Banks Can Collect Deficiency Judgments Without “Personal” Service on Mortgagors

In a recent case, Metrobank v. Cannatello, 2012 IL App (1st) 110529 (January 9, 2012) Cook Co., 1st Div., the court determined that a bank can collect a deficiency judgment from a mortgagor even if that mortgagor was not “personally” served. 

In this case, Metrobank’s predecessor-in-interest lent Frank Cannatello approximately $190,000 in 2004.  At some point thereafter, Cannatello defaulted on his mortgage payments.  The bank filed a foreclosure suit and served Cannatello through abode service.  This means that when the sheriff went to serve Mr. Cannatello, Mr. Cannatello was not home.  However, another adult was at home, and the sheriff left the summons with that adult.  Cannatello never appeared in court, and a judgment of foreclosure was entered against him.  After the property was auctioned, the bank determined that there was a shortage of approximately $52,000.  The bank went to court to obtain a deficiency judgment against Mr. Cannatello, which the loan documentation allowed them to do. 

The trial court approved the sale at auction, but denied the deficiency judgment based on the Foreclosure Law(735 ILCS 5/15-1508(e) (West 2010)), which states that a deficiency judgment “may be entered, or enforcement had, only in cases where personal service has been had upon the persons personally liable for the mortgage indebtedness, unless they have entered their appearance in the foreclosure action.”  Metrobank appealed.

On appeal, the court determined that in this case or in any similar situation, abode service could be considered appropriate personal service for a number of reasons.  For example, if abode service was not appropriate personal service, the result would be unjust,.  Moreover, such a result would not be consistent with legislative intent, and would therefore be inconsistent with the Foreclosure Law.  Additionally, legal definitions of personal service written prior to the Foreclosure Law encompassed abode service.

Metrobank therefore won on appeal and was entitled to collect the deficiency judgment from Mr. Cannatello.  It is interesting to note that Mr. Cannatello did not appear in this case at all, whether at trial or on appeal!