After the bank has filed its complaint, a homeowner will have thirty days to answer or otherwise plead. The “otherwise plead” will include items such as motions to quash service, motion for bill of particulars, etc.
But to answer, you will need to go through the foreclosure complaint, line by line, and specifically answer each item. As contemplated under the rules of civil procedure, a defendant should either admit or deny each allegation. However, not every allegation is that straightforward, as some allegations require the Defendant to obtain more information before answering, and some allegations are merely statements of law that do not need to be answered. Some allegations may not be directed at the Defendant, and therefore the Defendant does not need to answer.
Once the Defendant in a foreclosure matter has answered all of the allegations, the Defendant also needs to answer the “deemed” allegations. These are statutory in nature, and can be found at 735 ILCS 5/15-1504(c). The Defendant should again admit or deny every deemed allegation.
The Answer is crucial, but straightforward. The heart of it is whether the Defendant defaulted on the mortgage or not. Most foreclosure defense clients have one way or another defaulted on the mortgage. Usually it is because they have stopped making payments (I recognize that there are a considerable amount of people out there who have been wrongfully foreclosed on. In such a case, the Defendant should deny in their Answer that they defaulted).
In circumstances where a homeowner did default, but wishes to fight the foreclosure, affirmative defenses can be raised. Affirmative defenses are defenses that defeat the plaintiff’s right to receive a remedy despite the Defendant’s default on the mortgage. They are as follows:
Standing. This is the main one that every defendant raises. Essentially the argument goes – I have defaulted on my mortgage, but the party bringing the lawsuit against me is not my bank. Therefore, it has no right to foreclose. While it is true that a foreclosing bank must have standing to bring a foreclosure, and it must have standing before the case is brought, it turns out that the Illinois Mortgage Foreclosure Law is very open as to who can bring a foreclosure. A foreclosure can be brought by the mortgagee, the owner of the note, the servicer, a receiver, or any agent of any of the above. This means that as long as the foreclosing bank has some connection, however tenuous, to the homeowner’s bank, the Court will allow it to proceed.
If you believe your client has a standing issue, you can check the Mortgage and Note first. It is important to verify that the Note has been indorsed in blank (meaning any holder can enforce it). Check the indorsements to make sure they make sense. If the bank has attached an assignment of mortgage, make sure that it is in line with what the Note shows. If the transfers do not add up, or there has been no transfer at all to the foreclosing bank, then the homeowner may have a standing argument. But remember, if the Note has been indorsed in blank, the chance of a victory on a standing defense is slim to none.
For more information related to this argument, see our article on the foreclosing bank here.
Failure of Condition Precedent. Mortgages usually contain a clause wherein the mortgage bank is required to send a 30 day notice to a homeowner in default before it initiates a foreclosure proceeding. Illinois courts have found that if the 30 day notice was not sent, then the foreclosing bank has failed to satisfy a condition to foreclosure and the case must be dismissed. When this happens, the foreclosing bank will need to then send the 30 day notice and begin the foreclosure anew. This is good to buy some time for a homeowner, but it is not a permanent solution to the foreclosure. Also note, some Courts have found that this is not an affirmative defense at all.
Failure to Mitigate Damages. The basis of this affirmative defense is that in contract law, the non-defaulting party should not “run up the bill” on the defaulting party, but instead should take steps to minimize its loss in the contract. For a mortgage foreclosure the theory goes that the foreclosing bank could have/ should have modified the mortgage to bring the mortgage current and make it more affordable for the homeowner. Under such a scenario, the foreclosing bank would actually be doing itself a favor because it will turn a non-performing loan back into a performing loan. This reduces its damages. Courts do not buy this argument since banks do not have an obligation to modify any particular mortgage (many banks have obligations under various agreements to perform modifications generally, but they are not required to modify any specific person’s mortgage).
Dina Defense. This defense is essentially that a mortgage is against public policy, and should not exist. For more about this defense, see here.
This list is not exclusive, but instead highlights a few of the main affirmative defenses that come up. It is always worthwhile to try a new affirmative defense if the opportunity presents itself, because that is where law is made.
Once the homeowner’s answer and affirmative defenses have been filed, the bank’s attorney will either file a motion to strike the affirmative defenses, or a combined motion for summary judgment and to strike the affirmative defenses.
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For a general overview of the foreclosure process, check out NOLO’s guide on Amazon.