 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).
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"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]
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