U.S. BANK TRUST NATIONAL ASSOCIATION, as Owner Trustee for Queen‘s Park Oval Asset Holding Trust, Plaintiff-Appellee, v. JOSE HERNANDEZ and MARIA HERNANDEZ, Defendants-Appellants.
Docket No. 2-16-0850
Appellate Court of Illinois, Second District
October 12, 2017
2017 IL App (2d) 160850
JUSTICE BIRKETT delivered the judgment of the court, with opinion. Presiding Justice Hudson concurred in the judgment and opinion. Justice Schostok specially concurred, with opinion.
Appeal from the Circuit Court of Lake County, No. 14-CH-3; the Hon. Luis A. Berrones, Judge, presiding. Judgment: Vacated and remanded. Counsel: Daniel S. Khwaja, of Chicago, for appellants. Louis J. Manetti, Jr., of Codilis & Associates, P.C., of Burr Ridge, for appellee.
¶ 1 Defendants, Jose Hernandez and Maria Hernandez, appeal the summary judgment entered in favor of plaintiff, U.S. Bank Trust National Association, on its complaint to foreclose a mortgage. Defendants argue that material questions of fact exist on two issues: (1) whether plaintiff lacked standing to foreclose on the mortgage and (2) whether plaintiff complied with a federal regulation, specifically
I. BACKGROUND
¶ 2 On January 2, 2014, plaintiff filed its complaint to foreclose a mortgage on property owned by defendants. Plaintiff identified the original mortgagee as “Mortgage Electronic Registration Systems, Inc. as Nominee for Franklin American Mortgage Company.” Plaintiff attached a copy of the subject mortgage, dated June 9, 2008. In support of its claim to be the current mortgagee, plaintiff attached a copy of a note, also dated June 9, 2008 (the Note). The Note bore two indorsements. The first was an indorsement from Franklin American Mortgage Company to Countrywide Bank, FSB (Countrywide). The second was a blank indorsement from Countrywide, signed by its senior vice-president, Laurie Meder. Neither indorsement was dated.
¶ 3 After the trial court struck without prejudice defendants’ initial affirmative defenses, defendants refiled their answer and affirmative defenses. Their first affirmative defense was that plaintiff lacked standing because the indorsements on the Note were inadequate to show that plaintiff held the debt when it filed its complaint. Their second defense was that plaintiff failed to comply with
¶ 4 In February 2016, plaintiff moved for summary judgment, attaching several documents that bear on the issues in this appeal. First, plaintiff attached several affidavits from Kacy Prather, who identified herself as a foreclosure supervisor with Roundpoint Mortgage Servicing Corporation (Roundpoint). The affidavits were all dated in 2015. According to Prather, Roundpoint was “currently servic[ing] [defendants‘] loan on behalf of Plaintiff” and had “acquired the servicing rights for [the] loan on 09/16/13 from Bank of America N.A.” Prather averred that, in April 2012, plaintiff‘s agents “visited the subject property” in an attempt to have a face-to-face meeting with defendants. Prather also attached a copy of an April 2012 letter addressed to defendants at the subject property. The sender was Titanium Solutions (Titanium), identifying itself as the mortgage servicer for Bank of America, N.A. The letter advised defendants that a representative from Titanium would attempt to visit defendants regarding their loan. Prather attached what she claimed was “a copy of the FedEx Label for the package in which the letter was sent.” The label, which was computer-generated, showed a “ship date” of April 20, 2012, included a tracking number, and bore the instruction, “LEAVE AT ADDRESS. DON‘T RETURN.”
¶ 5 In addition to Prather‘s affidavits, plaintiff attached copies of two assignments of the subject mortgage. The first was an August 15, 2013, assignment from “Bank of America N.A., successor by merger to BAC Home Loans Servicing, LP FKA Countrywide Home Loans Servicing, LP” to the Secretary of Housing and Urban Development (HUD). The assignment specified that it included “the Note or Notes *** described” in the subject mortgage. The second assignment was a January 16, 2014, assignment from HUD to plaintiff. This assignment did not reference any underlying debt.
¶ 6 Defendants filed a response, contending that the August 2013 assignment to HUD raised an issue of material fact whether plaintiff owned the debt on January 2, 2014, when it filed its complaint. Defendants also claimed that the January 16, 2014, assignment was immaterial to whether plaintiff owned the debt at an earlier date.
¶ 7 Defendants further asserted that a triable question of fact existed as to plaintiff‘s compliance with
“10. I have never received a certified letter by mail from Plaintiff, U.S. Bank Trust National Association, the purported previous note holder, Bank of America, N.A.; one of their servicers, or affiliates, for notice of available counseling, or been offered a face-to-face meeting at either the Plaintiff‘s or the previous lender‘s local banks, or other H.U.D. related servicing office.”
¶ 8 The trial court granted summary judgment for plaintiff and entered a judgment of foreclosure and sale. Defendants filed a motion to reconsider, to which they attached a document from the Federal Deposit Insurance Corporation indicating that Countrywide was inactive as of April 27, 2009, having merged on that date into Bank of America. Defendants concluded that the blank indorsement by Countrywide could have been executed no later than April 2009 and was, accordingly, “mooted” by the later August 2013 assignment from Bank of America to HUD. The trial court denied the motion to reconsider.
¶ 9 Subsequently, plaintiff purchased the subject property at a judicial sale and moved the court to approve the sale. Defendants filed an objection. They attached documentation showing that the August 2013 assignment of the subject mortgage from Bank of America to HUD was recorded on January 23, 2014, several days after plaintiff instituted this foreclosure proceeding. The trial court rejected defendants’ arguments and entered an order confirming the sale.
¶ 10 Defendants filed this timely appeal.
II. ANALYSIS
A. General Principles
¶ 11 Defendants claim that the trial court erred by entering summary judgment in favor of plaintiff. Summary judgment is appropriate where “the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”
B. Standing
¶ 12 Defendants claim that a material question of fact exists as to whether plaintiff had standing to foreclose on the mortgage. We disagree.
¶ 13 “The doctrine of standing is designed to preclude persons who have no interest in a controversy from bringing suit.” Raintree Homes, Inc. v. Village of Long Grove, 209 Ill. 2d 248, 262 (2004). A party‘s standing must be determined as of the time the suit is brought. Deutsche Bank National Trust Co. v. Gilbert, 2012 IL App (2d) 120164, ¶ 15. Lack of standing is an affirmative defense that the defendant must plead and prove. Lebron v. Gottlieb Memorial Hospital, 237 Ill. 2d 217, 252 (2010).
¶ 14 Plaintiff‘s claim of authority to foreclose on the subject mortgage was based on its possession of the Note with its blank indorsement. A note indorsed in blank is payable to the bearer. See
¶ 15 Defendants suggest that plaintiff‘s attachment of a mere copy of the Note was inadequate to create a prima facie case. They cite no authority here, which is no surprise since well-established law holds to the contrary. See Bayview Loan Servicing, LLC v. Cornejo, 2015 IL App (3d) 140412, ¶ 12 (“The attachment of a copy of the note to a foreclosure complaint is prima facie evidence that the plaintiff owns the note.“); Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380, ¶ 26 (“For over 25 years, the [Illinois Mortgage] Foreclosure Law [(
¶ 16 Defendants also claim that plaintiff‘s own documentary support for summary judgment undercut its showing of standing. Defendants point specifically to the August 15, 2013, assignment of the subject mortgage from Bank of America to HUD. According to defendants, this assignment raises a triable question of fact whether the subject mortgage was held by HUD when plaintiff filed this action several months later in January 2014. Defendants suggest that the recording of the August 2013 assignment on January 23, 2014, after the complaint was filed, makes it even more likely that HUD, not plaintiff, owned the debt when the suit was brought. As for the January 16, 2014, assignment of the subject mortgage from HUD to plaintiff, defendants claim that it is “inconsequential” to whether plaintiff possessed the subject debt when it filed its complaint several days before. Defendants also assert that the January 2014 assignment could not have transferred the subject debt in any case since it did not reference that debt.
¶ 17 Plaintiff counters defendants’ position on the August 2013 assignment by pointing to Prather‘s statement in her 2015 affidavits that Roundpoint had “acquired the servicing rights for [defendants‘] loan on 09/16/13 from Bank of America N.A.” Plaintiff asks us to construe this remark as meaning that plaintiff “had an interest in the loan before it filed [its action].” The difficulty is that Prather did not specify for which entity Roundpoint began servicing the loan in September 2013. Her affidavits simply do not indicate when, prior to May 19, 2015 (the date of her earliest affidavit), plaintiff obtained the Note.
¶ 18 Irrespective of Prather‘s affidavits, however, plaintiff‘s standing was established as a matter of law. Defendants dismiss the blank indorsement on the Note as a “snapshot in time of a much earlier date, one that preceded the assignment of the [N]ote to [HUD].” Defendants fail to appreciate the force of the blank indorsement. The presumption of ownership conferred by the indorsement meant that plaintiff could sue on the Note without setting forth its history. Defendants, rather, had the burden of providing as much of that history as necessary to demonstrate that “the transfer [of the Note] did not occur before the complaint was filed.” Cornejo, 2015 IL App (3d) 140412, ¶ 13. Defendants “could have, through depositions or interrogatories, definitively shown when plaintiff obtained an interest in the mortgage.” Rosestone Investments, LLC v. Garner, 2013 IL App (1st) 123422, ¶ 25. Like the defendant in Rosestone, defendants did not make this effort below. Instead, they pointed, and continue to point on appeal, simply to another “snapshot in time,” the August 15, 2013, assignment. Assuming arguendo that the August 15, 2013, assignment conveyed the subject debt to HUD, it simply did not rebut the possibility that plaintiff became the owner of that debt sometime between August 15, 2013, and January 2, 2014 (the date that plaintiff filed its complaint), whether from HUD or another entity in the chain of ownership. Even the recording of the August 2013 assignment as late as January 23, 2014, did not rebut plaintiff‘s ownership of the debt on January 2.
¶ 19 As for the January 16, 2014, assignment from HUD to plaintiff, we agree with plaintiff that it is plausibly explained as a memorialization of a prior transfer of the Note to plaintiff. See id. (“Even when a written assignment exists, it may be a mere memorialization of an earlier transfer of interest.“).
¶ 20 Defendants cite
¶ 21 For these reasons, we hold that defendants failed to rebut plaintiff‘s prima facie case of standing. As plaintiff established as a matter of law that it had standing, summary judgment on that issue was proper.
C. Compliance With Section 203.604
¶ 22 Defendants’ second contention on appeal is that summary judgment was inappropriate on the issue of plaintiff‘s compliance with
¶ 23 As defendants’ mortgage was insured by HUD, it was subject to specific servicing requirements. See
¶ 24
¶ 25 We note initially that, in the midst of their argument on the “attempt-by-letter” requirement, defendants make the passing remark that “no visit to the property was ever conducted.” Prather claimed otherwise in her affidavit. As defendants do not acknowledge her statement or cite any other part of the record to support their point, we reject it as forfeited. See
¶ 26 The gravamen of defendants’ challenge is that plaintiff failed to satisfy the requirement that it attempt by letter to arrange a face-to-face meeting. According to defendants, plaintiff‘s use of Federal Express, as evidenced by a shipping label that plaintiff produced from the carrier, was inadequate because
¶ 27 We do not decide whether the use of a private carrier can constitute substantial compliance with the “attempt-by-letter” requirement of
¶ 28 We stress that we do not hold today that the use of a private carrier can never satisfy
¶ 29 Plaintiff alternatively argues lack of prejudice. First, as plaintiff reads Maria‘s affidavit, she asserted only that defendants received no letter from the Postal Service offering a face-to-face meeting, not that they received no such letter at all. We disagree. Maria did specifically deny that defendants received a letter by certified mail from the Postal Service, but at the end of the same sentence she also generally denied being “offered a face-to-face meeting at either the Plaintiff‘s or the previous lender‘s local banks, or other H.U.D. related servicing office.” Construing Maria‘s affidavit in the light most favorable to defendants, as we must, we read her as denying that she received any letter offering defendants a face-to-face meeting.
¶ 30 Second, plaintiff asserts that defendants’ history of delinquency on their mortgage payments suggests that they could not have avoided foreclosure even if offered a face-to-face meeting. Plaintiff‘s only authority for this contention is Wilson, where this court held that the offer of a face-to-face meeting pursuant to
¶ 31 Wilson grafted the no-prejudice principle, a creature of Illinois state law (as far as Pajor indicates), onto a federal regulation. In the absence of direction from the federal courts, to which plaintiff does not refer us, we decline to extend the principle to a situation so unlike that of Wilson and to hold that noncompliance with
¶ 32 We conclude that summary judgment was improper because plaintiff did not establish as a matter of law that it complied with
III. CONCLUSION
¶ 33 For the foregoing reasons, we vacate the summary judgment and judgment of foreclosure and sale, and we remand this case for further proceedings.
Vacated and remanded.
JUSTICE SCHOSTOK, specially concurring.
¶ 34 I write separately due to concerns over judicial economy that are created by situations such as present in this case. The plaintiff relies on Rourk for the proposition that the use of Federal Express was sufficient to comply with the requirements of