U.S. Bank Trust N.A. v Hernandez (IL)

U.S. Bank Trust N.A. v Hernandez, 2017 IL App (2d) 160850.

Summary: The trial court erred in granting summary judgment because there is a material question of fact regarding whether the plaintiff complied with section 203.604.

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Facts: On January 2, 2014, U.S. Bank Trust N.A. filed a complaint to foreclose a mortgage on property owned by the defendants and the subject mortgage and the note as supporting documents. In response to the complaint, the defendants filed two affirmative defenses alleging that (1) the plaintiff did not have standing because the endorsement on the note was inadequate to show that plaintiff held the debt when the complaint was filed and (2) the plaintiff failed to comply with section 203.604, which required the plaintiff to have, or reasonably attempt to have, a face-to-face meeting with defendants before seeking foreclosure.

The plaintiff moved for summary judgment and provided the court with several affidavits from its agents stating that the agents attempted to have a face-to-face meeting by visiting the subject property and sending a FedEx letter in April 2012. A copy of the FedEx label was attached in the plaintiff's motion. The FedEx label, computer-generated, showed a ship date of April 20, 2012, a tracking number and bore the following instructions: "Leave at address. Don’t return." The trial court granted the summary judgment and entered a judgment of foreclosure and sale.

Holding: Vacated and remanded. The defendants appealed the summary judgment.

First, the Court held that the plaintiff did have standing. Lack of standing is an affirmative defense and the defendant bears the burden of proof. It is established law the entity in possession of the note, endorsed in blank, is sufficient in establishing standing absent a contrary showing. Since the defendants did not provide any evidence to the contrary, the plaintiff was held to have provided sufficient prima facie evident to establish standing.

Second, the Court held that summary judgment was improper because plaintiff did not establish, as a matter of law, that it complied with Section 203.604. Section 203.604 requires the mortgagee to conduct a face-to-face interview with the mortgagor, or make a reasonable effort to do so, before three full monthly installments are due on the mortgage are unpaid. 24 C.F.R. 203.604(b). There are two elements to show "a reasonable effort to arrange a face-to-face meeting" has been made:

  1. It shall consist at least one letter sent to the mortgagor certified by the Postal Service as having been dispatched.
  2. It shall include one trip to the subject property.

The second element is at issue. The plain reading of section 203.604(d) requires that a letter be sent from the United State Postal Office. The plaintiff submitted a letter via FedEx, not through the Postal Service, failing to strictly comply with the regulation’s requirements. As a result of the plaintiff’s failure to comply with section 203.604(b), the grant of summary judgment was improper.

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By: ATG Underwriting Department | Posted on: Wed, 04/18/2018 - 1:17pm