Page 6 - John Hundley 2015

Appeals Court Renders Key HAMP Decision

A purported denial on the merits of a mortgagor’s Home Affordable Mortgage Program (HAMP)
mortgage modification application is an admission that the mortgagee had all the required documentation
needed to make its decision, a panel of the Appellate Court in Chicago has concluded.

Dealing with the HAMP rules applicable to Federal Housing Administration
(FHA) mortgages, the court in CitiMortgage, Inc. v. Lewis, 2014 IL App (1st)
131272, relied upon a denial letter to conclude defendant’s application was
complete, but upon a subsequent letter to conclude that it was still pending.
Because the later letter suggested the application was still pending, the court
concluded that a foreclosure sale may have been in violation of FHA-HAMP rules
and § 15-1508(d-5) of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-
1508(d-5)).
The court vacated the trial court’s confirmation of the foreclosure sale and ordered an evidentiary
hearing on whether the sale had violated those provisions.

Lewis is significant for several reasons:
► It demonstrates that mortgagees have to be diligent in their use of “pending” and “denial”
letters, because there are important ramifications to their issuance.
► It agrees with CitiMortgage, Inc. v. Bermudez, 2014 IL App (1st) 122824 (see Sharp
Thinking No. 116 (June 2014)), that the initial burden of showing compliance with HAMP application
requirements rests with the mortgagor.

► Lawyers will argue about this, but it appears to create a right to an evidentiary hearing when
a sale is held in apparent violation of the HAMP rules.

Void Foreclosure Judgment May Be Attacked At Any Time

Neither Wells Fargo Bank, N.A. v. McCluskey, 2013 IL 115469, nor any other applicable case
provides that an attempt to vacate a mortgage foreclosure judgment after confirmation of the sale is
limited to the matters stated in § 15-1508(b) of the Illinois Mortgage Foreclosure Law, the Appellate
Court’s Second District has held.
The court ruled that even though a series of properties were sold pursuant to foreclosure judgment in
2009 and the mortgagor did not seek to vacate until 2013, 735 ILCS 5/2-1401 permitted such a motion to
vacate because a void judgment may be attacked at any time. West Suburban Bank v. Advantage
Financial Partners, LLC, 2014 IL App (2d) 131146.
In West Suburban, the judgments were ruled void because the private process server had let both its
corporate status and its state registration lapse when it served the foreclosure summonses and
complaints. The fact that the mortgagor in fact obtained notice of the foreclosure through the defective
services was inconsequential, the court said.

Brenda\SharpThinking\#127.pdf
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