Deutsche Bank Nat. Trust Co. v Gilbert (IL)

Deutsche Bank Nat. Trust Co. v Gilbert, 2012 IL App (2d) 120164 (2d Dist. 2012).

Summary: A lender who initiates a foreclosure proceeding before receiving an assignment of the mortgage has no standing to make a complaint for foreclosure.

Facts:  On August 15, 2005, James Gilbert (Gilbert) entered into a home mortgage loan with WMC Mortgage Corporation that was secured with a mortgage to Mortgage Electronic Registration Systems (MERS). The loan had an interest rate of 6.990% for the first two years and then a variable interest rate of 3.85% plus the London Inter-Bank Offered Rate (LIBOR), rounded to the nearest 0.125%. At the time of the loan, the LIBOR was 4.0817%, making Gilbert’s interest 8.000%. 

On March 10, 2008, Deutsche Bank filed a foreclosure action against Gilbert, and alleged that it was the current holder of the indebtedness. This was supported by copies of the note and mortgage. On August 25, 2008, MERS (as nominee for WMC Mortgage) executed an Assignment (Assignment) of Mortgage to Deutsche Bank (as Trustee under the Pooling and Servicing Agreement dated as of November 1, 2005). On September 12, 2008, Deutsche bank filed an amended complaint with the Assignment attached as an exhibit. Gilbert filed an answer that raised the affirmative defense that Deutsche Bank lacked standing when it filed the foreclosure action. Gilbert also filed a counterclaim alleging that WMC Mortgage’s disclosures violated TILA by only stating that the initial interest rate might (emphasis added) be discounted when it knew for certain that it was discounted. Gilbert asserted that Deutsche Bank was liable for the violation as the assignee of the mortgage.

Both sides filed motions for summary judgment. Gilbert argued that Deutsche Bank lacked standing, and Deutsche Bank stated that it did have standing and submitted an affidavit from William Loch, an employee of a company that serviced loans for Deutsche Bank, which stated that, based upon his review of the documents, MERS assigned the interest in Gilbert’s loan on November 1, 2005. However, Loch did not testify how he knew when the assignment occurred, nor did he attach any documents in support of his contention.

The trial court granted Gilbert’s motion for summary judgment on the issue of standing for the foreclosure and denied both parties’ motions in regards to the TILA violation. Deutsche Bank filed a motion for reconsideration arguing that the assignment stated that MERS had assigned its interest on November 1, 2005. The trial court granted the reconsideration and reversed all of its earlier ruling, entered a judgment of foreclosure, and approved the sale of the home to Deutsche Bank. Gilbert appealed.

Holding:  Reversed in part and affirmed in part.  A party’s standing is determined at the time suit is filed. At the time of the complaint, both the note and the mortgage attached to the complaint listed MERS as the mortgagee, not Deutsche Bank, which constituted a prima facie showing of lack of standing. Deutsche Bank attempted to rebut this by relying on the Loch affidavit.  However, the Loch statements were inadmissible because they failed to state the facts on which the claims were based, as well as failed to attach all documents upon which he relied.  Because Loch’s statements failed to comply with the requirements of Illinois Supreme court Rule 191(a), they were disregarded. Furthermore, the court rejected Deutsche Bank’s contention that the amendment to the complaint acted as a joinder, which added Deutsche Bank in its new capacity, and protected it from a lack of standing claim. For these reasons the order granting Deutsche Bank’s motion for reconsideration and entering judgment in favor of Deutsche Bank were reversed, the judgment of foreclosure and the order confirming the sale was vacated, and the foreclosure was dismissed.

The assignee of a loan is only liable for a TILA violation if it is apparent on the face of the disclosure statement. In this instance the violation was not on its face because it would require Deutsche Bank to have outside knowledge, namely, the LIBOR rate. For these reasons the holding of the trial court is reversed in part and affirmed in part.

Opinion Year: 
By: ATG Underwriting Department | Posted on: Fri, 11/16/2012 - 11:36am