. 95-961 also details the information which must be provided in response to a properly
submitted payoff statement demand, again effective Jan. 1, 2009. In addition to an accurate state-
ment of the balance required to satisfy the obligation in full as of the date of preparation, the state-
ment must include information concerning amounts which are accruing on a daily basis so that the
mortgagor can calculate the payoff amount for the next 30 days (or until the scheduled judicial sale);
estimated charges the mortgagee believes may be incurred within the next 30 days; the loan number;
and the address and phone number of the mortgagee and, if a banking organization or corporation,
the name, phone, and fax numbers of any relevant department.
A mortgagee who willfully fails to deliver an accurate payoff statement within 10 business
days of receipt of a proper demand may be held liable for actual damages or for $500 if no
actual damages are sustained due to failure to deliver the statement.
P.A. 95-961 also gives the court the right to award attorney fees and costs to a defendant who
prevails in the foreclosure action, or on a motion, affirmative defense or counterclaim therein. (Per-
sons who exercise a right of reinstatement or redemption do not prevail for these purposes.) Contract
terms allowing recovery of attorney fees and costs remain unaffected.
Some subtle aspects to these provisions may be noted. First, although in
enacting P.A. 95-262 and 95-933 the legislature obviously intended to protect
residential tenants, those amendments, by their terms, were not so limited. Second,
IMFL provides that a supplemental petition runs “against a person not personally
named as a party to the foreclosure”, and this provision is unchanged. It is unclear
whether the protection of the amendments can be circumvented by naming tenants
as parties to the foreclosure at the outset. Third, the term “residential foreclosure
action” in P.A. 95-961 is not defined, but it is likely that the legislature did not intend
it to include the limitations which apply to “residential real estate”. Under IMFL,
mortgagors must reside in “residential real estate”, and farms over 40 acres and complexes of over 6
apartments are excluded. Those exclusions appear to limit the notice requirement of P.A. 95-826.

John\SharpThinking\#14.doc
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