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WI: Inconsistent Challenges to Foreclosure Fail at Trial (and on Appeal)

Posted By USFN, Thursday, April 4, 2013
Updated: Monday, November 30, 2015

April 4, 2013


by Steven E. Zablocki
Gray & Associates, L.L.P. – USFN Member (Wisconsin)

Recently, two favorable decisions have been issued by the Wisconsin Court of Appeals. The decisions are unpublished and, therefore, of limited precedential value. However, they do show a decided shift in favor of lenders. Discussed in this article is the case of CitiMortgage v. Hobach, 2012AP1462-FT (Wis. Ct. App. Feb. 13, 2013). The second case (Household Finance v. Kennedy, 2011AP2658 (Wis. Ct. App. Mar. 5, 2013)) will be summarized in the May USFN e–Update.

In Hobach, the Wisconsin Court of Appeals affirmed a judgment in favor of the lender. The defendant appealed the judgment, arguing that summary judgment was improper because the lender failed to establish that it held or was entitled to enforce the note. Additionally, the defendant contended that the court erroneously denied his motion to amend pleadings.

Facts of the Case

The defendant took out a loan from Hartford Financial Services, securing the debt with a mortgage on his residence. The mortgage was thereafter assigned to the plaintiff, CitiMortgage, who filed a foreclosure complaint based upon a default for failing to make payments. A pro se (without legal counsel) answer was filed.

The initial complaint attached various loan documents, including copies of the original note and mortgage in addition to an allonge transferring the note from Hartford to CitiMortgage. Citi filed a motion for summary judgment, along with an affidavit describing the nature of default and the amount due on the loan as well as indicating that Citi held the subject note.

Thereafter, the defendant filed his opposition and a motion for leave to amend pleadings to include counterclaims. The defendant’s motion was premised on a claim that an agreement was made under the Home Affordable Mortgage Program (HAMP). The defendant contended that CitiMortgage agreed to modify the loan and stop the foreclosure if he made a series of timely payments. The defendant’s affidavit stated that he made four timely payments in 2010 and Citi refused his fifth payment without explanation.

The trial court denied the motion to amend the pleadings, indicating that by the defendant’s own admission the HAMP transaction occurred in 2010 and there was an undue delay in waiting until 2012 to amend the pleadings. Further, the court found that the defendant had failed to establish the existence of a loan modification agreement under HAMP, and none of his proposed amendments would serve as a legal defense.

Additionally, the trial court found that the motion was filed partially in bad faith because it asserted “on information and belief” that Citi was not the holder of the note and mortgage and unable to enforce the same. The court found that this was “astounding” since the pleadings of the parties demonstrated that Citi held the note. Besides, the court observed that not only had the defendant signed a previous loan modification agreement explicitly acknowledging CitiMortgage’s status as the note holder, but his own proposed counterclaims asserted that CitiMortgage had treated him unfairly — a near concession that CitiMortgage was the lender.

Summary judgment was granted in favor of CitiMortgage, concluding that CitiMortgage had the right to enforce the note and mortgage through the documents attached to the pleadings and affidavits. The defendant argued that Citi’s affidavit failed to demonstrate adequate personal knowledge that would permit its admission into evidence. Citi established itself as a note holder by affidavit from an employee testifying that she possessed records related to the defendant’s loan and that she had personal knowledge of how the records were kept and maintained. The affidavit confirmed that she had access to these records and that based upon her review, she determined that Citi was the note holder. The affidavit established adequate personal knowledge to permit testimony that Citi held the note at issue, and the defendant provided nothing to rebut the allegations.


On appeal, the judgment was affirmed. The trial court’s findings were supported by the evidence. The defendant failed to provide any evidence to support a second loan modification agreement, and his payments remained delinquent.

The Hobach decision is interesting for two reasons: First, the court specifically reviewed and affirmed the adequacy of the affidavit. Of late, there have been many challenges from defendants over the sufficiency of evidence. (See, for example Palisades Collection v. Kalal, 2010 WI APP 38 (Wis. Ct. App. Feb. 4, 2010)). Next, the court took issue with the inconsistent position taken by the defendant; that is, challenging standing and also alleging a failure to modify the loan. A defendant should either contest standing or allege a failure to modify. Alleging both is inappropriate.

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