Household Bank v Lewis (IL)

Mortgage Foreclosure

Household Bank v Lewis, 2008 WL 2132467, 2008 Ill. LEXIS 324 (Ill 2008).

Summary: High bidder at mortgage foreclosure sale does not have title to real estate until the sale is confirmed by the court.

Facts: In 1999 Jewel Lewis gave a mortgage on her home to Household Bank. When she defaulted on her obligations, Household Bank (Household) instituted foreclosure proceedings under the Illinois Mortgage Foreclosure Act (735 ILCS 5/15-1101, et seq.). Lewis did not answer the complaint and the court entered a default judgment for Household that provided that the statutory period of redemption would end on July 17, 2005, and the property would be sold thereafter.

On July 21, 2005, an auction was held in which the highest bidder, Greenwich, offered $48,071. Eight days later Household requested and received a court order continuing proceedings on approving the sale so that Lewis could seek a private buyer. Lewis successfully sold the house for $67,945 on July 7, 2005, and tendered the profits to Household. Household then withdrew its motion for confirmation of the auction and moved to have the auction sale vacated.

Greenwich was given leave to intervene and objected to the sale on the grounds that it was a violation of justice and the Mortgage Foreclosure Act. The circuit court found for Household Bank, vacating the auction sale. On appeal, the appellate court found the circuit court abused its discretion and ordered the auction sale to be confirmed. Household Bank then abandoned its defense of the private sale, but the new homeowner was given leave to intervene and appealed to the Illinois Supreme Court.

Holding: Appellate court reversed, circuit court affirmed. The statute regarding judicial confirmation of sales requires that the court "shall" do certain things, making those requirements mandatory. 735 ILCS 5/15-1105(b). It must (1) conduct a hearing where a motion to confirm and notice has been given, and (2) confirm the sale following the statutory factors are met. While review of the circuit court is abuse of discretion in applying the statute, the appeals court invoked the analysis too soon. The statute is dependent upon a motion to confirm the sale, without which it is not operative. The only such motion was withdrawn before court action. Therefore, the issue was not whether the circuit court abused its discretion, but whether it was obligated to continue the confirmation process even after Household stopping pursuing it. Household has a right to control its own litigation, especially in a situation where it was more profitable to end the litigation than to pursue it. "[T]hose who invoke the jurisdiction of the courts do not thereby irrevocably commit themselves to that course of action." People v American National Bank & Trust Co., 32 Ill 2d 115, 203 NE2d 897 (Ill 1965). In People, the court recognized that a plaintiff in a tax foreclosure case had a right to dismiss his case when he received acceptable payment.

Greenwich does not have a claim because a high bidder does not immediately gain interest in the property, it is merely an offer which must still be confirmed by the court. Plaza Bank v Kappel, 334 Ill App 3d 847, 779 NE2d 359, 268 Ill Dec 745 (1st D 2002). Such interests are speculative. Nor did the limit on equitable right of redemption under 735 ILCS 5/15-1605 apply here. The act merely bars the equitable right of Lewis - Household may always choose to extend it as a matter of grace or waive the statute since it was designed for its benefit. In re Application of the County Collector for Judgment & Order of Sale Against Land & Lots Returned Delinquent for Nonpayment of General Taxes for the Year 1996 & Prior Years, 318 Ill App 3d 641, 742 NE2d 839, 252 Ill Dec 301 (1st D 2000). The circuit court therefore acted properly in granting the motion to vacate the judicial sale.

Opinion Year: 
By: ATG Underwriting Department | Posted on: Sun, 06/08/2008 - 5:32pm