Changes relating to Mortgages and Mortgage Foreclosures -- Public Act 095-0961

Effective January of this year, the mortgage foreclosure provisions of the Illinois Code of Civil Procedure are amended to change certain rules regarding notices, payoff statements, attorney fees. The amendment also added a provision to The Illinois Fairness in Lending Act prohibiting discrimination in connection with making a loan and a provision to the Illinois Human Rights Act that increased civil penalties that could be sought by the Attorney General for certain civil rights violations. Those provisions became effective in September 2008.

Under the new provisions, mortgagees are required to residential mortgagors with a statutory notice of their rights along with the summons in a foreclosure action. The notice must be in at least 12-point font and be in both English and Spanish. The law provides a suggested form for the notice and the Attorney General’s office will provide a Spanish translation on its website.

The notice of rights should include ten information points that are set forth in the sample form. These include legal information about ownership and possession rights during foreclosure, the owners rights to reinstate the loan within 90 days after receipt of the summons or redeem the property during the redemption period, the owners right to receive any surplus funds resulting from the foreclosure sale, if any, and information on how to arrange for a work out. The notice also includes warnings that caution the owner about mortgage rescuers who might contact him and recommend the owner seek professional advice, including advice from a certified housing counselor and an attorney.

The amendment adds a new section to the mortgage foreclosure provisions requiring the mortgage to provide the mortgagor with a written statement of the total outstanding balance that would be required to fully satisfy the obligation. The statement should also include enough information to allow the mortgagor to calculate the per diem of interest for 30 days from the date of the letter or until the judicial sale and a list of any other charges the mortgagee expects to incur during that period. The latter could include any real property tax payments or insurance premiums the mortgagee expects to pay and charge back to the mortgagor. The statement should be provided no later than 10 business days from the mortgagee’s receipt of the mortgagor’s written demand. If the mortgage fails to furnish the statement to the mortgagee, it will be responsible for the mortgagor’s actual damages or $500 if no actual damage is incurred. If the mortgagor has already given a notice of intent to redeem, the mortgagee responding to that need not furnish the payoff statement.

Another change allows the court to award reasonable attorneys fees to a mortgagor who wins a motion, affirmative defense or counterclaim, or in the entire foreclosure action. Neither redemption nor reinstatement is considered a win under this provision.

The Illinois Human Rights Act already allowed the Illinois Attorney General to seek civil penalties for violations. Under the new amendments, the Attorney General may seek greater damages for civil rights violations relating to real estate and other financial transactions.