Page 7 - John Hundley 2013

Mortgage Law Roundup

Sharp Thinking

No. 83 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. February 2013

Foreclosure Judgment Not Final And Appealable, High Court Says

A mortgage foreclosure judgment generally is a “final order” but not a “final and appealable” order, the
Illinois Supreme Court said late last month.

The ruling in EMC Mortgage Corp. v. Kemp, 2012 IL 113419, appears to resolve the conflict noted in
Sharp Thinking No. 60 (March 2012), as to whether a foreclosure judgment is sufficiently final in nature as
to be made final and appealable by a finding under Supreme Court Rule 304(a) that there is no just
reason to delay enforcement or appeal.

The high court said a foreclosure judgment “is not final and appealable until the trial court enters an
order approving the sale and directing the distribution.” However, it also said that the foreclosure
judgment “is a final order, [which] without Rule 304(a) language added to it . . . is not appealable” –
implying that such a judgment could have such language added and be appealable.

Forged Mortgage Doesn’t Prevent Equitable Subrogation or Lien

That a mortgage may have been forged does not prevent that mortgagee from recovering on
equitable subrogation and equitable lien theories, a federal judge in Chicago has ruled.

In Shchekina v. Washington Mut. Bank, 2012 WL 3245957 (N.D. Ill. 2012), the court denied summary
judgment on the plaintiff’s principal mortgage claim, finding there was a genuine dispute as to whether
that mortgage was forged. However, it granted partial summary on the equitable theories, reasoning that
even if the plaintiff’s mortgage was forged, by paying off the prior mortgage on the property, the plaintiff
became subrogated to that mortgagee’s rights. (Defendant did not dispute signing the prior mortgage.) In
addition, the court ruled that because of the owner’s receipt of the benefits of the plaintiff’s mortgage (the
payoff of the undisputed prior mortgage), an enforceable equitable lien arose to the extent of that payoff.

Court Has Discretion To Vacate Judgment After Sale, Panel Says

A trial court commits reversible error when it refuses to consider its post-sale discretion under 735
ILCS 5/2-1301(e) in the belief that § 15-1508 of the Mortgage Foreclosure Law (735 ILCS 5/15-1508)
exclusively controls proceedings at that stage, a panel in the Appellate Court’s Second District has ruled.

Acknowledging its disagreement with the Appellate Court’s First District (Mortgage Elec. Reg.
Systems, Inc. v. Barnes, 406 Ill.App.3d 1 (2010)), the Second District said that § 15-1508 was not the
exclusively-applicable legal provision and that refusal to exercise discretion due to the incorrect belief that
the court has no discretion “is itself an abuse of discretion.”

A generally applicable provision in civil matters, § 2-1301 is generally viewed as granting courts
discretionary power to vacate or stay judgments within 30 days of their entry. Section 15-1508, on the
other hand, strictly limits the grounds upon which a party may resist confirmation of a foreclosure sale.
The panel rejected an argument that § 15-1508, being more specific, displaced the general provision in
the post-sale context. Wells Fargo Bank, N.A. v. McCluskey, 2012 IL App (2d) 110961.

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Sharp Thinking is an occasional newsletter of The Sharp Law Firm, P.C. addressing developments in the law which may be of interest. Nothing contained in Sharp
Thinking shall be construed to create an attorney-client relation where none previously has existed, nor with respect to any particular matter. The perspectives herein
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