After Judgment, Lack of Standing Not a Valid Foreclosure Defense

In a recent appeal of a foreclosure, National Advantage Mortgage Company v. Ortiz, 2012 IL App (1st) 112755 (June 29, 2012) Cook Co., 6th Div., the foreclosed property owner lost despite his assertion that the the plaintiff bank lacked standing to foreclose him when it filed the foreclosure suit.

In October of 2009, the bank filed a foreclosure action against Mr. Ortiz, the mortgagor.  In March of the following year, the bank was granted judgment of foreclosure.  After the judgment, Mr. Ortiz tried to dismiss the bank’s complaint on the grounds that when the bank filed the foreclosure suit in October, it did not own the note.  The note was, in fact, not assigned to the bank until November 4, 2009.  The trial court granted Mr. Ortiz’s motion to dismiss, and allowed the bank 30 days to file a motion to reconsider.

In the interim period, the appellate court rendered its decision in Mortgage Electronic Registration Systems, Inc. v. Barnes, 406 Ill.App. 3d 1, 6-7 (2010).  In that case, the court stated that a person who was foreclosed could not raise a lack of standing defense after judgment of foreclosure was entered.  Armed with this new bit of case law, the court granted the bank’s motion to reconsider.

As a result, Mr. Ortiz appealed.  But again, he was out of luck.  The appellate court affirmed the trial court’s decision.

So what does this mean for you?  Well, if you are a property owner facing foreclosure, and if you want to claim that the bank lacked standing to file suit against you, don’t dawdle.  If the court enters a judgment of foreclosure, it’s too late to claim lack of standing even if the bank didn’t own the loan when they sued you!