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the bank moves for judgment, so by the time the bank files the affidavit with the court the information is terribly outdated.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.