Mortgage Foreclosures and Deceased Mortgagors

In the wake of ABN AMRO Mortgage Group, Inc v McGahan (see our July 2010 casenote), ATG has revised its underwriting guidelines for mortgage foreclosures. For all mortgage foreclosures filed after June 4, 2010 (opinion date of the McGahan case) and for all mortgage foreclosures filed before June 4, 2010 which do not have Supreme Court Rule 304 (a) language in the Judgment of Foreclosure as of June 4, 2010 and have not yet had the sale confirmed on June 4, 2010, the lender must have a personal representative named for a deceased mortgagor. The failure to do so will result in an exception, as follows, being placed on the final policy:

Consequences, if any, of the failure of the mortgage foreclosure case to include as a party defendant the personal representative of the estate of ____, deceased.

We revised our minutes of foreclosure language in REsource, subsection d, to reflect this requirement, as follows:

d. The following persons are necessary parties to any such proceeding:
    (1) Mortgagor (or successor in interest), the record owner, as a party defendant. If a mortgagor is deceased, the personal representative of the decedent, if one has been appointed, or a special representative appointed on behalf of the decedent pursuant to 735 ILCS 5/13-209, must be named as party defendant.

    (2) Mortgagee (or successor in interest), as party plaintiff.

Where the mortgage in foreclosure was signed by mortgagors who were either joint tenants or tenants by the entirety, and one is deceased leaving the other(s) as titleholder(s) to the whole property by survivorship, then a personal representative will not be required for the deceased mortgagor.

If you have further questions about this change in procedure and how it affects any transactions you have, please contact the ATG Underwriting Department,, 217.403.0020, or 312.752.1990, to discuss them.

Posted on: Wed, 08/18/2010 - 12:25pm