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Illinois

Mortgages

Mortgage Electronic Registration Systems, Inc v Barnes, 406 Ill App 3d 1, 940 NE2d 118, 346 Ill Dec 118 (1st D, 2010).

Facts:In January 2008, Mortgage Electronic Registration Systems, Inc. (MERS) filed for foreclosure of a mortgage against Jessie Barnes for $278,113.44 in unpaid principal. The mortgage identified Barnes as the borrower and MERS as the nominee of the lender. As nominee, the mortgage recognized MERS as holding only legal title, but also MERS&€™ capacity to exercise the interests of the lender, including "the right to foreclose and sell a property."

When Barnes failed to make an appearance, MERS was awarded a default judgment of foreclosure. Following the expiration of an emergency stay until September 29, 2008, on September 30 MERS offered the highest bid of $221,000 and the court ordered the property sold to MERS. In May 2009, MERS moved for distribution of the property, but Barnes filed a petition to vacate the judgment and sale, claiming that the foreclosure judgment for MERS was void because MERS was not the true owner or holder of the mortgage. In July 2009, the court rejected Barnes' petition, and Barnes subsequently appealed.

Holding:Affirmed. First, the court rejected Barnes' assertion that the instant appeal is of the trial court's rejection of her petition challenging standing. A party may seek relief of a final order after 30 days from its entry under Section 2-1401 of Civil Procedure, but in this case, when Barnes filed her petition under Section 2-1401, the foreclosure judgment was not yet final because the court had not yet confirmed the sale.

Barnes also argued that the judgment was void for lack of standing and therefore should be vacated. Barnes' theory was based on the court lacking subject matter jurisdiction to rule on a foreclosure suit brought by a party that was not the true owner of the mortgage and to whom Barnes owed no money. On appeal, Barnes admitted that MERS had the right to file for foreclosure on behalf of the lender, but violated Section 15-1504(a)(3)(N) of the foreclosure law by failing to identify its standing to foreclose under agency law.

The court found that a party filing a foreclosure complaint need only provide the information required in the form prescribed by Section 15-1504(a). A party need not, as asserted by Barnes, provide the optional information allowed by Section 15-1504(a)(3)(N), indicating the capacity in which the party is filing, thus providing proof of standing. Although the court ruled that Barnes failed to preserve the issue of standing by defaulting on the initial complaint, the court also explained MERS' specific standing. Illinois law does not restrict foreclosure complaints only to the owner of a note and mortgage; an agent of the holder, with authority, may also foreclose. Furthermore, Barnes specifically agreed to allow MERS to file for foreclosure within the contents of the mortgages at issue in this case. Therefore, the court affirmed the decision.

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