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Citimortgage, Inc. v. Johnson

Court of Appeals of Illinois, Second District

July 26, 2013

CITIMORTGAGE, INC., Plaintiff-Appellee,
v.
QUENTIN B. JOHNSON and TONYA M. WHITAKER, Defendants-Appellants The Lindent Estates Homeowners Association, Mortgage Electronic Registration Systems, Inc., Capital One Home Loans, LLC, Unknown Owners, and Nonrecord Claimants, Defendants

Held [*]

The order confirming the foreclosure sale of defendants’ property was vacated pursuant to section 15-1508(d-5) of the Code of Civil Procedure based on plaintiff’s violation of the Home Affordable Modification Program (HAMP) guidelines, and the cause was remanded to allow plaintiff to properly consider defendants’ HAMP application, but the trial court did not abuse its discretion in refusing to impose sanctions under Supreme Court Rule 137 in the absence of any allegations that plaintiff violated any established authority.

Appeal from the Circuit Court of Kane County, No. 09-CH-2986; the Hon. Leonard J. Wojtecki, Judge, presiding.

Ronald A. Almiron, of Raiz Almiron LLC, of Naperville, for appellants.

Rosa M. Tumialan, of Dykema Gossett PLLC, of Chicago, and Melissa C. Brown, of Dykema Gossett PLLC, of Grand Rapids, Michigan, for appellee.

Panel JUSTICE SPENCE delivered the judgment of the court, with opinion. Justices Hutchinson and Birkett concurred in the judgment and opinion.

OPINION

SPENCE JUSTICE

¶ 1 Plaintiff, CitiMortgage, Inc., sought to foreclose on defendants Quentin B. Johnson and Tonya M. Whitaker's property, and the circuit court of Kane County granted summary judgment in its favor. Plaintiff proceeded to a sheriff's sale of the property, and, after the sale but before its confirmation, defendants objected to the confirmation, arguing, in pertinent part, that the sale should be vacated because plaintiff violated section 15-1508(d-5) of the Code of Civil Procedure (Code) (735 ILCS 5/15-1508(d-5) (West 2010)). The trial court denied defendants' objection and their subsequent motion for reconsideration, and it confirmed the sale of the property. Defendants appeal, arguing that the trial court erred in denying their objection to the confirmation of the sale and in denying their motion for sanctions against plaintiff. For the following reasons, we reverse the trial court's denial of defendants' objection to the confirmation of the sale and affirm its denial of defendants' motion for sanctions.

¶ 2 I. BACKGROUND

¶ 3 Plaintiff filed its complaint on August 20, 2009, seeking to foreclose a mortgage secured by real property at 3358 Moraine Drive in Aurora, Illinois (the Property). Defendants owned the Property. They filed pro se appearances and an answer to the complaint on November 20, 2009. Plaintiff filed its motion for summary judgment on February 4, 2010, and defendants responded on February 25, 2010. Defendants' pro se response was limited to one page. Defendants raised three contentions: that (1) plaintiff "failed to comply with the FHA rules regarding pre-foreclosure [sic] procedures, " (2) the original mortgage holder engaged in potentially unfair lending practices, and (3) more information was necessary to determine the total amount owed. Plaintiff filed its reply on March 11, 2010, arguing that defendants' response was unsupported by facts or affidavit. The trial court agreed, entering an order on March 18, 2010, granting plaintiff's motion for summary judgment. The trial court also entered that day a judgment of foreclosure and sale in favor of plaintiff.

¶ 4 Defendants moved to reconsider the summary judgment ruling on June 11, 2010, arguing that plaintiff had failed to supply the court with the original signed loan documents and that plaintiff was not legally authorized to foreclose on defendants' mortgage, because only the holder of the note is so authorized. Defendants, still proceeding pro se, also filed an emergency motion to vacate judgment on June 16, 2010, reiterating plaintiff's lack of legal standing to bring this suit. On July 14, 2010, defendants filed a hardship affidavit seeking a loan modification under the Making Home Affordable Program (MHA) (see 12 U.S.C. § 5219 (Supp. III 2010)) through the Home Affordable Modification Program (HAMP) (Handbook for Servicers of Non-GSE Mortgages (Dec. 13, 2012), available at http://www.makinghomeaffordable.gov/for-partners/understanding-guidelines/ Documents/mhahandbook_41.pdf (last visited June 21, 2013) (hereinafter HAMP Guidelines)). On August 2, 2010, plaintiff responded to defendants' motion to vacate, asserting that its attachment of a copy of the mortgage and the note to its complaint established its standing. In defendants' reply, they for the first time argued that plaintiff failed to follow homeowner protection guidelines under section 15-1502.5 of the Code (735 ILCS 5/15-1502.5 (West 2010)). The trial court denied defendants' motion to vacate on September 2, 2010.

¶ 5 The Property was sold at a sheriff's sale on September 23, 2010. Defendants objected in writing to the confirmation of the sale, reiterating that plaintiff had violated section 15-1502.5 of the Code and attaching their hardship affidavit. On October 4, 2010, the court heard plaintiff's motion to confirm the sale. Defendants orally objected, and the court denied their oral objection. However, the court did not confirm the sale. Instead, the court directed defendants to file a written motion opposing confirmation under section 15-1508(d-5) of the Code (735 ILCS 5/15-1508(d-5) (West 2010)), evidencing any application for a loan modification under the MHA/HAMP and specifying any "material violations" of that program's requirements. Defendants filed their motion on October 15, 2010.

¶ 6 In their motion to deny confirmation of the sheriff's sale, defendants alleged violations of section 15-1502.5 of the Code (735 ILCS 5/15-1502.5 (West 2010)), including failure to postpone the sheriff's sale after defendants submitted a HAMP application on July 14, 2010, and lack of communication from plaintiff regarding their application, and attached their HAMP application. Plaintiff responded by pointing out that under section 15-1508(d-5), defendants were required to show that they submitted a HAMP application and that plaintiff materially violated the HAMP's requirements for proceeding to a judicial sale. However, plaintiff argued, defendants had shown only the submission of the application, not any material violations of the HAMP. Plaintiff had denied defendants' HAMP application on September 17, 2010, on the basis of a negative net present value (NPV) of a loan modification. Plaintiff attached a letter dated September 22, 2010, from plaintiff to defendants denying their application. Defendants' reply argued that plaintiff violated federal guidelines under the MHA, including by providing inadequate notice before the sheriff's sale.

¶ 7 On December 28, 2010, the trial court granted defendants' motion to deny confirmation of the sale and set aside the sale. However, the court further ordered that the redemption period had passed and the previously entered judgment remained in full force and effect, so plaintiff could proceed to sale with proper issuance of new notice. That is what plaintiff did, issuing new notice for a sheriff's sale scheduled for July 28, 2011, although later canceling that sale and rescheduling it for November 17, 2011.

¶ 8 Meanwhile, on July 19, 2011, defendants filed a voluntary petition for chapter 7 bankruptcy (11 U.S.C. § 701 et seq. (2006)) in the Northern District of Illinois.[1] Defendants also filed a second HAMP application on October 21, 2011, requesting a loan modification. On the second HAMP application, defendants indicated that their bankruptcy had been discharged. Defendants faxed a copy of their application to plaintiff on November 3.

¶ 9 The rescheduled sheriff's sale, for which plaintiff sent defendants notice via mail on October 24, 2011, took place on November 17, 2011. On November 28, plaintiff moved to confirm the sale and defendants moved to deny confirmation. In their motion, defendants claimed that plaintiff violated section 15-1508(d-5) of the Code (735 ILCS 5/15-1508(d-5) (West 2010)) by materially violating the HAMP guidelines by failing to process the application as required, failing to postpone the sale, and failing to provide proper notice.[2]Plaintiff filed a response on January 31, 2012, arguing that: (1) it did not violate section 5-1508(d-5), because defendants did not identify a sufficient change in circumstance, as necessary for a successive HAMP application, and (2) it had unrefuted evidence that it served proper notice on defendants. Plaintiff further argued that, even if there had been a sufficient change in circumstance, defendants still ...


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