An Auction Has Been Scheduled For My Property. What Does It Mean?

You have discovered that your property, or your client’s property, has been scheduled for a foreclosure auction. This usually arises when you are actively participating in the foreclosure matter and are provided an official “Notice of Sale” from the bank’s attorney. If no appearance has been filed, then it is possible the auction may be scheduled without the homeowner even being aware of it. But more often than not, once a foreclosure auction is scheduled the homeowner will be contacted by all manner of individuals looking to peddle their services.

In order to have a foreclosure auction in Illinois, the bank must obtain judgment against the Defendants, and the court order must reflect that the bank has the authority to sell the property at a foreclosure auction.

If the property is located in Cook County, and certain other surrounding counties, then the bank will use the Judicial Sales Corporation to auction the property. If the property is located in Lake County, the Lake County Sheriff’s Office conducts the auction at their Waukegan office. Both organizations maintain an online list of properties awaiting auction. The lists will state whether a pending auction has been canceled or not, the minimum bid, and whether an auction has already occurred.

Any party may bid at a foreclosure auction, but the key is that 25% of the sale price must be provided in cash immediately, and the remaining amount must be provided in cash within 24 hours. This makes it exceptionally difficult for anyone to bid at the auction outside of the foreclosing bank itself and property investors looking to snatch up properties for resale or rental. Because of this, properties tend to sell for much less than they would sell for on the open market.

Note that a foreclosure auction in and of itself does not end the foreclosure.  The homeowners still maintain possession of the property until at least 30 days after the auction has been confirmed at a confirmation of sale hearing.  Many homeowners move out upon the auction thinking the property is immediately lost.  That is not the case.

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What is the Affidavit of Amounts Due and Owing?

The Affidavit of Amounts Due and Owing, also known as the Prove-up Affidavit, is a document required in a bank’s motion for summary judgment pursuant to Illinois Supreme Court Rule 113.

The Affidavit is a document that attests to the judgment amount, and provides supporting exhibits that outline the judgment amount. The affidavit is required to contain the identification of the affiant, the position of the affiant, an identification of the evidence the affiant relies upon, and a description of the computer system used. The Illinois Supreme Court Rule 113 provides a form affidavit that is widely used by banks’ attorneys.

So why should you care about this particular affidavit? Judges care about the evidence contained in this affidavit and are willing to deny entry of judgment if the affidavit does not conform to Rule 113 or if it contains conflicting information, incomplete or confusing information, or if it is erroneous in just about any way. It is crucial to review the affidavit and the supporting documentation for any errors and raise objections based on those errors in writing in response to the bank’s motion for judgment.

One particular point of interest – the affidavit should be attested to by an employee of the current servicer. Occasionally banks’ attorneys will supply affidavits from former servicers. This information excludes recent information and it is also an affidavit from a non-party to the lawsuit since the prior servicer is no longer an agent of the Plaintiff.


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What is a Loss Mitigation Affidavit?

The Illinois Supreme Court requires that foreclosing banks file a “loss mitigation affidavit,” also known as a Rule 114 Affidavit for the specific rule. This affidavit must be filed at the time the bank is moving for judgment. This includes default judgment and summary judgment.

The purpose of the affidavit is to apprise the court of the status of any loss mitigation effort, including loan modifications, short sales, deeds-in-lieu, or forbearances. The way it works in practice is that the foreclosing bank supplies minimal and often inaccurate information. The affidavit often will say something along the lines of “Foreclosing Bank solicited homeowners for loss mitigation on these dates, and the homeowners did not respond.” Or “Foreclosing Bank solicited homeowners for loss mitigation on these dates and determined the homeowners do not qualify for any loss mitigation.”

Such statements do not really provide much if any information to the court. To make matters worse, the foreclosing bank often gets the information wrong. Oftentimes the loss mitigation affidavit is completed months (or years!) before the bank moves for judgment, so by the time the bank files the affidavit with the court the information is terribly outdated.

Since the affidavit is a requirement for the bank to obtain judgment (the court is given discretion to approve, deny, or delay entry of judgment if no affidavit is presented or if the affidavit is found to be inadequate), it is important to scrutinize the affidavit for errors and inconsistencies. Judges may delay entering judgment based on arguments raised in response to a loss mitigation affidavit. This can buy the homeowner crucial time to obtain a loan modification and delay any foreclosure auction that may arise.

In particular, verify the dates of solicitation letters are correct, check if any loss mitigation affidavits are currently pending and unreported, and check if the information conflicts with itself.

 


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People ex rel. Madigan v. Wildermuth

The First District Appellate Court has determined in a recent ruling that individuals and companies engaged in predatory loan modification assistance endeavors cannot target protected classes.

The case, People ex rel. Madigan v. Wildermuth, stands for the proposition that predatory loan modification assistance companies can also violate the Illinois Human Rights Act, 775 ILCS 5/3-102(B) when they specifically target minority groups or other protected classes.  People ex rel. Madigan v. Wildermuth, 2016 IL App (1st) 143592.

The Illinois Attorney General has accused Matthew Wildermuth, George Kleanthis, and the Loan Modification Network, LLC, of not only conducting a predatory loan modification assistance program but also specifically targeting African-Americans and Latinos.

The question at issue upon appeal was whether the Illinois Human Rights Act might apply to this specific situation, and the First District answered in the affirmative. The Court did not determine whether the Defendants were actually engaged in predatory loan modification scams or whether they were actually directing the scams at minorities.

It is important to have legal representation when one’s home has fallen into foreclosure, but it is a necessity to vet the attorney or assistance group before engaging their services. Many homeowners in Illinois employ unscrupulous “law firms” based in California or Florida to help them obtain loan modifications. It is best to obtain local counsel that is subject to the Illinois rules related to loan modification assistance. The various bar associations and courts maintain lists of attorneys in good standing that provide assistance in foreclosure defense. When in doubt, check with these organizations.


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Deutsche Bank National Trust Company v. Iordanov

The First District Appellate Court once again affirmed its position that if an affirmative defense is not timely filed, it is forfeited.

In the case Deutsche Bank National Trust Company v. Iordanov, 2016 IL App (1st) 152656 (2016), the homeowner, Iordanov, raised the affirmative defense of standing upon the final hearing – a motion to reconsider confirmation of sale. His argument revolved around the issue that the Plaintiff, Deutsche Bank, was assigned the mortgage after the lawsuit was filed. The Appellate Court stated that Mr. Iordanov waived this argument because he did not timely raise it. Affirmative defenses should be raised in the Answer, or shortly thereafter with leave of the Court. Courts generally do not permit leave to file affirmative defenses after summary judgment has been entered.

What makes this case damaging to Defendants is that the Appellate Court, in dicta, goes on to find the following legal conclusions:

  • Mortgage Assignments can be oral. It does not need to physically exist. A written assignment can be prepared after the fact to memorialize the transfer.
  • The Defendant under such a scenario has the burden to show that there was no oral assignment – a nearly impossible task.
  • A Defendant cannot rely solely on the Bank’s filings to raise the affirmative defense of standing. The Defendant must produce something more than the mortgage, note, and assignments to rebut the strong presumption that the Bank is entitled to bring the foreclosure lawsuit.
  • The First District specifically rejects the Second District’s ruling on a similar matter in the case Deutsche Bank National Trust Company v. Gilbert, 2012 IL App (2d) 120164. The Court in Gilbert found that the Defendant could make a prima facie showing that the Bank did not have standing to foreclose at the time of the lawsuit filing, by proffering a late or non-existent assignment. The Iordanov Court says this burden-shifting runs contrary to the Illinois Supreme Court’s position that lack of standing must be plead and proved by the Defendant alone.

With this ruling it is clear that if a Defendant homeowner wants to successfully assert the affirmative defense of standing in the First District, he/she must obtain evidence beyond the mortgage and note documents filed by the foreclosing Bank to have a chance.

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For a more detailed analysis of affirmative defenses to a Complaint, check out NCLC’s Foreclosures Guide.


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Chicago Foreclosure Help

One of the most important steps a homeowner can take in defending a foreclosure lawsuit is to seek out an attorney to represent him/her in the matter. There are many attorneys practicing in the area of foreclosure defense in the Chicagoland area. Some are better than others.

To get a sense of the attorney’s worth, check the attorney out on review websites such as Avvo, Yelp, or Google. Avvo has a somewhat convoluted rating system that assigns a numerical value based on a number of factors including length of time spent practicing as an attorney. Therefore, older attorneys tend to have ratings near perfect more often than newer attorneys or mid-career attorneys. Due to this, the numerical value is not as important as the actual reviews left on Avvo. Under each attorney’s profile, you can see the attorney’s reviews left by clients, and endorsements from other attorneys. This permits you to get a sense of how others perceive the value of the attorney. While one bad review does not mean the attorney is poor (disgruntled clients who did not win their cases sometimes choose to leave poor reviews out of spite), beware of attorneys with many bad reviews as this indicates a pattern of dissatisfaction. Many attorneys offer a free consultation so you can meet with the attorney to determine if the attorney will be a good fit.

If you determine that you are unable to afford an attorney, there are non-profits that assist homeowners in foreclosure defense for those who qualify. In Chicago, Chicago Volunteer Legal Services offers some amount of foreclosure defense. In Lake County, Prairie State Legal Services offers foreclosure defense as well. Lake County also offers a “foreclosure help desk” during the foreclosure court calls to permit unrepresented homeowners to obtain basic information about the process. This is a good resource to utilize when you are just getting started in the matter.

Lastly, many counties in the Chicagoland area offer mediation. It is beneficial for homeowners to undertake mediation with the assistance of an attorney knowledgeable in loan modifications and other forms of loss mitigation. That way, if the homeowner is wrongfully denied a modification the attorney can challenge the denial and attempt to negotiate some other form of workout. Never rely on the premise that the foreclosing bank is working in your best interest.

The following is an affiliate link, which means this website makes money if you purchase the product linked:

For a novice level guide to foreclosure, check out NOLO’s guide on Amazon.

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What is Default Judgment?

When a bank seeks to foreclose and the Defendant homeowners do not file an appearance or answer the bank’s complaint, the bank will seek what is known as “default judgment.” Simply put, default judgment is a form of judgment entered where the bank gets judgment by default because no defense was proffered.

Homeowners may choose not to participate in their case for a number of reasons. They may have been told by their bank that they didn’t need to defend the lawsuit because they are applying for a loan modification (this is wrong, a loan modification does not stop the foreclosure). Homeowners may not be aware a foreclosure was filed against them because the bank served the summons by publication rather than personal service. Homeowners may simply not want to go to court and deal with the issue head-on. Lastly, some homeowners do not file an appearance and answer strategically – to avoid an in personam deficiency judgment.

Whatever the reason, if the bank gets a default judgment they are free to proceed to a foreclosure auction to sell the property (after waiting the statutory 90 days during the right of redemption). When homeowners discover they had default judgment entered against them, the best course of action is to seek out an attorney.

Default judgment can be addressed in a number of ways depending on the homeowners’ goals. If the homeowners wish to retain the property and fight the foreclosure, the homeowners can ask the court for leave to file an appearance and vacate default judgment. The defendants will need to file a “motion to vacate default judgment.” Courts dislike judgment by default, and therefore Judges are often willing to vacate default judgment provided not too much time has passed (if a foreclosure auction is scheduled within 30 days, the court is much less likely to grant default judgment). Upon granting a motion to vacate default judgment, the court will usually provide a certain amount of time to the defendants to file their answer (generally 30 days). If the defendants do not file an answer, the court, upon the bank’s motion, will again enter default judgment in the bank’s favor and will be unlikely to vacate that default judgment a second time. It is important to file an answer when the court has granted the ability to.

If the homeowners do not wish to fight the foreclosure, then the simple threat of a motion to vacate default judgment may be enough to get the bank to play ball on a loss mitigation option such as a deed-in-lieu, short sale, or consent foreclosure. Since the process of vacating default judgment and then responding to the affirmative defenses and bringing a motion for summary judgment takes a long time, the bank may be willing to work with the homeowner to avoid that lengthy process.

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If you are looking to short sell your property in foreclosure, reach out to a realtor today to determine your next steps.

 


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Motions to Dismiss the Complaint to Foreclose

In the alternative to answering a foreclosure complaint, a homeowner can instead file a motion to dismiss the complaint. When courts permit the Defendant time to “answer or otherwise plead,” this is partially what the court means by “otherwise plead.”

There are two statutes in Illinois for bringing a motion to dismiss a complaint. They are known as 2-615 and 2-619.

735 ILCS 5/2-615 permits a party to move to have a pleading stricken based on a defect within the pleading. Essentially, the moving party is stating that there is a fundamental error with the pleading that requires the court to strike it. In the context of a complaint, the argument is that the complaint, even if taken as true, does not contain the allegations to support the remedy requested. Either the complaint is missing fundamental pleading requirements or the relief requested is not available by law for the circumstances outlined in the complaint. A 2-615 motion does not permit outside information to be brought in to support dismissal. Instead, the movant must base the entire motion to dismiss solely on the complaint.

Alternatively, a motion can be brought under 735 ILCS 5/2-619. This provision is a motion to dismiss the complaint but permits outside information to be plead in support thereof. The movant is saying that there is a fundamental error with the complaint, but the error is based on some outside information that is plead in the 2-619 motion. An affidavit must be attached to the motion to dismiss, and the reasoning behind the dismissal should fall within one of the nine categories that follow:

(1) That the court does not have jurisdiction of the subject matter of the action, provided the defect cannot be removed by a transfer of the case to a court having jurisdiction.
(2) That the plaintiff does not have legal capacity to sue or that the defendant does not have legal capacity to be sued.
(3) That there is another action pending between the same parties for the same cause.
(4) That the cause of action is barred by a prior judgment.
(5) That the action was not commenced within the time limited by law.
(6) That the claim set forth in the plaintiff’s pleading has been released, satisfied of record, or discharged in bankruptcy.
(7) That the claim asserted is unenforceable under the provisions of the Statute of Frauds.
(8) That the claim asserted against defendant is unenforceable because of his or her minority or other disability.
(9) That the claim asserted against defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim.

The two motions can actually be brought together in a 2-615 and 2-619 combined motion to dismiss. You will want to be sure the arguments are separated out, so for instance, section 1 can be the 2-615 motion to dismiss and section 2 can be the 2-619 motion to dismiss. Do not blend them together, but the Defendant can have both separate arguments in one filing.

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If you are looking to short sell your property in foreclosure, reach out to a realtor today to determine your next steps.


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Should I Participate in Foreclosure Mediation?

Cook County, Lake County, and Will County all offer foreclosure mediation programs with varying results. At its heart, mediation is the court-sanctioned opportunity for the homeowner to sit down with the foreclosing bank’s representative and hash out an agreement to either permit the homeowner to stay, via a loan modification, or permit the homeowner to walk away without a personal deficiency, via a short sale, deed-in-lieu, or consent foreclosure.

Out of the three programs, Lake County’s appears to be the most effective. Lake County was actually created by the Chancery Division of the 19th Judicial Circuit Court along with a non-profit organization called the Affordable Housing Corporation. The AHC administers the mediation. Part of the success of Lake County’s program is due to the fact that it was created after Cook County’s program, and therefore some of the pitfalls of that program have been avoided.

All three programs begin the same way. The Court provides an opportunity to go to mediation before the foreclosure process really takes off. The summons and complaint often includes a mailer alerting the homeowner to the mediation program. To attend the program in Lake County, the homeowner need only contact the AHC to start the process, whereas in Cook and Will Counties the homeowner must show up to the initial case management hearing and request that the court send the matter to mediation.

Once in the program, the homeowner is required to submit a complete application to the foreclosing bank before the actual mediation date. In Lake County, the AHC obtains the documents from the homeowner and then submits it to the bank. In Cook and Will County, it is the homeowner’s responsibility to get a complete application to the bank before mediation.

If the bank receives a complete application, they can then provide some sort of answer to the homeowner at the mediation session. Ideally, this would be a loan modification. However, it often does not work that way, and the bank may instead show up to the mediation and simply ask for more documentation and schedule a new mediation session, or may deny the homeowner for any loss mitigation and terminate the mediation session.

The mediators can send notice to the court if one party is not participating in the mediation in good faith. The court may issue an order directing the party to participate, or may even sanction the party if the conduct was awful enough. A tip for a homeowner or a homeowner’s attorney: be sure all documentation asked for from the bank has been submitted, and keep evidence of the submission. Always consider that you may have to prove that all documents were submitted as banks often “lose” loan modification documents or state they never received them.

Mediation is a great tool to work out a loss mitigation option, and for 99% of homeowners it is worthwhile to attend.

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For a novice level guide to foreclosure, check out NOLO’s guide on Amazon.


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Illinois Motion to Quash Service

In Illinois, there are strict rules on how a Defendant can be served the summons and complaint in a lawsuit.  For more information on service, see our blog post about it here.

When the Defendants appear in court, the court will usually provide the Defendants with 28 days to file an appearance and answer, or otherwise plead.  If service was performed correctly, the Defendants should file answer.  For more information on filing an Answer to a foreclosure, see our blog post here.

If service was not performed correctly, the Defendants should file a motion to quash service.  This motion, filed before the foreclosing bank obtains judgment, states that the bank failed to properly serve the Defendants and therefore the court does not have jurisdiction to enter judgment against the Defendants.  If the court agrees, the court will dismiss the lawsuit.

So what constitutes proper service in Illinois?  Service is obtained by the process server hand-delivering copies of the summons and complaint to the defendant or by delivering the summons and complaint to the defendant’s home and leaving it with a person who resides at the home that is 13 years or older.  See 735 ILCS 5/2-203 for the service statute in Illinois.

If the process server is unable to deliver the summons and complaint, the court can give permission for the foreclosing bank to serve by publication. See 735 ILCS 5/2-206. What this means is that the bank will publish notice in a newspaper announcing the foreclosure lawsuit for a number of weeks.

If the bank utilizes the first method of service, and follows the requirements of it, then there is no possibility of bringing a motion to quash.  If the bank utilizes the second method of service with the court’s permission, then again there is no basis for a motion to quash.

However, if the process server made a crucial error, for instance serving a member of the household who was 12 years old instead of 13, or some other error, then it is advisable to bring a motion to quash the lawsuit.

Other common errors include the process server simply leaving the documents at the property (on the porch or in the mailbox) without actually handing them to anyone.  It is necessary to check the affidavit of the process server that was filed with the court to verify that it matches the reality.  If anything is off, then the Defendants should attempt to quash service.

A motion to quash service is simple enough.  It will outline the deficiency of service, cite the service statute provision that was violated, and contain an affidavit if necessary that testifies as to the error.  The motion should be scheduled with the court and the bank’s attorney should be given notice of the motion.

A motion to quash service is a powerful, but temporary remedy.  It will get the case dismissed temporarily, but you can bet the bank will not make the same mistake twice and will properly serve the Defendants the second time.  A second foreclosure matter will be filed and the bank will pick up where it left off.

The following is an affiliate link, which means this website makes money if you purchase the product linked:

For a novice level guide to foreclosure, check out NOLO’s guide on Amazon.

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