Posted By USFN,
Wednesday, February 6, 2013
Updated: Monday, November 30, 2015
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February 6, 2013
by Lee Perres & Nicholas Schad
Fisher and Shapiro, LLC
USFN Member (Illinois)
Editor's Note: On February 8, 2013, Illinois Governor Quinn signed SB16. It is effective June 1, 2013.
On December 5, 2012, SB16 (the Bill) passed both houses of the 97th Illinois General Assembly, set to become effective June 1, 2013. At the timing of the writing of this article, the bill is awaiting the governor’s signature.
The Bill has four main components: (1) funding for housing counseling and foreclosure prevention; (2) an expedited process to foreclose abandoned properties; (3) additional notice requirements to aldermen, if the property is located in the city of Chicago, and to the last-known property insurers; and (4) clarification of the requirements of the form of a properly recorded Illinois mortgage. The Bill applies to standard mortgages and “revolving credit” loans.
Funding for Housing Counseling and Foreclosure Prevention — The Bill authorizes the Illinois Housing Authority to establish and administer a Foreclosure Prevention Program. The program uses monies in the Foreclosure Prevention and Counseling Fund, appropriated for that purpose, to make grants to HUD-certified housing counseling agencies to support pre-purchase and post-purchase home ownership education and foreclosure prevention counseling. Seventy-five percent of the fund monies are to be used for housing counseling outside of the city of Chicago, and twenty-five percent for counseling in Chicago. Funding for the Foreclosure Prevention and Counseling Fund and the Abandoned Residential Property Municipality Relief Fund comes from additional filing fees charged to plaintiffs in foreclosure actions. The amount of the additional fee is determined by a “tier system” based on the number of foreclosure complaints filed by a plaintiff, “together with its affiliates” (defined as “any company that controls, is controlled by, or is under common control with another company” by the Bill), during the calendar year immediately preceding the filing of the subject foreclosure:
Number of Complaints filed by Plaintiff
together with its Affiliates
Amount of additional filing
fee per case
|175+ foreclosure complaints
|50 – 174 foreclosure complaints
|0 – 49 foreclosure complaints
A fee of $500 per case applies in the following instances: (1) the plaintiff, together with its affiliates, is a “tier one” filer and files the subject complaint on its own behalf as the holder of the indebtedness; (2) the plaintiff, together with its affiliates, is a “tier one” filer and files the subject complaint on behalf of a “tier one” mortgagee; or (3) the plaintiff, together with its affiliates, is not a depository institution (defined as a bank, savings bank, savings and loan association, or credit union chartered, organized, or holding a certificate of authority to do business under the laws of Illinois, another state, or the United States by the Bill) and files the subject complaint on behalf of a “tier-one” mortgagee.
A fee of $250 per case applies in the following instances: (1) the plaintiff, together with its affiliates, is a “tier two” filer and files the subject complaint on its own behalf as the holder of the indebtedness; (2) the plaintiff, together with its affiliates, is a “tier one” or “tier two” filer and files the subject complaint on behalf of a “tier two” mortgagee; (3) the plaintiff, together with its affiliates, is a “tier two” filer and files the subject complaint on behalf of a “tier one” mortgagee; or (4) the plaintiff, together with its affiliates, is not a depository institution and files the subject complaint on behalf of a “tier two” mortgagee.
A fee of $50 per case applies in the following instances: (1) the plaintiff, together with its affiliates, is a “tier three” filer and files the subject complaint on its own behalf as holder of the indebtedness; (2) the plaintiff, together with its affiliates, is a “tier one,” “tier two,” or “tier three” filer and files the subject complaint on behalf of a “tier three” mortgagee; (3) the plaintiff, together with its affiliates, is a “tier three” filer and files the subject complaint on behalf of a “tier one” mortgagee or “tier two” mortgagee; or (4) the plaintiff, together with its affiliates, is not a depository institution and files the subject complaint on behalf of a “tier three” mortgagee.
To determine which fee the plaintiff must pay, a verified statement is to be filed by the plaintiff at the time the complaint is filed, stating which tier applies to the plaintiff. The clerk of the court may specify other processes by which a plaintiff may certify its eligibility for exemption from the additional fee. The additional fees will expire on January 1, 2018.
Expedited Process to Foreclose Abandoned Property — The Bill amends Illinois Mortgage Foreclosure Law (IMFL) to permit a mortgagee to file a “motion to expedite the judgment and sale” at filing or any time thereafter on abandoned residential property (735 ILCS 5/15-1505.8). “Abandoned residential property” is defined as “residential real estate that either is unoccupied by a lawful occupant as a principal residence or contains an incomplete structure if the real estate is zoned for residential development, where the structure is empty or otherwise uninhabited and is in need of maintenance, repair or securing,” and, in either case, two or more of the following conditions exist:
- Construction was initiated on the property and was discontinued prior to completion, leaving a building unsuitable for occupancy, and no construction has taken place for at least six months;
- Multiple windows on the property are boarded up, closed off, or are smashed through, broken off, or unhinged, or multiple window panes are broken and unrepaired;
- Doors on the property are smashed through, broken off, unhinged, or continuously unlocked;
- The property has been stripped of copper or other materials, or interior fixtures to the property have been removed;
- Gas, electrical, or water services to the entire property have been terminated;
- There exist one or more written statements of the mortgagor or the mortgagor’s personal representative or assigns, including documents of conveyance, which indicate a clear intent to abandon the property;
- Law enforcement officials have received at least one report of trespassing or vandalism or other illegal acts being committed at the property in the last six months;
- The property has been declared unfit for occupancy and ordered to remain vacant and unoccupied under an order issued by a municipal or county authority or court of competent jurisdiction;
- The local police, fire, or code enforcement authority has requested the owner or other interested or authorized party to secure or winterize the property due to the local authority declaring the property to be an imminent danger to the health, safety, and welfare of the public;
- The property is open and unprotected and in reasonable danger of significant damage due to exposure to the elements, vandalism, or freezing; or
- There exists other evidence indicating a clear intent to abandon the property; or
- The real estate is zoned for residential development and is a vacant lot that is in need of maintenance, repair, or securing (735 ILCS 5/15-1200.5).
The Bill excludes the following from the definition of “abandoned residential property”: (1) property undergoing active construction; (2) property that is seasonably inhabited but otherwise secure; (3) property on which appear bona fide rental or “for sale” signs; (4) property that is otherwise secure, but is subject to probate, quiet title, or ownership dispute; or (5) a property that is otherwise secure and substantially complies with all applicable codes, regulations, and laws (735 ILCS 5/15-1200.7).
The motion must be supported by an affidavit that sets forth facts demonstrating the mortgaged real estate is abandoned residential property under Section 15-1200.5. If the motion is filed with the complaint, or before the period to answer the foreclosure complaint has expired, a hearing on the motion “shall be held no earlier than before the period to answer the foreclosure complaint has expired and no later than 15 days after the period to answer the foreclosure complaint has expired.” If the motion is filed “after the period to answer the foreclosure complaint has expired, the motion shall be heard no later than 15 days after the motion is filed with the court.” If the court determines that the property is abandoned, the court shall grant the motion for expedited judgment and the matter can immediately proceed to “trial of the foreclosure.” While the section is not clear, these authors are hopeful that the judgment hearing will proceed as it always does, by affidavit.
A court may not grant a motion for expedited judgment if the mortgagor, unknown owner, owner, or lawful occupant, appears in the action before or at the hearing and objects to a finding of abandonment. The court is required to vacate an order granting a motion for expedited judgment and sale if the mortgagor or lawful occupant appears in the action at any time before the order confirming sale and presents evidence establishing that the mortgagor or lawful occupant has not abandoned the property. The Bill does not offer guidance regarding the proof that the court will require from an objecting defendant.
The reinstatement period and redemption period for the abandoned property shall expire 30 days after entry of judgment, and the property is to be sold at the earliest possible time thereafter.
Upon confirmation of the sale, any personal property left in or upon the property shall be deemed to have been abandoned by the owner and may be disposed of or donated by the holder of the certificate of sale. The mortgagee, its successors or assigns, the holder of the certificate of sale, or purchaser at sale shall not be liable for the disposal or donation of personal property.
Statutory notices are required to be posted at the property address at least 14 days prior to the hearing on the motion requesting expedited judgment and sale, and at least 14 days prior to the hearing to confirm the foreclosure sale. All notices must be sent to the last-known address of the mortgagor.
Additional Notice Requirements — If the real subject property is located within a city of 2,000,000 or more people (Chicago), the party initiating the foreclosure must send the notice of foreclosure (lis pendens) to the alderman for the ward in which the real estate is located. The notice must be sent by first-class mail. The plaintiff must file an affidavit with the court attesting that the notice was sent to the alderman. Failure to comply with this requirement results in a dismissal without prejudice of the complaint or counterclaim upon the motion of a party or the court.
A copy of the confirmation order (the order confirming the foreclosure sale) must be sent to the last-known property insurer by first-class mail. Failure to send this notice shall not impair or abrogate in any way the rights of the mortgagee or purchaser or affect the status of the foreclosure proceedings.
Clarification of the Required Form of Mortgage — Finally, the Bill addresses a decision of a bankruptcy court in Illinois which invalidated mortgages that do not have the interest rate stated on the face of the mortgage. The Bill provides that “the failure of an otherwise lawfully executed and recorded mortgage to be in the form described in subsection (a) in one or more respects, including the failure to state the interest rate or the maturity date, or both, shall not affect the validity or priority of the mortgage, nor shall its recordation be ineffective for notice purposes regardless of when the mortgage was recorded.”
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Winter 2013 USFN Report
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