Friday, August 25, 2017

Recent Case Addresses Illinois Single Refiling Rule for Foreclosure

A recent case before the Appellate Court of Illinois clarified how the Illinois single refiling rule (735 ILCS 5/13-217) applies in certain foreclosure actions. In brief, the case of Wells Fargo Bank v. Norris involved a mortgagor who argued that the bank’s third attempt to file a foreclosure action was barred by the Illinois single refiling rule. The facts of the case are long and drawn-out, but we will give you a basic set of facts in order to understand the outcome of the case. In the meantime, it is important to begin by looking at the Illinois single refiling rule and how it functions with regard to foreclosures in the Chicago metropolitan area.

Illinois Single Refiling Rule: How Does it Affect Foreclosure Actions?

What is the Illinois single refiling rule, and how does it affect foreclosure actions? In basic terms, the Illinois single refiling rule exists to prevent a bank or mortgage company from dismissing a foreclosure action and later refilling multiple times. In the 2015 case United Central Bank v. KMWC 845, LLC, the Seventh Circuit Court of Appeals clarified that actions to enforce a mortgage default cannot be refiled more than one time.

That case also clarified that, when a refiling based on a promissory note is not allowed under the Illinois single refiling rule, the bank cannot refile an action based on the mortgage default. In other words, refiling a foreclosure action—based on the promissory note or the mortgage—can only happen once for each case. Now that you have a clearer sense of how the Illinois single refiling rule works, we can take a closer look at the recent case.

Appellate Court of Illinois Permits Third Filing in Recent Case

Under the Illinois single refiling rule, a third filing by a bank should be illegal, right? In the recent case, however, the Appellate Court of Illinois ruled that Wells Fargo’s third attempt to filing a foreclosure action was not barred by the Illinois single refiling rule. How did it come to this conclusion? To better understand, let’s examine the facts of the case.

As we mentioned, this case has a long history. However, we will summarize some of the key facts for you. In this case, the mortgagor (the defendant) had been married back in 2008. At that time, his then-wife signed a promissory note for a mortgage. The defendant did not sign that, but did sign a mortgage agreement. The couple went into default in 2008, and the bank, Wells Fargo, filed a foreclosure action. Shortly thereafter, Wells Fargo voluntarily dismissed the foreclosure action because it learned that the defendant and his wife had obtained a mortgage modification. The defendant and his wife allegedly defaulted on the mortgage modification, and Wells Fargo again filed a foreclosure action. However, the defendant disputed that he had ever agreed to a modification, and thus Wells Fargo again voluntarily dismissed the second foreclosure filing because it presumed the modification was unenforceable.

Now we get to the final foreclosure filing—the third foreclosure filing against the defendant. Wells Fargo filed this third action, but it was a filing for the original default from 2008. The defendant argued that the Illinois single refiling rule prohibited a third filing (or second refiling). The court, however, did not agree.

The court determined that the second foreclosure filing (connected to the mortgage modification default) was a new filing altogether—it was not a refiling of the first foreclosure action. As such, the third filing was in fact the first refiling (of the original foreclosure action for the 2008 default). As such, the court concluded that Wells Fargo was not in violation of the Illinois single refiling rule when it filed its third foreclosure action.

Consult an Oak Park Foreclosure Defense Lawyer

The Illinois single refiling rule can be confusing, and this recent case emphasizes how complicated the law can be. If you have questions, an Oak Park foreclosure defense attorney can help. Contact the Emerson Law Firm for more information.

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