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In In re Gluth Bros. Constr., Inc., 451 B.R. 447 (Bankr. N.D. Ill. 2011), the bank conceded the note
had been paid in full, but refused to release the mortgage because it contained indemnity clauses in
the event the bank was forced to disgorge part of the payments received, as through an action by a
bankruptcy trustee. Even though a Creditor Trust, successor to such a trustee, had in fact filed an
adversary proceeding seeking to avoid preferential transfers to the bank, the court ruled that that was
insufficient to justify the bank’s refusal to release the mortgage. The court ruled that the Creditor Trust
created in the bankruptcy proceedings had standing to enforce the act, ordered the mortgage’s release,
and entered judgment for the $200 statutory penalty plus attorneys’ fees and costs.

Objections To Personal Jurisdiction Limited

IMFL has been amended to restrict when a defendant in a residential foreclosure action may object
to the court’s jurisdiction over his person.

Effective August 12, 2011, P.A. 97-0329 amended IMFL to add § 15-1505.6, providing that the
deadline for filing a motion to dismiss a proceeding or to quash service of process that objects to the
jurisdiction over the person, unless extended by the court for good cause, is 60 days after the earlier of
(i) the date the moving party files an appearance or (ii) the date the moving party participates in a
hearing without filing an appearance. Moreover, the amendment further provides that if the objecting
party files a responsive pleading or a motion (other than a motion for an extension of time to answer or
otherwise appear) before filing a motion objecting to personal jurisdiction, that party waives all
objections to the court’s jurisdiction over his or her person.

Rule 304(a) Applies To Foreclosure Judgment, Court Says

A finding under Supreme Court Rule 304(a) that there is no just reason to delay enforcement or
appeal makes a foreclosure judgment final and appealable, an Appellate Court panel reasoned
recently.

Deutsche Bank Nat’l Trust Co. v. Snick, 2011 IL App (3d) 100436, made the ruling en route to
holding that the debtor’s challenge to the plaintiff’s “standing” was untimely. Though the ultimate result
probably was correct on other grounds, the ruling on the efficacy of Rule 304(a) language sets up a
conflict with case law reasoning that a foreclosure judgment is inherently not final until the sale is
confirmed and a Rule 304 finding does not change that fact. See GMB Fin. Group, Inc. v. Marzano,
385 Ill.App.3d 978 (2008).

Security Deposits Must Be Transferred To Foreclosure Buyers

IMFL has been amended to require that security deposits be transferred to foreclosure sale
purchasers of property containing five or more dwelling units.

Under P.A. 97-0575, effective August 26, 2011, the requirement of such transfer shall be included
in the order confirming sale, along with a requirement that the mortgagor give an accounting of such
deposits. Deposits are covered by the new provision whether given to secure payment of future rent or
to compensate for possible damages to the property. Where statutory interest applies, interest also
must be transferred. P.A. 97-0575 also amended the Security Deposit Return Act, 765 ILCS 710, to
require the purchaser to give notice of the transfer of the funds to the tenants.

--John T. Hundley, 618-242-0246, Jhundley@lotsharp.com

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