Washington Mutual Bank, FA. v. Boyd

Opinion

THIRD DIVISION December 20, 2006

No. 1-06-0305

WASHINGTON MUTUAL BANK, FA. ) Appeal from the ) Circuit Court of Plaintiff, ) Cook County. ) v. ) ) JANICE BOYD and TOMMY THOMAS, ) ) Defendants ) No. 02CH22123 ) (Greenwich Investors XVI, LLC, ) ) Intervening Defendant-Appellant; ) ) The Honorable ) Jesse Reyes, Florence Pittman and Argent Mortgage ) Judge Presiding. Company, LLC, ) ) Intervening Defendants-Appellees). )

JUSTICE GREIMAN delivered the opinion of the court:

This is an appeal from the trial court's denial of a petition to confirm the judicial mortgage

foreclosure sale of certain property to appellant-intervenor, Greenwich Investors XVI, LLC,

(Greenwich), which was the highest bidder of the property at a mortgage foreclosure sale. The

property had been foreclosed by plaintiff, Washington Mutual Bank, FA (Washington Mutual),

after mortgagors Janice Boyd and Tommy Thomas (deceased) defaulted on the mortgage. On

appeal, appellants contend that the trial court erred by failing to confirm the judicial foreclosure

sale. We reverse and remand the case to the trial court.

The following facts are taken from the record. Washington Mutual filed a complaint of

foreclosure on December 12, 2002, against the mortgagors, Tommy Thomas and Janice Boyd, for 1-06-0305

their property on South Lafayette Avenue in Chicago, Illinois. Washington Mutual later amended

its complaint to include the unknown heirs and devisees of Tommy Thomas because Tommy

Thomas died on February 20, 2003.

The trial court entered a judgment of foreclosure and sale finding that the rights of

redemption shall expire on May 10, 2005. Sometime after May 10, 2005, a foreclosure sale was

held wherein Greenwich was the highest bidder at $66,000. On May 31, 2005, the trial court

granted the mortgagors’ motion to vacate the foreclosure sale and gave Washington Mutual 21

days to close on a contract for the sale of the property. On July 8, 2005, intervenors Florence

Pittman and Argent Mortgage Company, LLC, purportedly purchased the property for $110,000.

Intervenors Pittman and Argent were granted leave to file their pleadings. The trial court

approved the report of the Pittman/Argent sale and distribution was set for September 29, 2005.

In their pleadings Pittman and Argent stated that Pittman had purchased the property on July 8,

2005, with financing from Argent, that neither Pittman nor Argent knew at the closing that a

foreclosure sale had been held, and that they relied on a payoff letter dated July 1, 2005, from

Washington Mutual that stated that the foreclosure action would be dismissed provided sufficient

funds were tendered to repay the loan. Pittman and Argent's pleading also stated that at the

closing, the seller's attorney confirmed with Washington Mutual the amount necessary to repay

the loan and upon such verification the closing agent for Argent forwarded a check for the exact

amount to Washington Mutual to repay the loan. The payoff letter also stated: "If there is a

foreclosure sale date scheduled for your property this letter DOES NOT extend or change that

foreclosure sale date. Therefore, if the effective date for the payment quotation stated in this

letter continues past the scheduled foreclosure sale date, the foreclosure sale will nonetheless

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occur unless the loan is reinstated or paid off PRIOR TO the foreclosure sale as required by

applicable law."

On November 23, 2005, the trial court dismissed the case, vacating the judgment of

foreclosure and vacating the judicial sale, finding it would be unjust to approve the foreclosure

sale because Argent relied on the affirmative representation made by the attorneys for Washington

Mutual that the foreclosure would be dismissed provided sufficient funds were received to repay

the mortgage. The trial court also found that Washington Mutual waived compliance with the

statutory redemption law by voluntarily agreeing to accept full payment of the loan with interest

and costs. The trial court stated that if the foreclosure sale were approved the mortgagors would

be prejudiced by losing almost half of the value of their house. This timely appeal followed.

Illinois provides those who have defaulted on their mortgage loans have an "equity of

redemption," which permits mortgagors to redeem the property after default. Aurora Loan

Services, Inc., v. Craddieth, 442 F.3d 1018, 1028 (7th Cir. 2006) (interpreting Illinois law).

However, the Illinois Mortgage Foreclosure law provides that equitable redemption cannot be

granted later than the foreclosure sale. 735 ILCS 5/15-1605 (West 2004). Section 16-1605 of

the Illinois Mortgage Foreclosure law provides:

"Equitable Right of Redemption. No equitable right of

redemption shall exist or be enforced under or with respect to a

mortgage after a judicial sale of the mortgaged real estate pursuant

to Section 15-1507 or after entry of a judgment of foreclosure

pursuant to Section[] 15-1402 or 15-1403." 735 ILCS 5/15-1605

(West 2004).

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See also First Illinois Nation Bank v. Hans, 143 Ill. App. 3d 1033, 1037 (1986) ("[O]nce a

foreclosure sale occurs, the equitable right to redemption ends").

In this case the deadline expired. The foreclosure sale occurred sometime between May

11 and May 31, 2005, and intervenor Pittman "purchased" the property on July 8, 2005, with the

trial court denying Greenwich's motion to approve the foreclosure sale on November 23, 2005.

Intervenors Pittman and Argent argue that the "justice not otherwise done" provision in

section 15-1508(b)(iv) of the Illinois Mortgage Foreclosure law permits a court to use its

discretion to refuse to confirm a judicial foreclosure sale. 735 ILCS 5/15-1508(b)(iv) (West

2004). They argue that the payoff letter led them to believe that if the mortgage was paid off, the

attorneys for Washington Mutual would "take appropriate action to obtain a dismissal of the

action."

We recognize that a judicial foreclosure sale is not complete until is has been approved by

the trial court. Fleet Mortgage Corp. v. Deale, 287 Ill. App. 3d 385, 388 (1997). A trial court is

justified in refusing to approve a judicial sale if unfairness is shown that is prejudicial to an

interested party. 735 ILCS 5/15-1508(b) (West 2004); Fleet 287 Ill. App. 3d at 388. Section 15-

1508(b) of the Illinois Mortgage Foreclosure law provides: "Hearing. Upon motion and notice in

accordance with court rules applicable to motion generally, which motion shall not be made prior

to sale, the court shall conduct a hearing to confirm the sale. Unless the court finds * * * (iv) that

justice was otherwise not done, the court shall then enter an order confirming the sale." 735

ILCS 5/15-1508(b) (West 2004). However, this section does not extend the deadline imposed by

section 15-1605. Section 15-1603(c)(1) provides: "Once expired, the [statutory] right of

redemption *** shall not be revived." 735 5/15-1603(c)(1) (West 2004). Further, section 15-

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1605 provides: "No equitable right of redemption shall exist or be enforceable under or with

respect to a mortgage after a judicial sale of the mortgaged real estate ***." 735 ILCS 5/15-1605

(West 2004). In addition, the payoff letter informed intervenors Pittman and Argent that

"foreclosure sale will nonetheless occur unless the loan is reinstated or paid off PRIOR TO the

foreclosure sale as required by applicable law." Thus, intervenors Pittman and Argent were put

on notice that a valid payoff could not occur because a foreclosure sale had already taken place.

Accordingly, the trial court abused its discretion by refusing to confirm the judicial foreclosure

sale.

Intervenors Pittman and Argent cite Commercial Credit Loans, Inc. V. Espinoza, 293 Ill.

App. 3d 923 (1997), Fleet Mortgage Corp. v. Deale, 287 Ill. App. 3d 385 (1997), and Citicorp

Savings v. First Chicago Trust Co., 269 Ill. App. 3d 293 (1995). These cases are not applicable

to the case at bar because all of the events that led the courts to refuse to confirm the foreclosure

sales occurred within the redemption periods, before the foreclosure sales, that is, before the

deadlines. Commercial Credit Loans, 293 Ill. App. 3d at 927-28; Fleet Mortgage Corp., 287 Ill.

App. 3d at 389; Citicorp, 269 Ill. App. 3d at 300-01. In this case the allegedly misleading payoff

letter was given to intervenors Pittman and Argent well after the redemption period ended.

We also recognize that the judicial foreclosure sale yielded a much lower price than the

purported private sale; $66,000 for the judicial foreclosure sale versus $110,000 for the private

sale to intervenor Pittman. However, this does not change the fact that the purported sale

occurred after the deadline. Further, as this court stated in Commercial Credit Loans, 293 Ill.

App. 3d at 928, "[t]he sale price alone may not be enough to deny confirmation of a foreclosure

sale."

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Finally, we observe that in a recent decision, another division of this district reached the

opposite conclusion in a case involving nearly identical facts. In Mortgage Electronic

Registration Systems, Inc. v. Thompson, No. 1-05-2720 (November 3, 2006), the plaintiff

mortgagee filed a complaint for foreclosure of its mortgage on property owned by the defendant

mortgagors. The court ordered a judgment of foreclosure and the property was sold at a judicial

sale to the intervenor. Thereafter, the defendants were issued a payoff letter from the plaintiff.

The defendants then entered a contract to sell the property to a third party. The court granted the

defendants’ motion to vacate the judgment of foreclosure and the judicial sale and dismissed the

action.

On appeal, the sixth division noted that a trial court has broad discretion in approving or

disapproving judicial sales. The court further noted that the purpose of Illinois foreclosure law is

to protect equity in a property by allowing for redemption. The court found that the trial court

had properly considered the interests of all parties in refusing to confirm the judicial sale and

concluded that, “[b]ased on the fact that plaintiff issued a payoff letter which facilitated the sale of

the property, two additional lienholders were paid off from the sale to the third-party purchaser,

the third-party purchaser was spared the loss of the property and the mortgagor’s equity was not

forfeited.” Mortgage Electronic Registration Systems, Inc., slip op. at 8. Accordingly, the court

affirmed the trial court’s judgment, stating that “[a]lthough we may not have come to the same

conclusion as the circuit court in this case, we cannot say that it acted arbitrarily, without

conscientious judgment or ignored principles of law resulting in substantial prejudice.” Mortgage

Electronic Registration Systems, Inc., slip op. at 8.

While we ordinarily give deference to cases decided by other divisions of this court, we

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are not bound to follow those decisions. See People v. Primm, 319 Ill. App. 3d 411, 428 (2000)

(“principles of stare decisis do not require us to follow precedent established by another division

of the First District; stare decisis does not bind courts to follow decisions of equal courts”). We

must disagree with the Mortgage Electronic Registration Systems court’s reasoning and

conclusion. First, the Mortgage Electronic Registration Systems court ignored the fact that, as

discussed above, the Illinois Mortgage Foreclosure law provides that, after a foreclosure sale, a

mortgagor no longer has a right of redemption. Second, in referring to the purpose of Illinois

foreclosure law, the Mortgage Electronic Registration Systems court quoted Fleet Mortgage

Corp., but ignored the fact that Fleet Mortgage Corp. specifically provides that the articulated

purpose is “to protect the equity of a mortgagor by permitting mortgage redemptions prior to

forced sales.” (Emphasis added.) Fleet Mortgage Corp., 287 Ill. App. 3d at 389. Furthermore,

though it cites Fleet Mortgage Corp. and Citicorp, the Mortgage Electronic Registration Systems

court failed to note that those cases are distinguishable in that, as discussed above, in those cases,

the circumstances which led the court to refuse to confirm the foreclosure sales occurred prior to

the expiration of the redemption periods, not after the judicial sales of the property, as occurred in

Mortgage Electronic Registration Systems and in this case.

For the above-stated reasons, we reverse the judgment of the circuit court of Cook

County and remand this case with instructions that the circuit court confirm the judicial sale of the

property.

Reversed and remanded.

THEIS, P.J., and KARNEZIS, J., concur.

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