U.S. Bank v. Prabhakaran (IL)


Summary: The Illinois Mortgage Foreclosure Law governs the mode of procedure for mortgage foreclosures in Illinois and supersedes any inconsistent statutory provisions from other sections of the Code.


U.S. Bank v. Prabhakaran, 2013 IL App (1st) 111224.


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Facts: On August 8, 2007, America’s Servicing Company (ASC) filed a complaint to foreclose a mortgage against the defendant, Jean J. Prabhakaran, pursuant to 735 ILCS 15-1504(a)(1)-(a)(3) of the Illinois Mortgage Foreclosure Law (Foreclosure Law). This filing was later amended to substitute U.S. Bank as the correct plaintiff. The complaint alleged that the defendant was in default of her loan, with an unpaid principal totaling $130,116.91. Defendant was properly served and, represented by counsel, answered the complaint by challenging the claim of default. She asserted that she was not in default on the loan until U.S. Bank refused tender of her mortgage payments.

U.S. Bank moved for summary judgment, asserting that the defendant’s answer failed to raise a genuine issue of material fact and submitted an affidavit of judgment detailing the default, which contradicted the defendant’s recitation of events. The defendant responded by asserting that payments were made on an ongoing basis to ACS and its affiliates through February 2008.

The court granted U.S. Bank's summary judgment motion on June 10, 2008 and entered a judgment of foreclosure that same day. The defendant did not appeal these findings. The property was subsequently sold by judicial sale to U.S. Bank. The court confirmed the sale and entered an in rem deficiency judgment of $100, 479. The defendant did not appeal the confirmation. The judicial sale deed was executed on January 19, 2010.

On March 15, 2010, the defendant filed a pro se motion to stay possession, asserting that there was a modification agreement in place since October 20, 2009, and that she was not given notice of the foreclosure proceedings. The court stayed possession until April 30, 2010. In its response, U.S. Bank submitted proof of service for each step of the proceedings. They also attached an affidavit averring that the defendant did not have a loan modification agreement in October 2009 or any time thereafter. On April 30, 2010, defendant was granted an additional 21 day stay due to new defense counsel appearing on April 27, 2010. On May 20, 2010, defendant filed a petition to vacate judgment pursuant to section 2-1401, contending that the summary judgment order was invalid and void because U.S. Bank continued to accept mortgage payments from defendant until September 2009. The defendant argued that U.S. Bank was unjustly enriched and therefore should be estopped from foreclosure. The circuit court denied the defendant’s petition and the defendant filed a timely appeal.


Holding: Affirmed. The defendant first challenged the court’s summary judgment ruling. She contended that her answer to the original complaint raised a genuine issue of material fact as to whether default had occurred under the mortgage, and that the money orders included in the record were sufficient to defeat summary judgment. The court determined that because the defendant chose not to appeal the summary judgment ruling, and because the 2-1401 petition, and the reply to the plaintiff’s response, made no mention of the issue of whether a default occurred prior to entry of the foreclosure judgment, the defendant had forfeited the argument on that issue and could not now raise it on appeal.

The defendant also contended that her 2-1401 petition was not barred by the Foreclosure Law. The court found that, as the defendant asserted, the language of section 15-1509(a) did contemplate a timely challenge to confirmation of sale under certain circumstances. However, those circumstances were not present in this case. In this case, the defendant filed a 2-1401 challenge more than 4 months after the confirmation of sale. This was not a timely appeal, but rather, the court explained, an entirely new proceeding. In its holding, the court relied on the fact that the section 15 language is controlling and supersedes other sections of the Code when dealing with the provisions of the Foreclosure Law. Specifically, the Foreclosure Law limits the discretion of courts in confirming judicial sales to instances where: (i) a required notice was not given, (ii) the terms of the sale were unconscionable, (iii) the sale was conducted fraudulently, or (iv) justice was not otherwise done. The statute then sets up a 30-day window for appeals related to these factors to be filed. Absent an appeal on these grounds, the sale will be confirmed. Section 15-1509(c) of the Foreclosure Law expressly bars all claims of parties to the foreclosure after vesting of title by deed, which occurs after the period for appeal has run. The court determined that this was dispositive in this case. The relief contemplated by the statute is an appeal, within the 30-day period, challenging on the aforementioned factors. The defendant did not seek this relief and is therefore barred from attacking the foreclosure.

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By: ATG Underwriting Department | Posted on: Mon, 04/15/2013 - 9:38am