Nationstar Mortgage LLC v. Missirlian
2017 IL App (1st) 152730
| Ill. App. Ct. | 2017Background
- In 2007 defendant Jonathan Missirlian took out a $442,500 loan secured by a condominium; he defaulted in 2009.
- MERS was the mortgagee of record; in June 2009 MERS assigned the mortgage to Aurora Loan Services, which later initiated foreclosure.
- Nationstar acquired servicing rights in 2012 and Aurora formally assigned the mortgage to Nationstar in 2013; Nationstar obtained a judgment of foreclosure and purchased the property at auction in 2014.
- Defendant objected to confirmation of the sale under the Code’s "justice clause," arguing MERS and Aurora were unlicensed under the Illinois Residential Mortgage License Act and that the assignment to Nationstar was therefore void.
- The trial court denied confirmation, held the Aurora-to-Nationstar assignment void for licensing violations (relying on Dina), dismissed the foreclosure for lack of standing, and Nationstar appealed.
- The appellate court reversed, holding that (1) the amendment to the License Act and prevailing law preclude invalidating mortgage assignments solely for licensing violations, and (2) the trial court erred in declaring the assignment void and dismissing the foreclosure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defendant met burden to show sale was improper/justice was not done | Nationstar: defendant failed to show sale was improper or injustice occurred | Missirlian: licensing violations rendered orders/assignment void, so sale confirmation should be denied | Court: defendant did not have a legal basis to void the assignment; sale confirmation denial and dismissal were erroneous |
| Whether assignment to an unlicensed assignee invalidates the mortgage/assignment | Nationstar: assignment valid; unlicensed-status in secondary sale does not void assignment | Missirlian: Aurora’s lack of license rendered its purchase/assignment void, defeating standing | Court: assignment is not invalidated solely due to licensing violation; trial court erred |
| Whether federal law preempts Illinois licensing requirements for Aurora (subsidiary of federal savings bank) | Nationstar: federal preemption may apply; Aurora could be exempt as federal savings bank subsidiary | Missirlian: state licensing requirement controls and was violated | Court: uncertainty in record about exemption, but decision did not depend on preemption—licensing violation alone cannot void assignment |
| Whether servicer status conferred standing on Aurora/Nationstar | Nationstar: servicer/subsequent assignee had standing to foreclose | Missirlian: lack of proper standing due to void assignment | Court: standing cannot be negated by invalidating assignment based only on licensing violation; dismissal for lack of standing was erroneous |
Key Cases Cited
- Household Bank, FSB v. Lewis, 229 Ill. 2d 173 (Illinois Supreme Court) (standard: trial court’s denial of sale confirmation reviewed for abuse of discretion)
- Carver v. Sheriff of La Salle County, 203 Ill. 2d 497 (Illinois Supreme Court) (statutory interpretation reviewed de novo)
- Allstate Insurance Co. v. Menards, Inc., 202 Ill. 2d 586 (Illinois Supreme Court) (plain statutory language controls legislative intent)
- Petersen v. Wallach, 198 Ill. 2d 439 (Illinois Supreme Court) (clear statutory text resolved without other aids of construction)
- Richardson v. JPMorgan Chase Bank, N.A. (In re Jordan), 543 B.R. 878 (C.D. Ill. Bankr.) (discussing lack of private remedies to avoid mortgages for License Act violations)