PNC Bank, National Ass'n v. Wilson
2017 IL App (2d) 151189
| Ill. App. Ct. | 2017Background
- Jeremy and Michelle Wilson obtained an FHA-insured mortgage that later was owned by PNC Bank (successor to National City Mortgage).
- The Wilsons defaulted; PNC offered forbearance and a loan modification in 2011; the Wilsons filed Chapter 7 in Feb 2011 and received a discharge in May 2011 without reaffirming the mortgage.
- PNC filed foreclosure in October 2012, alleging post-2012 defaults; Jeremy alone answered and the parties filed cross-motions for summary judgment.
- The Wilsons argued PNC failed to comply with HUD regulations (24 C.F.R. §203.604) requiring a face-to-face interview or reasonable efforts (certified letter + at least one home visit) before foreclosure.
- PNC presented corporate affidavits, a computer-generated copy of a February 2, 2012 letter marked “Certified Mail/Return Receipt Requested,” and JMA field-visit records showing contact with Michelle on February 12, 2012.
- The trial court granted summary judgment for PNC; on appeal Jeremy argued (1) lack of USPS proof of certified-mail dispatch under §203.604(d), and (2) §203.604(b) timing noncompliance. The court affirmed.
Issues
| Issue | Plaintiff's Argument (PNC) | Defendant's Argument (Wilson) | Held |
|---|---|---|---|
| Whether PNC satisfied §203.604(d)’s requirement that a letter be "certified by the Postal Service as having been dispatched" before foreclosure | PNC provided a certified-mail–marked copy of the letter plus corporate and agent affidavits and field-visit records showing delivery attempts and contact | Wilson: PNC failed to produce proof from USPS (certificate of mailing/dispatch); Arthur lacked personal knowledge of USPS dispatch | Court: Regulation’s plain text requires USPS proof, but under these facts the lack of USPS dispatch proof was non-dispositive because sending notice would have been futile after Wilsons’ bankruptcy discharge without reaffirmation; judgment for PNC affirmed |
| Whether PNC complied with §203.604(b)’s timing requirements (face-to-face or reasonable effort before three installments unpaid / within 30 days after plan default) | PNC relied on its records and dated letters/visits to show timely efforts | Wilson: Multiple potential default dates create a factual dispute about timeliness | Court: Issue forfeited on appeal because not argued at trial hearing; not preserved for review |
| Whether the FHA-regulation defense (technical violation) requires vacating foreclosure where mortgagor suffered no prejudice and notice would have been futile | PNC: Even if procedural defect, foreclosure may proceed when notice would be futile and mortgagor nullified the contract by bankruptcy discharge without reaffirmation | Wilson: Regulatory noncompliance is a defense that should bar foreclosure | Held: Equity doctrines apply; because Wilsons had discharged debt and not reaffirmed, efforts to cure the loan would be futile and no prejudice to Wilsons existed, so foreclosure may proceed despite lack of USPS dispatch proof |
Key Cases Cited
- Home Insurance Co. v. Cincinnati Insurance Co., 213 Ill. 2d 307 (discussing de novo review of summary judgment)
- Bankers Life Co. v. Denton, 120 Ill. App. 3d 576 (HUD-servicing requirements can be a defense in foreclosure)
- Burton v. Airborne Express, Inc., 367 Ill. App. 3d 1026 (appellate court may affirm on any proper basis appearing in the record)
- Federal Natl. Mortgage Ass'n v. Moore, 609 F. Supp. 194 (describing HUD’s specific mortgage-servicing regulations)
- First Illini Bank v. Wittek Industries, Inc., 261 Ill. App. 3d 969 (demand excused where futile)
- Carroll v. Curry, 392 Ill. App. 3d 511 (law does not require doing a useless thing)
- Federal Natl. Mortgage Ass'n v. Bryant, 62 Ill. App. 3d 25 (foreclosure is an equitable proceeding; party must do equity)
- King v. Paul J. Krez Co., 323 Ill. App. 3d 532 (issue forfeited where trial court made no ruling)