Page 29 - John Hundley 2014

Mortgage Law Roundup

Sharp Thinking

No. 121 Perspectives on Developments in the Law from The Sharp Law Firm, P.C. October 2014

Proof of Grace-Period Notice Required

A plaintiff seeking to foreclose on a single-family owner-occupied residence should specifically allege
that the 30-day grace-period notice of 735 ILCS 5/15-1502.5 was sent, and had better attach proof of that
sending to the complaint.

Those are the teachings of a surprising recent opinion of a panel in the Appellate Court in Chicago.

Bank of America, N.A. v. Adeyiga, 2014 IL App (1st) 131252, held it would be an abuse of discretion
for a trial court to confirm a judicial sale if the grace-period notice had not been sent, even if the owner
had not pleaded lack of the notice in response to the complaint. And it said that a foreclosure plaintiff
may not on rely upon the “deemed made” allegation of 735 ILCS 5/15-1504(c)(9) that all “other
notices required to be given have been duly and properly given” as covering the grace-period notice.

The decision is likely to send shock waves through the offices of firms concentrating in
foreclosures, as most have assumed from the language and structure of the Illinois
Mortgage Foreclosure Law (735 ILCS 5/15-1101 et seq.) that use of the form complaint set
forth therein is sufficient.

Indeed, that law expressly states that a foreclosure complaint “may be” in the outline
form set forth in § 15-1504(a), and when so filed the outline complaint is “deemed and
construed to include allegations … that … notices required to be given have been duly and
properly given” (§ 15-1504(c)(9)).

Adeyiga recognized those provisions but found that they were not controlling. That was because the
grace-notice section was adopted after § 15-1504 and provides that “[t]here shall be no waiver of any
provision of this Section” (§ 15-1502.5(h)). It said that to allow the issue to be decided by the owner’s
failure to dispute an allegation not expressly made in the complaint it would render § 15-1502.5(h) “nearly
unenforceable, an absurd result in light of the emphasis the statute places on the need for such notice”.

While this issue could have been decided as a matter of pleading, the panel repeatedly refers
to the bank’s failure to show “evidence” that the notice was sent. It thus seems to say that the
prudent plaintiff should not just allege that the grace-notice was sent, but attach proof as well.

Court Issues Seminal Opinion On Standing

The issues posed by the rash of “standing” challenges in foreclosure cases – especially in cases of
assignments and those involving the Mortgage Electronic Registration System – recently have been
addressed by the Appellate Court in Chicago.

In a seminal opinion in CitiMortgage, Inc. v. Morgan, 2014 IL App (1st) 132430, the panel wrote so
helpful a passage that it is easiest and clearest just to reproduce it here (citations omitted):

In the modern banking world, few loans remain with the original lender. Banks freely buy,
sell, and transfer mortgage loans. Still more loans are transferred because banks them-

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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
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