CitiMortgage, Inc. v. Johnson
993 N.E.2d 563
Ill. App. Ct.2013Background
- CitiMortgage obtained summary judgment and a foreclosure judgment against Quentin Johnson and Tonya Whitaker for property in Aurora, Illinois, and the property was sold at sheriff’s sale.
- Defendants submitted a HAMP (MHA) hardship affidavit in July 2010 and a second HAMP application on October 21, 2011 (faxed Nov. 3, 2011); they also received a Chapter 7 discharge in October 2011.
- Defendants objected to confirmation of the November 17, 2011 sale under 735 ILCS 5/15-1508(d-5), alleging plaintiff materially violated HAMP guidelines (particularly Guideline 3.3 requiring servicers to suspend sale to evaluate timely HAMP applications).
- The trial court confirmed the sale on March 29, 2012 and later denied defendants’ motion to reconsider and their request for Rule 137 sanctions.
- On appeal, the court examined whether a Chapter 7 discharge can constitute a change in circumstance for HAMP reconsideration and whether proceeding to sale despite a timely successive HAMP application was a material violation under section 15-1508(d-5).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the sheriff’s sale must be set aside under 735 ILCS 5/15-1508(d-5) because plaintiff materially violated HAMP by not suspending the sale after receiving a timely HAMP application | CitiMortgage argued defendants did not show a material HAMP violation; their second application lacked a qualifying change in circumstance and plaintiff had no duty to suspend absent such a change or clear guideline violation | Defendants argued their timely second HAMP application (after Chapter 7 discharge) required suspension under HAMP Guideline 3.3 and thus the sale was a material violation of MHA requirements | Court held sale should have been vacated: defendants qualified for reconsideration and plaintiff’s proceeding to sale violated HAMP Guideline 3.3, a material violation under §15-1508(d-5) |
| Whether a Chapter 7 bankruptcy discharge can be a change in circumstance that justifies HAMP reconsideration | CitiMortgage said discharge alone is not necessarily a change in circumstance affecting prior NPV denial and defendants failed to supply financial data showing such change | Defendants said discharge affects credit/NPV, so it was a qualifying change triggering reconsideration | Court held a Chapter 7 discharge can constitute a change in circumstance absent a servicer policy to the contrary, so defendants qualified for reconsideration |
| Whether notice of the November 17, 2011 sale was inadequate | CitiMortgage asserted it mailed proper notice (filed proof) and defendants offered only self-serving denials | Defendants claimed they never received notice and the court file’s mail-stamp postdated the sale | Court found the trial court did not abuse discretion in concluding notice was adequate; this issue was moot because sale was vacated on HAMP grounds |
| Whether Rule 137 sanctions were warranted against plaintiff for proceeding with the sale | CitiMortgage argued its conduct was fact-based and reasonable in an unclear legal area | Defendants urged sanctions for egregious conduct in ignoring a timely HAMP application | Court affirmed denial of sanctions: no abuse of discretion where conduct was grounded in fact and law was unsettled |
Key Cases Cited
- Household Bank, FSB v. Lewis, 229 Ill. 2d 173 (Illinois 2008) (standard of review and deference for confirmation of judicial sales)
- Wigod v. Wells Fargo Bank, N.A., 673 F.3d 547 (7th Cir. 2012) (purpose of HAMP is to prevent avoidable foreclosures; servicer duties under HAMP)
- Dowd & Dowd, Ltd. v. Gleason, 181 Ill. 2d 460 (Illinois 1998) (standard for reversing denial of Rule 137 sanctions; review for abuse of discretion)
- Peeples v. Village of Johnsburg, 403 Ill. App. 3d 333 (Ill. App. Ct.) (abuse of discretion occurs when ruling rests on an error of law)