Unlicensed Mortgage Lender Does Not Mean Invalid Loan

Wells Fargo Bank, N.A. v. Maka, 2017 IL App (1st) 153010 (February 3, 2017) Cook Co., 5th Div. revolved around a case where the defendant was foreclosed, and then insisted that the bank should never have foreclosed him because the loan they made was invalid to begin with. Why? Because when the loan was originated, the lender was not licensed under the Residential Mortgage License Act of 1987.

In support, the defendant cited a 2014 case, First Mortgage Co. v. Dina, 2014 IL App (2d) 130567, which stated that a violation of the Residential Mortgage License Act resulted in an invalid mortgage. The First District Appellate Court, however, disagreed with the Second District Appellate Court’s 2014 Dina decision, and stated that the Dina decision is “no longer viable in Illinois.”

Not only were the facts of the Dina case very different from the instant case, but the legislature has subsequently amended the law to specifically state that violations of the Residential Mortgage License Act do not result in mortgages that are void.

As a result, the mortgage was valid and the foreclosure stands.