 The three stand-alone Supreme Court rules reflect the court's concern over
well-publicized deceptive practices at the national and local level and the
significant impact the continuing flow of residential mortgage foreclosures is
having on Illinois citizens and communities.The rules are a direct outgrowth
of public hearings and 21 months of work by the Special Supreme Court Committee
on Mortgage Foreclosures, whose formation was recommended by Justice Mary Jane
Theis.
The 14-member committee consisted of people who have been on the front lines
in dealing with the housing and foreclosure crises, including judges; bankers
and their lawyers; a public interest attorney; a law professor; and the head of
the Consumer Protection Division of the Illinois attorney general's office.
"These new rules will promote fairness in home foreclosure proceedings, curb
abuses in the system, provide lenders finality when foreclosure is necessary and
ensure homeowners who have been thrown out of work during the years of a
troubled economy are aware of their rights and where to turn for help," said
Chief Justice Thomas L. Kilbride, an early proponent of foreclosure mediation
programs in Illinois. "The special committee, formed at the recommendation of
Justice Theis, has done its work well, with perseverance and with attention to
the kind of detail that we believe will get positive results.
"I and my colleagues on the Supreme Court thank them as well everyone who
participated in the process through written suggestions or testimony at the
public hearings. All their efforts, we hope, will not only promote efficiency,
finality and justice; but provide a touch of humanity in what is a painful
process for homeowners and an unwelcome one for lenders."
Theis acknowledged the hard work of the committee, not only for its labors
but for engaging in extensive compromise to draft significant proposals that
bridge the inherent self-interests on both sides, the lender and the borrower.
"The special committee worked hard and reached a consensus," Theis said.
"Some of the provisions in these rules are controversial in their specific
worlds, whether it be finance and lending or in public interest and consumer
law. No side got everything it wanted.
"I applaud the special committee, and all those who had input, for drafting
provisions that will lend some stability and certitude to what is a financially
and emotionally draining process."
Theis explained that the new rules establish a uniform protocol around the
state that will require lenders to provide homeowners with needed information so
that they understand the process and consequences of foreclosure; require
lenders to seek modification of loans for eligible homeowners before they
complete foreclosure; require improved legal notice to homeowners throughout the
process and before the actual sale of a foreclosed home; and require circuit
courts in Illinois that have a mediation program to provide resources for
HUD-certified consultation, free legal help and language interpretive services
to those eligible and in need of them.
"There can be no 'win-win' in a process that is as painful to homeowners as
foreclosure," Theis said. "But the process should be fair. These rules remedy or
mitigate questionable practices such as robo-signing; speed up the process to
hopefully shorten the blight on communities through boarded-up homes, and
provide a certainty that will enable foreclosed homeowners to examine loan
modification options or proceed on a new path."
The changes in Illinois foreclosure practice are embodied in new Supreme
Court Rule 99.1, dealing with requirements for mortgage foreclosure mediation
programs in the circuit courts and counties; new Supreme Court Rule 113, which
sets out required practice, procedure and notice obligations by the lender as
plaintiff; and new Supreme Court Rule 114, which requires a lender to attest
that it has complied with the requirements of any loss mitigation program that
applies to the specific home loan. Without the affidavit, a judge many deny
entry of a foreclosure judgment.
The rules are effective March 1. Counties and circuits that already have
foreclosure mediation programs have 90 additional days until June 1 to amend
their local rules to comply with the Rule 99.1 requirements, including the
identification of resources for counseling, free legal aid and interpretive
language services.
"I'm very proud of the committee's work," said Judge Lewis M. Nixon, chair of
the committee, who is supervising judge of the Mortgage Foreclosure Section of
the Cook County Circuit Court. "We had input from private citizens, people who
were going through foreclosures themselves, from banks and attorneys. The rules
are balanced. They contain recommendations that are helpful to both sides."
Daniel P. Lindsey, a public interest attorney at LAF (formerly Legal
Assistance Foundation of Metropolitan Chicago), was co-chair of a subcommittee
that recommended the new rules requiring the loss-mitigation affidavit (Rule
114) and the requirements for mortgage foreclosure mediation programs (Rule
99.1).
[to top of second column] |
"I hope what the loss mitigation and mediation proposals do is give
homeowners a chance whenever possible to work something out with
their lender, whether a loan modification or something else, instead
of going through the entirety of the foreclosure process," Lindsey
said. "A lot of the work I do is with homeowners we think should get
a loan modification who are getting the runaround. The lender is
telling them one thing on the phone -- 'Don't worry, we'll work with
you' -- and then their lawyers are barreling ahead with the
foreclosure in court.
"I hope these rules can slow things down, when appropriate, to
help the homeowner and lender to get a real chance to do a loan
modification and avoid foreclosure. The loss-mitigation affidavit is
an enforcement tool to help reach that goal. It gives judges a
concrete tool to make sure lenders are offering loss mitigation
before seeking a foreclosure judgment."
Counties that have mediation programs and have until June 1 to
adapt their local rules to Supreme Court Rule 99.1 are Cook, Will,
Peoria, Madison and Bond, McLean, and Kane. Kankakee and St. Clair
counties are in the process of establishing mediation programs.
Supreme Court Rule 113 establishes new rules of practice and
procedure that improve legal notice to a homeowner and is directly
aimed at eliminating the questionable practice of robo-signings by
requiring submission by the lender's representative of a prove-up
affidavit.
"The new rules improve the quality of notice to homeowners
involved in foreclosure cases," said Appellate Justice Mathias W.
Delort, who served as co-chair of the Practice and Procedure
subcommittee that drafted Rule 113. "First, if a homeowner loses a
foreclosure case by default because of a failure to appear in court,
the clerk of the court will be required to send a clear notice to
the homeowner explaining what occurred. Currently, there is no
consistent practice in giving notice.
"Second, foreclosure plaintiffs (lenders) will be required to
send a specific notice of the sale date to all homeowners, rather
than simply advertising it in a newspaper. And thirdly, to alleviate
some of the confusion caused by the frequent transfer of mortgages
and lawsuits being brought by entities unknown to the borrowers,
every foreclosure lawsuit must now include a copy of the note signed
by the mortgagor, including all endorsements evidencing the transfer
of ownership of the mortgage."
In addition to Nixon,.Lindsey and Delort, the members of the
committee are:
-
Judge Robert G.
Gibson, of the 18th Judicial Circuit, Du Page County, Wheaton
-
John J. Glowinski,
senior vice president, First Midwest Bank, Itasca, senior
officer responsible for remediation of troubled accounts
-
Richard M. Guerard,
attorney and partner with Guerard, Kalina & Butkus, Wheaton, a
firm concentrating its practice in commercial, banking and real
estate law
-
Deborah Hagen,
chief of the Consumer Protection Division of the Illinois
attorney general's office, Springfield, and publisher of
"Illinois Consumer Protection Law" for the Illinois Institute of
Continuing Legal Education
-
Richard L. Heavner,
attorney with Heavner, Scott, Beyers & Mihlar, a firm
concentrating in providing legal services to mortgage lending
institutions, and owner of Central Illinois Title Co., Decatur.
He was co-chair with Delort of the Practice and Procedure
subcommittee.
-
Judge Douglas L.
Jarman, of the 4th Judicial Circuit, Montgomery County
Courthouse, Hillsboro
-
Prof. Robert M.
Lawless, University of Illinois College of Law, Champaign,
teacher of courses including bailouts, bankruptcy, business
bankruptcy and consumer law
-
Retired Cook
County Circuit Judge Clifford L. Meacham, Chicago. Meachem
served with Lindsey as co-chair of the Loss Mitigation and
Mediation subcommittee.
-
Associate Judge
Darryl B. Simko, Cook County Circuit Court, Mortgage Foreclosure
Section
-
William F. Smith,
attorney, general counsel with Home Star Bank, Manteno
-
Kevin J. Stine, attorney with Mathis,
Marifian & Richter, Belleville, concentrating in banking law and
creditor rights
___
Supreme Court Rules
99.1, 113 and 114
[Text from file received from the
Illinois Supreme Court] |
