HB4680 96TH GENERAL ASSEMBLY

LRB096 14871 AJO 29737 b

96TH GENERAL ASSEMBLY
State of Illinois
2009 and 2010
HB4680

Introduced , by Rep. Mary E. Flowers

SYNOPSIS AS INTRODUCED:

735 ILCS 5/15-1401	from Ch. 110, par. 15-1401
735 ILCS 5/15-1402	from Ch. 110, par. 15-1402
735 ILCS 5/15-1506	from Ch. 110, par. 15-1506

Amends the Code of Civil Procedure. Provides that a mortgagor and mortgagee may agree on a termination of the mortgagor's interest in the mortgaged real estate after a default by a mortgagor provided that the mortgagee must prove by clear and convincing documentary evidence, other than by oral testimony or affidavit, that the mortgagee is the actual mortgagee legally entitled to receive a deed in lieu of foreclosure (instead of after a default by a mortgagor). Provides that in a foreclosure action, the mortgagee must prove by clear and convincing documentary evidence, other than by oral testimony or affidavit, that the mortgagee is the actual mortgagee legally entitled to bring the action.

A BILL FOR

AN ACT concerning civil law.

Be it enacted by the People of the State of Illinois, represented in the General Assembly:

Section 5. The Code of Civil Procedure is amended by changing Sections 15-1401, 15-1402, and 15-1506 as follows:

(735 ILCS 5/15-1401) (from Ch. 110, par. 15-1401)

Sec. 15-1401. Deed in Lieu of Foreclosure. The mortgagor and mortgagee may agree on a termination of the mortgagor's interest in the mortgaged real estate after a default by a mortgagor provided that the mortgagee must file an action to confirm the deed in lieu of foreclosure, prove by clear and convincing documentary evidence, other than by oral testimony or affidavit, in that action that the party seeking a judgment to confirm the deed in lieu of foreclosure is the actual, legal mortgagee entitled to bring the action, and obtain a judgment confirming the deed that finds that the mortgagee is entitled to bring the action. Any mortgagee or mortgagee's nominee may accept a deed from the mortgagor in lieu of foreclosure subject to any other claims or liens affecting the real estate. Acceptance of a deed in lieu of foreclosure shall relieve from personal liability all persons who may owe payment or the performance of other obligations secured by the mortgage, including guarantors of such indebtedness or obligations, except to the extent a person agrees not to be relieved in an instrument executed contemporaneously. A deed in lieu of foreclosure, whether to the mortgagee or mortgagee's nominee, shall not effect a merger of the mortgagee's interest as mortgagee and the mortgagee's interest derived from the deed in lieu of foreclosure. The mere tender of an executed deed by the mortgagor or the recording of a deed by the mortgagor to the mortgagee shall not constitute acceptance by the mortgagee of a deed in lieu of foreclosure.

(Source: P.A. 86-974.)

(735 ILCS 5/15-1402) (from Ch. 110, par. 15-1402)

Sec. 15-1402. Consent Foreclosure.

(a) No Objection. In a foreclosure, the court shall enter a judgment satisfying the mortgage indebtedness by vesting absolute title to the mortgaged real estate in the mortgagee free and clear of all claims, liens (except liens of the United States of America which cannot be foreclosed without judicial sale) and interest of the mortgagor, including all rights of reinstatement and redemption, and of all rights of all other persons made parties in the foreclosure whose interests are subordinate to that of the mortgagee and all nonrecord claimants given notice in accordance with paragraph (2) of subsection (c) of Section 15-1502 provided that the party seeking the judgment must prove by clear and convincing documentary evidence, other than by oral testimony or affidavit, that it is the actual, legal mortgagee and is entitled to bring the foreclosure action, if at any time before sale:

(1) the mortgagee offers, in connection with such a judgment, to waive any and all rights to a personal judgment for deficiency against the mortgagor and against all other persons liable for the indebtedness or other obligations secured by the mortgage;

(2) such offer is made either in the foreclosure complaint or by motion upon notice to all parties not in default;

(3) all mortgagors who then have an interest in the mortgaged real estate, by answer to the complaint, response to the motion or stipulation filed with the court expressly consent to the entry of such judgment;

(4) no other party, by answer or by response to the motion or stipulation, within the time allowed for such answer or response, objects to the entry of such judgment; and

(5) upon notice to all parties who have not previously been found in default for failure to appear, answer or otherwise plead.

(b) Objection. If any party other than a mortgagor who then has an interest in the mortgaged real estate objects to the entry of such judgment by consent, the court, after hearing, shall enter an order providing either:

(1) that for good cause shown, the judgment by consent shall not be allowed; or

(2) that, good cause not having been shown by the objecting party and the objecting party not having agreed to pay the amount required to redeem in accordance with subsection (d) of Section 15-1603, title to the mortgaged real estate be vested in the mortgagee as requested by the mortgagee and consented to by the mortgagor; or

(3) determining the amount required to redeem in accordance with subsection (d) of Section 15-1603, finding that the objecting party (or, if more than one party so objects, the objecting party who has the least priority) has agreed to pay such amount and additional interest under the mortgage accrued to the date of payment within 30 days after entry of the order, and declaring that upon payment of such amount within 30 days title to the mortgaged real estate shall be vested in such objecting party. Title so vested shall be free and clear of all claims, liens (except liens of the United States of America which cannot be foreclosed without judicial sale) and interest of the mortgagor and of all rights of other persons made parties in the foreclosure whose interests are subordinate to the interest of the mortgagee and all nonrecord claimants given notice in accordance with paragraph (2) of subsection (c) of Section 15-1502. If any objecting party subject to such an order has not paid the amount required to redeem in accordance with that order within the 30-day period, the court (i) shall order that such title to the mortgaged real estate shall vest in the objecting party next higher in priority (and successively with respect to each other objecting party in increasing order of such party's priority), if any, upon that party's agreeing to pay within 30 days after the entry of such further order, such amount as specified in the original order plus additional interest under the terms of the mortgage accrued to the date of payment, provided that such party pays such amount within the 30-day period, and (ii) may order that the non-paying objecting party pay costs, interest accrued between the start of the preceding 30-day period and the later of the date another objecting party makes the payment, if applicable, or the date such period expired, and the reasonable attorneys' fees incurred by all other parties on account of that party's objection.

(c) Judgment. Any judgment entered pursuant to Section 15-1402 shall recite the mortgagee's waiver of rights to a personal judgment for deficiency and shall bar the mortgagee from obtaining such a deficiency judgment against the mortgagor or any other person liable for the indebtedness or other obligations secured by the mortgage.

(Source: P.A. 86-974.)

(735 ILCS 5/15-1506) (from Ch. 110, par. 15-1506)

Sec. 15-1506. Judgment. (a) Evidence. In the trial of a foreclosure, the evidence to support the allegations of the complaint shall be taken in open court, and notwithstanding any provision of this Article, the mortgagee must prove by clear and convincing documentary evidence, other than by oral testimony or affidavit, that the party seeking a judgment of foreclosure is the actual, legal mortgagee and is entitled to bring the foreclosure action, except:

(1) where an allegation of fact in the complaint is not denied by a party's verified answer or verified counterclaim, or where a party pursuant to subsection (b) of Section 2-610 of the Code of Civil Procedure states, or is deemed to have stated, in its pleading that it has no knowledge of such allegation sufficient to form a belief and attaches the required affidavit, a sworn verification of the complaint or a separate affidavit setting forth such fact is not sufficient evidence thereof against such party and no further evidence of such fact shall be required; and

(2) where all the allegations of fact in the complaint have been proved by verification of the complaint or affidavit, the court upon motion supported by an affidavit stating the amount which is due the mortgagee, shall enter a judgment of foreclosure as requested in the complaint.

(b) Instruments. In all cases the evidence of the indebtedness and the mortgage foreclosed shall be exhibited to the court and appropriately marked, and copies thereof shall be filed with the court.

(c) Summary and Default Judgments. Nothing in this Section 15-1506 shall prevent a party from obtaining a summary or default judgment authorized by Article II of the Code of Civil Procedure.

(d) Notice of Entry of Default. When any judgment in a foreclosure is entered by default, notice of such judgment shall be given in accordance with Section 2-1302 of the Code of Civil Procedure.

(e) Matters Required in Judgment. A judgment of foreclosure shall include the last date for redemption and all rulings of the court entered with respect to each request for relief set forth in the complaint. The omission of the date for redemption shall not extend the time for redemption or impair the validity of the judgment.

(f) Special Matters in Judgment. Without limiting the general authority and powers of the court, special matters may be included in the judgment of foreclosure if sought by a party in the complaint or by separate motion. Such matters may include, without limitation:

(1) a manner of sale other than public auction;

(2) a sale by sealed bid;

(3) an official or other person who shall be the officer to conduct the sale other than the one customarily designated by the court;

(4) provisions for non-exclusive broker listings or designating a duly licensed real estate broker nominated by one of the parties to exclusively list the real estate for sale;

(5) the fees or commissions to be paid out of the sale proceeds to the listing or other duly licensed broker, if any, who shall have procured the accepted bid;

(6) the fees to be paid out of the sale proceeds to an auctioneer, if any, who shall have been authorized to conduct a public auction sale;

(7) whether and in what manner and with what content signs shall be posted on the real estate;

(8) a particular time and place at which such bids shall be received;

(9) a particular newspaper or newspapers in which notice of sale shall be published;

(10) the format for the advertising of such sale, including the size, content and format of such advertising, and additional advertising of such sale;

(11) matters or exceptions to which title in the real estate may be subject at the sale;

(12) a requirement that title insurance in a specified form be provided to a purchaser at the sale, and who shall pay for such insurance;

(13) whether and to what extent bids with mortgage or other contingencies will be allowed;

(14) such other matters as approved by the court to ensure sale of the real estate for the most commercially favorable price for the type of real estate involved.

(g) Agreement of the Parties. If all of the parties agree in writing on the minimum price and that the real estate may be sold to the first person who offers in writing to purchase the real estate for such price, and on such other commercially reasonable terms and conditions as the parties may agree, then the court shall order the real estate to be sold on such terms, subject to confirmation of the sale in accordance with Section 15-1508.

(h) Postponement of Proving Priority. With the approval of the court prior to the entry of the judgment of foreclosure, a party claiming an interest in the proceeds of the sale of the mortgaged real estate may defer proving the priority of such interest until the hearing to confirm the sale.

(i) Effect of Judgment and Lien. (1) Upon the entry of the judgment of foreclosure, all rights of a party in the foreclosure against the mortgagor provided for in the judgment of foreclosure or this Article shall be secured by a lien on the mortgaged real estate, which lien shall have the same priority as the claim to which the judgment relates and shall be terminated upon confirmation of a judicial sale in accordance with this Article.

(2) Upon the entry of the judgment of foreclosure, the rights in the real estate subject to the judgment of foreclosure of (i) all persons made a party in the foreclosure and (ii) all nonrecord claimants given notice in accordance with paragraph (2) of subsection (c) of Section 15-1502, shall be solely as provided for in the judgment of foreclosure and in this Article.

(Source: P.A. 85-907.)