February 28, 2021 Articles

Illinois Appellate Court Holds Statute Bars Post-Confirmation Foreclosure Claims

Though it may appear substantively counterintuitive—the reverse mortgagee was able to foreclose on a property, truly in fact, occupied by the dead mortgagor’s spouse—the First District’s opinion was doctrinally correct.

By Scott B. Mueller and Keegan J. Shea

Section 15-1509(c) of the Illinois Compiled Statutes, on its face, drastically limits the availability of legal redress to Illinois homeowners after a foreclosure sale confirmation. Apart from two specific exceptions (involving lack of jurisdiction and claims for interest in sale proceeds), the statute robustly bars all subsequent claims challenging the underlying foreclosure judgment:

[V]esting of title . . . by deed . . . shall be an entire bar of (i) all claims of parties to the foreclosure and (ii) all claims of any nonrecord claimant who is given notice of the foreclosure in accordance with paragraph (2) of subsection (c) of Section 15-1502, notwithstanding the provisions of subsection (g) of Section 2-1301 to the contrary. Any person seeking relief from any judgment or order entered in the foreclosure in accordance with subsection (g) of Section 2-1301 of the Code of Civil Procedure may claim only an interest in the proceeds of sale.

735 Ill. Comp. Stat. 5/15-1509(c) (emphasis added).

This statute advances the policy rationale that foreclosure sale purchasers should be assured and confident of their good title to the foreclosed property. But what if a foreclosed defendant claims that the underlying judgment results from fraud? A recent ruling from Illinois’s First Circuit Appellate Court harmonized previous decisional law from Illinois appellate courts and rejected the availability of fraud for post-foreclosure confirmation pursuit. In American Advisors Group v. Cockrell, 2020 IL App (1st) 190623, the homeowner sought to use an infamous, well-reported, and litigated mortgage fraud scheme to justify taking another bite at the apple to stave off the enforcement of a reverse mortgage. Ultimately, the attempt failed and the Illinois Supreme Court rejected the application for rehearing, essentially affirming those holdings that absolutely bar even fraud claims (or, at least, intrinsic fraud claims) raised post-confirmation, and thereby clarified the narrowly tailored extrinsic fraud exception (i.e., lack of jurisdiction) to the section 15-1509(c) bar to post-confirmation attacks on foreclosure sale titles.

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