Foreclosure Judgment and Auction Voided -
Homeowners represented by attorney George H. Olsen, JD/MA of The Rogers Law Group in Deerfield, Illinois won an important decision on June 27, 2014. The Illinois Appellate Court for the Second Circuit held that residential mortgages made by an unlicensed loan originator are invalid under the Illinois Residential Mortgage License Act of 1987. The Illinois Supreme Court denied the plaintiff lender’s petition to review that decision on September 24, 2014.
“Many unlicensed loan originators have made mortgages in Illinois during the run-up to the 2008 Recession,” says Olsen. “Under the Appellate Court ruling, these mortgages are void and cannot be enforced through foreclosure by the original lender or its successors.”
The Case-
The homeowners obtained a construction loan from First Mortgage Company of Idaho, LLC, “FMCI”. When the loan came due, permanent financing was no longer available to refinance the construction loan. Therefore, the homeowners continued making their regular monthly payments to FMCI. In 2010, they were informed FMCI was accelerating the note and a full balloon payment would be due.
In February 2010, the homeowners hired The Rogers Law Group to negotiate with the lender to accept modified terms so the homeowners could continue making monthly payments toward the mortgage and keep their home until permanent mortgage financing became available. FMCI refused to respond and filed a foreclosure lawsuit. The Circuit Court entered a judgement of foreclosure, and the home was sold at auction.
“On behalf of the homeowners, we appealed the mortgage foreclosure judgment arguing that FMCI, the originating lender, was not a licensed lender under the Residential Mortgage License Act of 1987 at the time the loan was made,” states Olsen.
The Appellate Court ruled in favor of the homeowners, overturning the foreclosure auction and vacating the judgment. In its ruling, the Appellate Court relied on prior Illinois Supreme Court rulings that “...[C]ourts will not aid a plaintiff who bases his cause of action on an illegal act. Courts will not enforce a contract involving a party who does not have a license called for by
legislation that expressly prohibits the carrying on of the particular activity without a license where the legislation was enacted for the protection of the public, not as a revenue measure.....”
The Rogers Law Group in Deerfield, Illinois concentrates its practice in foreclosure defense, loan modification, mediation, bankruptcy and short sales. If you have any questions concerning mortgage foreclosures or want more information about this judicial decision, please contact George Olsen at The Rogers Law Group at: 847-607-8570 or visit their website at: www.therogerslawgroup.com.
