One of the reasons why Illinois has such a famously long foreclosure timeline is because our state's judicial foreclosure process puts procedural and statutory "speed bumps" into place. For example, once a judgment of foreclosure and sale is entered in a case, there is a 90-day period where the homeowner can exercise his or her right of redemption. During this period, the foreclosing lender cannot take the property to sale.
The new Rule 113 imposes other procedural steps upon foreclosing lenders, although many of them do not significantly extend foreclosure time frames. However, other portions of Rule 113 are highly likely to extend foreclosure time frames because they require banks to produce additional documentation. In my experience, producing documentation has been one of the areas in which banks are the slowest.
Rule 113(b) requires that a foreclosing lender attach a copy of the note as it currently exists to the mortgage foreclosure complaint. This change is significant. Foreclosing lenders routinely attach any copy of the note that they can find when they file their complaint. These copies may not reflect the chain of title from the original lender to the foreclosing lender, raising significant questions about the lender's ability to bring the lawsuit. Section 1504 of the Illinois Mortgage Foreclosure Law states that these copies are presumed to be true and correct copies of the note. In many cases, the lender will later produce a note with several indorsements and allonges that "prove" the chain of title to the note.
The comments to Rule 113(b) indicate that one of the reasons for requiring that the current copy of the note be attached to the complaint is to "prevent unnecessary delays caused by motion practice and discovery often used by defendants." However, even if this rule is followed in every case going forward, borrowers may still demand that the lender provide the original note. This Rule also seems to create a presumption that the note attached to the complaint is how the note looks at the time of filing. A copy produced in discovery that contains additional indorsements must therefore have been indorsed after the case was filed. Although the new rule may defuse frivolous standing arguments, it may also strengthen valid standing issues by creating this additional presumption/burden.
Rule 113(c) provides homeowners with another level of protection -- when a foreclosing lender files a motion seeking a judgment of foreclosure and sale, it must also submit an affidavit that proves-up the amount that the homeowner owes on his or her loan. This affidavit must contain:
- Information about how the affiant has knowledge of the lender's business and mode of operation. This means that the affiant must either be a custodian of records for the lender or be able to explain how he or she has knowledge of the lender's business.
- The affidavit must also provide copies of the documents used to establish the information in the affidavit. This includes records transferred from a previous lender or servicer in addition to internal records from the foreclosing lender. This requirement only applies if the defendants have filed an appearance or responsive pleading in the case.
- The affidavit must also idenfity any computer program or software that the lender uses to record and track mortgage payments. It must include the source of the information, the method for entering that information, and an explanation as to why the record is considered a "business record" within the meaning of the law.
- The affidavit must also include any necessary additional evidence that demonstrates the Plaintiff's ability to bring the lawsuit.
This new affidavit requirement could be a serious boon for homeowners. One of the biggest problems with affidavits filed by lenders is that the affidavit merely recites a legal standard -- it does not specifically discuss the sources of information and how the person signing the affidavit has any personal knowledge of the facts of a case. Requiring that lenders actually establish that the records they use are business records (and adding a requirement that they actually attach documents) means that banks will have a harder time robo-signing documents.
Rule 113(d) expands the notice requirements of the Illinois Mortgage Foreclosure Law. When a default judgment is entered, the new Rule requires that all defendants in the case be mailed a notice of default within 5 days of the entry of the default judgment. The notice must also include the amount of money required to reinstate the loan. This is a key provision because borrowers can easily vacate a default judgment within 30 days of its entry. This notice helps homeowners establish a timeframe for attempting to vacate a default. It is worth noting, however, that failing to comply with Rule 113(d) is not a basis for vacating a default.
Perhaps even more significant is Rule 113(f), which requires that every defendant in a foreclosure action be notified not less than 10 days before a sheriff's sale is held of the date, time, and location of the sale. The IMFL only requires that parties who have filed an appearance receive this notice. Expanding it to all defendants gives homeowners one last chance to save their home by acting before the sale date. For example, a borrower can use a Chapter 13 bankruptcy to reinstate his or her loan up to the day of the sale. After the sale is conducted, that right disappears.
Rule 113 contains other provisions not discussed in this post.