## I L L I N O I S 

## O F F I C I A L 

## RE P O R T S Appellate Court

Citi Mortgage, Inc. v. Johnson , 2013 IL App (2d) 120719

Appellate Court Caption CI T IM O RT G A G E
, I N C.
, Pl a in

ti f f

- A p p e ll e e , v

. QUENT I

N B

. JO H N SON and TONYA M. WHI TAKER, Def endants-A

ppellants (The L indent Estates Homeowne rs Association, Mortg ag e E l ectr onic Reg istration Sy stems, Inc., Capital One Home L oans, L L C, Unknown Owner s, and Nonre cord Claimants, De fenda nts).

District & N o. Second District Docke t No. 2-12-0719

Filed J uly 26, 2013

Held (Not e: This syl lab us

con st i t ute s no par t of the opi nio n of the cour t but has bee n pre

par ed by the Repo r t er of D e c i s i o n s f

o r t h e

c o n v e n i e n c e o

f t h e

rea der

. ) The order confirming the fore closure sale of defe ndants’ proper ty was

vacated pursuant to section 15-1508(d- 5) of the Code of Civil Procedur e based on plaintiff’s vi o l at ion of the Home Affor dable Modification Prog ram (HAMP) guidelines, and the cause was rema nd ed to allow plaintiff to proper ly consider defe ndants’ HAMP application, but the trial
court d i d not abuse its discretion in ref using to impose sanctions under Supreme Court Rule 137 in the absence of any alleg ations that plaintiff violated any

established author ity

.

Dec ision Under
Review Appea l from the Circuit Court of Kane County
, No. 09 -C H- 2 9 8 6; the Hon. L eonar d J . Wojt ecki, Judge , presiding

.

J udg ment Affir med in part a

nd reve rsed in par

t; cause r emande d.Counsel on

Appea l Ronald A. Almiron, of Raiz Almiron L L C, of Nape rville, for appellants.

Rosa M. Tumialan, of Dy kema Gosse tt PL L C, of Chicag o, and Melissa C. Br own, of Dy

kema Gossett PL L C, of Gra nd Rapids, Michig an, for appellee

.

Panel J USTI CE SP ENCE delivere d the judg ment of the c ourt, with opinion.
J ustices Hutchinson and Birke tt concur red in the judgme nt and opinion.

OP INION

¶ 1 Plaintiff, Citi Mortg ag e, Inc., soug ht to fore close on defe ndants Quentin B. J ohnson and Tony a M. Whit aker ’s pro p er t y , and the circ uit court of Kane County g rante d summary judgme nt in its favor

. Plaintiff proce eded to a sheriff ’s sale of the proper

ty , and, afte r the sale but befor e its confirmation, defe ndants objec ted to the confirma tion, arguing, in pertinent part, that the s ale should b e v ac at ed beca use pl aintiff viol ated section 15-1508(d- 5) of the Code of Civil Procedure (C o d e) (735 I L CS 5/15-1508(d-5) (West 2010)). The trial court denied defe ndants’ o b

j ec t ion and their subsequent motion for rec onsideration, and it confirme d the s al e o f the proper ty

. Def endants appea l, arguing that the trial court err ed in denying their object i o n t o t he confirma tion of the sale and in denying their motion for sanctions aga inst plaintiff. For the foll owing rea sons, we rever se t he trial court’s denial of defe ndants’ o b

j ection to the confirmation of the sale and aff irm its denial of defe ndants’ motion for sanctions.

¶ 2 I . BA CKGROUND ¶ 3 Plaintiff filed its complaint on August 20, 2009, seeking to fore close a mortg ag e secur ed by rea l proper

ty at 3358 Moraine Drive in Aurora
, I llinois (the Property ). Def endants owned the Property

. They filed pro se appea ranc es and an answe r to the complaint on November 20, 2009. Plaintiff filed its motion for summary judgme nt on Fe bruar y 4, 2010, and defe ndants

re s p o nded on Fe bruar

y 25, 2010. Def

endants’ pro se response was limit ed to one p age

. Def endants raised three contentions: that (1) plaintiff “fa iled to comply with the FHA rules
reg arding pre- fore closure [ sic ] proce dures,” (2) the orig inal mortg ag e holder eng ag ed in potentially unfair lending prac tices, and (3) more information was nece ssary to deter mine the total amount owed. P laintiff filed its reply on Marc h 11, 2010, arguing that defe ndants’
response was unsupported by fac ts or aff idavit. T he trial court ag ree d, enter ing an order on Marc h 18, 2010, g ranting plaintiff’s motion for su m m ary judgme nt. The trial court also
enter ed that day

a judg ment of for eclosure and sale in favor of plaintiff.

-2-¶ 4 Def endants moved to rec onsider the summary judgme nt ruling on J une 11, 2010, arguing that plaintiff had failed to supply the court with the orig inal signe d loan documents and that plaintiff was not le g ally authorized to f orec lose on defe ndants’ mortg ag e, beca use only the holder of the note is so authorized

. De fendants, still proce eding pro se , also filed an

emer g ency motion to vacate judgme nt on J une 16, 2010, reiter ating plaintiff’s lack of leg al standing to bring this suit. On J uly 14, 2010, defe ndants filed a hardship aff idavit seeking a loan modific at i o n u n der the Making Home Affor dable Prog ram (MHA) (see 12 U.S.C. § 5219 (Supp. I I I 201 0 )) t h ro ug h the Home Affor dable Modification Prog ram (HAMP) ( Handbook for Servic ers o f N o n -GSE Mortgages (De c. 13, 2012), available at h t t p : / / w w w

. m a k i n g h o m e a f f o r d a b l e

. g o v / f

o r

- p a r t n e r s / u n d e r s t a n d i n g

- g u i d e l i n e s / Do cuments/mhahandbook_41.pdf (last visited J une 21, 2013) (her einaf ter HAMP Gui del i n es ))

. On August 2, 2010, plaintiff responde d to defe ndants’ motion to vacate,

asser ting that its attachme nt of a co p y o f t he mortg ag e and the note to its complaint established its standing

. In defe ndants’ reply
, they for the first time argued that plaintiff failed
to follow homeowner protec tion guidelines under section 15-1502.5 of the Code (735 I L CS 5/15-1502.5 (West 2010)). The trial court denied defe ndants’ motion to vacate on September 2, 2010. ¶ 5 The Property was sold at a sheriff ’s sale on September 23, 2010. Def endants objected in writing to the confirmation of the sale, reiter ating that plai n t i ff had violated section 15- 1502.5 of the Code and attaching their hardship aff idavit. On October 4, 201 0
, t h e court hear d plaintiff’s motion to confirm the sale. Def endants orally objected, and the court denied their oral objection. Howeve r, the court did not confirm the sale. Instead, the court direc ted defe ndants to file a written motion opposing confirmation under section 15-1508(d- 5) of the Code (735 I L CS 5/15-1508(d-5) (West 201 0 ))
, evidenc ing any application for a loan modification under the MHA/HAMP and specify ing any “mater ial violations” of that
prog ram’s r equire ments. Defe ndants filed their motion on Octobe r 15, 2010. ¶ 6 In their motion to deny confirmation of the sheriff ’s sale, defe ndants alleg ed violations of section 15-1502.5 of the Code (735 I L CS 5/15-1502.5 (West 2010)), including failure to postpone the sheriff

’s sale afte r defe ndants submitt ed a HAMP application on J uly 14, 2010, and lack of communication from plaintiff reg ardin g their application, and attache d their HAMP application. Plai n t i ff re sponded by pointing out that under section 15-1508(d- 5), defe ndants wer e require d to show that they submitt ed a HAMP application and that plaintiff materia lly violated the HA MP’s require ments for proce eding to a judicial sale. Howeve r, plaintiff arg

ued, defe ndants had s h o wn o n l y the submissi on of the application, not any materia l violations of the HAMP. Plaintiff h ad denied defe ndants’ HAMP application on September 17
, 2 0 1 0
, o n the basis of a neg ative net prese nt value (NPV) of a loan modification. Plaintiff at t ac h ed a letter dated September 22, 2010, from plaintiff to defe ndants denying their application. Def endants’ reply argued that plaintiff violated fede ral
guidelines under the MHA, including b y p ro viding inadequate notice befor e the sheriff ’s sale. ¶ 7 On Dec ember 28, 2010, the trial court g rante d defe ndants’ motion to deny confirma tion of the sale and set asi d e t h e s ale. Howeve r, the court further order ed that the rede mption period had passed and the previously enter ed judgme nt rema ined in full forc e and eff ect, so

-3-plaintiff could proce ed to sale with proper issuance of new notice. That is what plaintiff did,

issuing new notice for a sheriff ’s sale schedule d for J uly 28, 2011, althoug h later canc eling that sale a nd resc hedulingit for Novembe r 17, 2011. ¶ 8 Meanwhile, on J uly 19, 2011, defe ndants filed a vol u n t ar y p et i t i o n fo r ch ap t er 7 bankruptc y (11 U.S.C. § 701 et seq. (2006)) in the Norther n District of I llinois

. Def endants 1 also filed a second HAMP application on October 21, 2011, reque sting a loan modification. On t h e second HAMP application, defe ndants indicated that their bankruptc y had been discharg ed. De fenda

nts faxed a copy

of their a pplication to plaintiff on November 3. ¶ 9 The resc heduled sheriff’s s al e, for which plaintiff sent defe ndants notice via mail on October 24, 2011, took place on November 17, 2011. On November 28, plaintiff moved to confirm the sale and defe ndants moved t o d en y confirma tion. In their motion, defe ndants claimed that plaintiff violated section 15-1508(d- 5) of the Code (735 I L CS 5/15-1508(d-5) (West 2010)) by materia lly violating the HAMP guidelines by failing to proce ss the application as re quired, failing to postpone the sale, and failing to provide proper notice. 2 Plaintiff f iled a response on J anuar

y 31, 2012, arg

uing that: (1) it did not violate section 5- 1508(d-5)
, beca

use defe ndants did not identify a sufficie nt chang e in circ umstance, as

nece ssary for a succe ssive HAMP application, and (2) it had unref uted evidenc e that it serve d
proper notice on defe ndants. Plaintiff further argued that, even if there had been a sufficie nt chang e in circ umstance, defe ndants still had not identified a material violation of the HAMP
guidelines. Def

endants’ reply did not identify a chang e i n ci rc umstance. The reply mostly

re s t at ed ar guments made in the initial motion and in prior motions in the course of the litigation. ¶ 10 On M arc h 29, 2012, the t rial court denied defenda n t s ’ m o t i o n to deny confirmation of the sale. T h e o rder stated that notice for the sale was proper and that no issues reg arding violations of the HAMP guidelines prec luded confirmation of the sale. The court g rante d plaintiff’s motion to confirm, appr oving the sale a nd distribution of the Property

. ¶ 11 On April 17, 2012, defe ndants, now repr esente d by counsel, filed a motion to r econside r the Marc h 29 order

. Def

endants argued that plaintiff violated section 1 5 -1 5 0 8 (d-5) of the Code wh en i t let the sheriff ’s sale proce ed despite defe ndants’ October 21, 2011, HAMP application, because (1) defenda nts’ discharg e from bankruptc y on October 27, 2011, was

a sufficie nt chang e in circ umstance beca use the elimination of debt would have chang ed the
outcome of the HAMP application, and (2) beca use defe ndants submitt ed a timely application, it was not y et the provi nce of the court to deter mine the merits of the HAMP application, but only to stop the November 17 sale. Def endants arg

ued that plaintiff did not

asser t that it did not timely rec eive their HAMP application but rathe r that plaintiff chose to ignor e the application. Def endants arg

ued that plaintiff’s rea son for denying their

Def end ant s do not at ta ch a cop y of the ir ban krupt cy pet it ion or ci te to the re cor d to sup por t 1 the ir fi li ng. However, pla int if f c onc ede s t he f

il ing, an d we p roc eed wit h this dis pos it ion ass um ing tha t d ef end ant s di d f

il e f or ban krupt cy as r el at ed i n t hei r b ri ef

.

Def end ant s cl ai m tha t the y never re cei ved not ic e of the she ri ff’s sal e and fou nd out tha t the 2 sal e ha d oc cur re d on ly fr om a r eal torwho vis it ed t he h om e on Novem ber22, 2011

.
-4-application–that the loan had been paid off as of November 21, 20 1 1

–wa s tantamount to

telling defe n d an t s “t oo bad,” that plaintiff would not “wa ste time” considering their application when it had alre ady sold their proper ty

. Def endants further argued for sanctions
ag ainst plaintiff under I llinois Supreme Court Rule 137 (ef f. J an. 4, 2013) beca

use plaintiff knew that it should not have proce eded with the sale or soug ht confirmation of the sale when in rec eipt of defe ndants’ applicatio n , y et d i d so any way , requiring defe ndants to hire attorney s an d causing them financ ial hardship. Def endants also filed a motion to stay dispositi on of the Proper

ty

. ¶ 12 Plaintiff a

rgued in its response that a second HAMP application in and of itself did not require a delay of the sheriff ’s sale and that a discharg e from bankruptc y was not a sufficie nt chang e in circ umstance for a succe ssive application. Fur thermore
, it ar gu ed that whether defe ndants re ceive d cer

tain documents was immaterial beca use the Marc h 29 order was based on a finding of no materia l vio l at i o n o f HAMP guidelines, and nonrec eipt of documents would not chang e that analy sis. Finally
, it denied that sanctions wer e war rante d. Def endants reiter ated their orig inal arguments in their reply
, arguing that plaintiff’s asser tion that there was no sufficie nt chang e in circ umstance was speculative and that plaintiff failed to follow HAMP guide lines by not properly

consideringtheir sec ond HAMP application. ¶ 13 On J une 14, 2012, the trial court held a hear ing reg arding defe ndant s ’ m o t i o n s t o

rec onsider the Marc h 29 order
, i m p ose sanctions, and stay dispositi on of the Property

. I t denied a ll moti ons. ¶ 14 Def

endants timely

appea led.

¶ 15 I I . ANALYSI S ¶ 16 A. Standard of Review ¶ 17 Def

endants contend that the proper standard of re view is de novo beca use their motion
to rec onsider challeng ed the trial court’s application of law in conf i rm i n g the sale of the Property

. See JP Morgan Chase Bank v. Fankhauser
, 383 I ll. App. 3d 254, 2 5 9 (2 0 0 8 ) (“ [ W ]here a motion to rec onsider raises a question of whether the trial court err ed i n i t s previous applica

tion of exi sting law , we review de novo the t rial court’s deter minations of leg al issues.”). How ev er , plaintiff disag ree s, instead arguing for an abuse- of-discr etion standard, citing Household Bank, FSB v. Lewis
, 229 I l l

. 2 d 173, 178 (2008) (“A court’s decision to confir m o r re j ec t a judicial sale will not be disturbed absent an abuse of *** discretion.”)

. ¶ 18 Her e, defe ndants moved to rec o n s i d er t h e t ri al co u rt ’s co n firmation of the sale. Def endants argue on appea l that the trial court should not have confirme d the sale and should have va cate d the sale. We a g ree with pla intiff that, under Lewis
, the standard of revie w for whether the trial court corr ectly confirme d the sale is the abuse- of- discretion standard. Howeve r, we note that a trial court abuses its discr etion when its ruling rests on an err or of law. Pee ples v. Village of Johnsburg , 403 I ll. App. 3d 333, 339 (2010). ¶ 19 As to the denial of Rule 137 sanctions, defe ndants do not c ite a standard of revie w, but as pl aintiff correc tly

cites, the standa

rd of r eview is a lso for an a buse of discr etion. Nelson

v. Chicago Park District
, 408 I ll. App. 3d 53, 67 (2011); Medic al Alliances, LLC v. Health

-5-Care Servic e Corp. , 371 I ll. App. 3d 755, 756 (2007).

¶ 20 B. O rder

Approvingand ConfirmingSale and Distribution of the Proper ty ¶ 21 Def

endants’ appea l cente rs around the trial court’s Marc h 29, 2012, order approvingand confirming the sale and distribution o f t h e P roper ty

. Def endants advanc e two primary
arguments for why the trial court err ed by enter ing the order and for why the sale should be
set aside: (1) the trial court misapprehe nded the facts reg arding defe ndants’ HAMP
ap p l i ca tion, and (2) the court misapplied the law by confirming the sale despite material violations of I llinois law (735 I L CS 5/15-1508(d-5) (West 2010)) and the HAMP guidelines. ¶ 22 Def

endants a rgue that, had the trial court considered the following fac ts, the M arc h 29 order would not have been enter ed. Their bankruptc y and subsequent discharg e was a chang e in circ umstances for purposes of the HAMP guidelines. Plaintiff admitted that defe ndants
soug ht a loan modification under the HAMP on Oc t o b er 21, 2011, and that it even had a homeowner support specia list sen d d ef endants a letter offe ring assistance

. Plaintiff

corr esponded with defe ndants on November 3, 2011, reque sting documents in support of the HAMP application, which defe ndants faxe d p lain ti f f tha t same day

. By rec eiving defe ndants’ timely HAMP application, plaintiff had actua l notic e o f d ef endants’ application on November 3. Yet, despite rec eipt of defe ndants ’ application, plaintiff proce eded with the sheriff ’s sale and soug ht confirmation of the sale. The sale should not have proce eded for at least two rea sons: improper notice to defe ndants and a materia l violation of HAMP guideline 3.3. See HAMP G uidelines
, supra , ch. I I , § 3.3. ¶ 23 As to notice, defe ndants argue that notice was improper under sec t i on 15-1507 of the Code (735 I L CS 5/15-1507 (West 2010) ) beca use defe ndants did not rec eive notice befor e the sale, the notice proff

ere d by plaintiff did not have a file-stamp, and the notice in the trial
court file was not f

ile-stamped until Nove mber 28, 2011, which was 11 day s after the sale. As to the HAMP violations, HAMP guideline 3.3 require s that “[w]hen a borrowe r submits

a re quest for H AMP consideration after a fore closure sale date has been sc heduled a nd the
reque st is rec eived no later than midnight of the seventh business day prior to the fore closure sale date (De adline), the service r must suspend the sale as nece ssary to evaluate the borrowe r for HAMP.” HAMP Guidelines
, supra , ch. I I
, § 3.3. Her e, plaintiff had at least 14 day s’ notice of defe ndants’ HAMP application prior to the date schedule d for the sale but did not stop the sale. The issue, there fore
, is plaintiff’s fa i l u re to suspend the sale upon rec eipt of defe ndants’ HAMP application, not whether defe ndants’ discha

rg e fr om ba

nkruptcy was a sufficie nt chang e in circ umstance ( althoug h defe ndants maintain that it was). ¶ 24 Turning from plaintiff’s conduct to the trial court’s application of law, defe ndants arg ue that the court misapplied section 15-1508(d- 5) (735 I L CS 5/15-1508(d-5) (West 2010)) and the HAMP guidelines when it conf irmed the sher iff’s sa le. Section 15-1508(d- 5) re ads: “The court that e ntere d the judgme nt sha ll set aside a sa le held pursua nt to Section 15- 1507, upon motion of the mortg ag or at any time prior to the confirmation of the sale, if the mortg ag or proves by a preponde ra n ce of the evidenc e that (i) the mortg ag or has applied for assistance under the Making Home Afforda ble P rog ram estab l i s h ed b y the United States Depa

rtment of the Trea sury pursuant to the Emerg ency Econom i c

-6-Stabiliz ation Act of 2008, as amende d by the Americ an Recove ry and Reinvestment Act of 2009, and (ii) the mortg ag ed rea l estate was sold in material violation of the program’s requireme ntsfor procee ding to a judicial sale .” (Emphasis added.) 735 I L CS 5/15-1508(d-5) (West 2010). Def endants argue that plaintiff materia lly violated HAMP guideline 3.3 beca use it was awa

re

o f defe ndants’ ti mely HAMP application y et di d not act on it by stalling the sheriff ’s s ale. Moreove r, HAMP guideline 1.2 provides that a loan that was initially reje cted for, inter alia
, a neg ative NPV “may be rec onsidered for HAMP at a future time if the borrowe r experience s

a chang e in circ umstance.” HAMP Guidelines
, supra , ch. I I
, § 1.2. Def endants contend that their discharg e from bankruptc y would have led to a chang e in their cre dit score s, thus aff ecting an NPV analy sis–the ty pe of analy sis that led to the reje ction of their first HAMP application. This was a chang e in cir cums tance that should have allowed for HAMP

rec onsideration, and a ll that was nec essar y to halt the sale was the reconsideration, not the
outcome of the rec onsideration. There fore
, beca use defe ndants made a timely application for

rec onsideration afte r experiencing a chang e in circ umstance, plaintiff violated HA MP
guideline 3.3 by proce eding with the sale despite actua l notice of the timely application, and the trial court should have set asi d e t h e s al e pursuant to section 15-1508(d- 5) (735 I L CS 5/15-1508(d-5) (West 2010)). ¶ 25 Plaintiff responds to defe ndants’ arguments a s f ollows. As a threshold matter, de fenda nts have the burden of developing a sufficie nt rec ord for review

. Ho wever, with reg ard to whether defe ndants’ second HAMP application repr esente d a chang e in c ircumstance such that rec onsideration was require d under HAMP guideline 1.2, there is l ittle evidenc e–def

endants present onl y their applications from J uly 14, 2010, and November 3, 2011, and, of the two applications, o n l y t h e November 2011 application contained defe ndants’ financ ial information. There fore
, defe ndants’ argument that plaintiff materia lly violated HAMP guidelines and thus the trial court should have set aside the sale pursuant to section 15-1508(d-5) (735 I L CS 5/15-1508(d-5) (West 2010)) should be deemed forfeited under I llinois Supreme Court Rule 341(h)( 7) (ef f. Fe b. 6, 2013), beca

use there is an insufficient rec ord to support the argument. We fin d
, h oweve r, that there is a sufficie nt

rec ord to a ddress the issues prese nted on appea l, a nd we there fore addre ss the substance of defe ndants’ ar guments. ¶ 26 Plaintiff nextarg ues that def

endants’ a

rguments fail on their merits. Although plaintiff

c o n c e d e s th a

t d e f e n d a nts ’ s e cond HAMP application qualified for rec onsider a ti o n , q u a li fy in g is not s y n o ny mous with experiencing a chang e in circ umstance that requires rec onsideration. Plaintiff focuse s on the lack of evi d en ce

– s pecif ically defe ndants’ failure to demonstrate a chang e in their financ ial circ umstances–to establish a chang e in circ umstan ce t h at would have aff ecte d their NPV calc ulation, which was the basis for denial of their first HAMP application. A postbankruptcy status, standing alone, is not a chang e in circ umstance under the HAMP guidelines. Although succe ssive HAMP applications are possible and anticipated under the guidelines, the mere filing of a succe ssive application does not t ri gger M HA protec tions; a chang e in circ umstance is a ne cessa ry condition for re consideration, and the chang e in circ umstance must re late to the rea son the orig inal application wa s denied, he re, the neg ative NPV calc ulation. Wit hout financ ial data from both t h e fi rst and second

-7-applications, d e f e n d a nts have not demonstrated a chang e in their financ ial circ umstances that

co u ld have aff

ecte d their NPV calc ulation. Moreove r, defe ndants cite no support i n t h e

rec ord or au t h o ri t y for the proposition that a bankruptc y discharg e constitutes a chang e in circ umstance ne cessa

ry for r econside ration under the HAMP guidelines. ¶ 27 Moreove r, plaintiff argues, defe ndants’ arguments lead to an absurd result–that is, if all

a defe ndants has to d o t o delay proce eding s is file a HAMP application without an

acc ompanying chang e in circ umstance, then a defe ndant could unilatera lly delay a sheriff ’s sale into perpe tuity

. Plaintiff argues that the purpose of the HAMP guidelines and the MHA is to provide assistance to home owner s to reduce monthly pay ments so that they

may keep their homes, not to let homeowner s rec ycle denied applications to stave off inevitable sales. ¶ 28 Plaintiff also argues that def endants’ c ontention that they did not rece ive prope r notice

o f the sheriff

’s sale fails. Howeve r, plaintiff offe rs littl e in the way of support for t h i s

ar gument, other than asser ting that “def

endants offe r nothing, save a passing ref ere nce i n their brief, to compel a d i ff er ent conclusion” and that, since defe ndants “knew to submit” their second HAMP application on November 3, 2011–two wee ks befor e the date set for the sheriff ’s sale–the y

must have bee n awa

re of the sale, implying tha

t they had notice. ¶ 29 Def

endants rep l y b y ar gu i n g t h at t h er e i s n o d i ffe renc e betwee n qualifying f or consideration and rec onsideration of a HAMP application. What is important, they argue, is that they submitt ed a timely HAMP application follo w in g a d ischarg e from bankruptc y , more than seven day s befor e the schedule d sheriff ’s sale. Following a developing common theme here –one that we find cuts ag ainst both parties, at least at time s–defe ndants contend that plaintiff lacks suppor

ting a uthority for its positions. ¶ 30 Def

endants also cite HAMP guideline 1.2, which say s that a borrowe r who has re ceive d a cha pter 7 bankruptcy discharg e in a case invol ving a first l ien mortg ag e and who did not

rea ffirm the mortg ag e debt under applicable law is elig ible for HAMP. HAMP Guidelines
, supra , ch. I I
, § 1.2. Def

endants argue that this guideline provides that a bankruptc y discharg e is, in fac t, a chang e in ci rc u m s t an ce that allowed them to submit a succe ssive HAMP application. Fur t h er m ore, the HAMP guidelines do not require a material chang e in circ umstance; materia lity
, acc ording to defe ndants, is rele vant o n ly to plaintiff’s violation of the HAMP guidelines, i.e.
, the require ment under section 15-1508(d- 5) of the Code (735 I L CS 5/15-1508(d-5) (West 2010)) that the sale proce eded in materia l violation of the MHA, and thus the HAMP guidelines. Moreove r , d e f e n d ants deny that consideration of their second HAMP application–following a d i s char g e from bankruptc y that would aff ect their cre dit

score , there by possibly altering an NPV analy sis–would lead to an absurd result of endless,

succe ssive filings to delay a sheriff ’s sale. Rather, they mere ly submitt ed a second application afte r circ umstances chang ed in such a way that they might qualify under the MHA to modify

and pay down their loan. ¶ 31 We beg in our ana ly sis by rec og nizi ng that any relief here stemming from violations of HAMP guidelines must derive from section 15-1508(d- 5). For the following rea s o n s , we 3

Def end ant s do not ex pli ci tl y ar gue for re li ef st emm ing fr om HAMP viola ti ons unde r 3

ano the r sec ti on of I ll ino is la w, al tho ugh the y do ar gue tha t n oti ce was imprope r u nde r s ect ion 15-

-8-find that the trial court should have g rante d defe ndants’ motion to deny confirmation of the

sale unde r sec tion 15-1508(d-5) ( 735 I L CS 5/ 15-1508(d- 5) (West 2010)). ¶ 32 We ag ree with defe ndants that the initial, operative question is whether they qualified for

rec onsideration and disag ree with plaintiff that qualifying for rec onsideration is somehow

a wholly separ ate inquiry from experiencing a chang e in circ umstance. Per HAMP guideline 1.2, a m o rt g ag e loan may be reconsider ed under HAMP if, afte r m eeting basic criteria but being disqualified due to a negat i v e NP V– as was defe ndants’ first application in J uly 2010–the borrowe r experience s a chang e in circ umstance. HAMP Guidelines
, supra , ch. I I
, § 1.2; see also Home Affordable Modification P r o gr am–Borrower Outreach and Communication Supplemental Di r ec t i ve 10-02, at 9 (Mar

. 24, 2010), available at https://www.hmpadmin.com/portal/programs/docs/hamp_ser vicer /sd1002.pdf (last visited J une 21, 201 3). Howeve r, guideline 1.2 does not end there

. I t continues, “Servic ers must have an internal written policy which define s what the servi ce r consi ders a chang e in circ umstance and outlines when a borrowe r will be ree valuated for HAMP.” HAMP Guidelines
, supra , ch. I I
, § 1.2. Fur thermore
, althoug h a service r’ s p o l i cy may limit the number of rec onsiderations, the guidelines require the service r to allow at l ea st one

rec onsideration, and this was defe ndants’ first such reque st for re co n s ideration. HAMP Guidelines
, supra , ch. I I
, § 1.2. Conspicuously missing from plaintiff’s brief is any ref ere nce to its own internal policy that would define or limit what it considers a chang e in circ umstance. Given that plaintiff has not ruled out a bankruptc y discharg e as a ch ang e in circ umstance per it s policy
, and given that a borrower ’s credit score is a fa ct o r input in an NPV calc ulation (see HAMP Guidelines
, supra , ch. I I
, §§ 2.2, 7.6.1, 7.8), it stands to rea son that a bankruptc y discharg e could be a chang e in a borrowe r’s circ umstance that would aff ect the outcome of the very analy sis that was the basis for t h ei r first application’s denial: a neg ative NPV. Whether a discharg e from bankruptcy would lead to a positive NPV, or t o 4

even a more ne g ative NPV, we do not know. But that is t he point

. The purpose of HAMP, and the purpose of a rec onsideration afte r a chang e in circ umstance, is to evaluate the status of borrowe rs to deter

mine if they qualify under the MHA for loan assistance or modification and thus to preve nt avoidable fore closures afte r the collapse of the housing marke t in 2008. See W igod v. W ells Fargo Bank, N.A.
, 673 F.3d 547, 554 (7th Cir. 2012). Ba nkruptcy aff

ects

a cr ed i t score , which in turn aff ects an NPV analy sis, which in turn aff ects whether a borrowe r will rec eive assistance under HAMP. We find that, absent an internal policy to the
contra ry , a borrowe r’s discharg e from chapte r 7 bankruptc y is a chang e in circ umstance that

1508 (b) . W e a ddr ess not ic e a ft eradd re ssi ng the al le ged HAMP vio la ti ons

.

Def end ant s ar gue tha t HAMP guidel ine 1.2 sup por ts tha t a dis cha rge fr om cha pte r 7 4 b a n kru ptc y is a cha nge in ci rc um st anc e. T he por ti on of the guidel ine the y ci te st at es tha t “[ b]o rr ower s who have re cei ved a Chap te r 7 ban krupt cy dis cha rge in a cas e invol ving a f i r s t li en

m ort gag e *** ar e e l i gi b l e for HAMP.” HAMP Guidel ine s , sup ra , ch. I I
, § 1.2. However, thi s pro visio n m er el y af

fi rms tha t a bor rowe r dis cha rged fr om ban krupt cy is el igi b l e f o r H AMP in
genera l but doe s no t s p e a k to con ti nue d el igibi li ty for a suc ces si ve a ppl ic at ion due to a cha nge in ci rc um st anc e.

-9-can trig g er continued elig ibilit y for a succe ssive HAMP application under HAMP guideline

1.2. Cf. Santelises v. Bank of America, N.A.
, No. 12-1 1 1 6 4 -NMG, 2012 WL 6045986 (D. Mass. Oct. 22, 2012) (def endants failed to alleg e a chang e in circ umstance, which the court descr ibed as a

n incre ase in income or other a ssets). ¶ 33 Finding that the b an kru p t cy d i s ch ar ge q u al i fi ed d efe ndants to apply for HA MP

rec onsideration only g ets their prover bial fee t in the door. In order to set a sale aside, section 15-1508(d- 5) require s that a defe ndant fi l e a motion befor e confirmation of the sale and prove, by a prepondera

nce of the evidence, that the defendant applied for a ssistance under the MHA and that the sale took place in material violation of the MHA’s require ments, i.e.
, the HAMP guidelines, for proce eding to a judi ci al s al e. 735 I L CS 5/15-1508(d-5) (West 2010). De fenda

nts corr ectly contend that this is where mate riality matters, that is, whethe r plaintiff m at er i al l y violated HAMP and not whether the chang e in circ umstance was a materia l one. ¶ 34 Def

endants focus on HAMP guideline 3.3, which say s that a service r must suspend a sale

as nece ssary to e valuate the borrowe r for HAMP if a timely application is submitt ed. Her e, defe ndants ’ s ub mission two wee ks befor e the sale was timely

. They wer e elig ible for

rec onsideration beca

use of their chang e in c ircumstance
, and plaintiff did not complete the evaluation of their application until afte r the sale, indicating that suspension of the sale was

nece ssary to allow for sufficie nt time to complete the evaluation. Given that the purpose of the HAMP is to assist borrowe rs in maintaining their proper ties, proce eding to sale in violation of a guideline that mandate s that a ser vicer “must suspend the sale” is c lear ly the ty pe of material violation contemplate d in section 15-1508(d- 5). ¶ 35 There are , howeve r, four circ umstances wher e a service r such as plaintiff is not require d
to suspend a fore closure sale; none applies here

. HAMP Guidelines
, supra , ch. I I
, § 3.3. The first is when a HAMP application is un t i m el y , t h at is, rec eived after the deadline of seven business day s prior to the schedule d sale. We have alre ady found that defe ndants’ application

was timely

. The second reg ards the situation wher e a borrowe r has rec eived a perma nent loan modification, which is inapplicable here beca use defe ndants never rec eived any sort of loan modification. The third involves a trial period plan (TPP), which again does not apply beca use defe ndants never rec eived a TPP. Finally
, a service r does not have to suspend a sale if it finds a borrowe r ineligible under HAMP

. Al t h o u gh that is essentially what plaintiff
argues on appe al–that def endants did not qualify to f ile a succ essive HAMP applica tion–it did not deny defe ndants’ second application on this basis. Instead, it pro ce ed ed to sale without resolving the HAMP application one way or another
, and, only afte r the s al e, it informed defe ndants that their application was d en i ed b eca use the loan had been paid off (via, impliedly
, the sale). Moreove r, we have alre ady found that defe ndants wer e elig ible for

a succe ssive HAMP application due to their chang e in circ umstance, and there fore plaintiff’s
argument fails re g ardle ss. ¶ 36 Although the trial court had discretion to decide whether to confirm the sale, we r eview the construction of statutes de novo

. See Household Bank, FSB
, 229 I ll. 2d at 178. We f ind
t hat a “mater ial violation” under section 15-1508(d- 5) occur red wher e plaintiff proce eded
to sale in violation of HAMP guideline 3.3, which require d suspension of the s ale upon defe ndants’ successive HAMP application. Had t h e trial court construed t he law this way ,

-10-it surely would have sustained defe ndants’ objection to confirmation of the sale. There fore
,

the trial court abused its discretion when it confirme d the sale of the Property

. To hold otherwise would be to eff

ectively ignor e our leg islature’s promu lg a ti o n o f s e c ti o n 1 5

- 1 5 0 8 ( d5). ¶ 37 We also disagree with plaintiff that our holding will lead to an absurd result. Successive applications cannot be made ad infinit um under our holding. In fac t, unless a defe ndant can decla re and rec eive a discharg e from bankruptc y multipl e times–and all befor e a schedule d sale–then a defe ndant cannot use our holding to perpe tually suspend a sale. A chang e in circ umstance is nece ssary to qualify a defe ndant for a succe ssive application, and the HAMP
guidelines require that a service r allow at least one rec onsideration b as ed o n a change in circ umst an ce. The proper course is for a service r such as plaintiff to define in its internal policy what qualifies as a chang e in circ umstance, and, if it rec eives a succe ssive application that does not qualify due to a lack of chang e in circ umstance, to timely deny the application based on that fac t. ¶ 38 As to defe ndants’ argument of improper notice, the trial court did not abuse its discr etion in finding that notice was proper under section 15-1508(b- 5). The notice filed with the court, albeit not f

ile-stamped until af

ter the sale, attested to the fac t that pla intiff mailed notice of the November 17, 2011, sale on October 24, 2011. Def endants offe r nothing more than their

own protestations that they did not rec eive the mail. Howeve r, this argument is moot beca use confirmation of the sale should have been denied based on a violation of section 15-1508(d5) for a mater ial violation of the HAMP guidelines.

¶ 39 C. Rule 137 Sanctions ¶ 40 Def

endants a rgue that plaintiff’ s failure to suspe nd the sale per HAMP guideline 3.3 is alone rea son to sanction plaintiff. Def endants also try to paint a picture of blatant disreg ard for rules and procedure s as pl aintiff rushe d to complete the sa le of the Prope rty

. Howeve r, defe ndants provide no leg al standard by which we can assess whether the trial court abused its discretion and should have imposed sa nctions. ¶ 41 I llinois Supreme Court Rule 137 (ef f. J an. 4, 2013) require s that an attorney cer tify that

a pleading
, motion, or other document is “to the best o f his knowledg e, information, and belief formed afte r rea so n ab l e inquiry ” and “is well g rounded in fac t and is war rante d by exis ting law or a g ood-fa ith argument for the extension, modification, or reve rsal of exis ting law, and that it is no t i nterposed for any improper purpose, such as to hara ss or to cause

unnece ssary

delay or needle ss inc rea se in the cost of litigation.” “The purpose of Rule 137 is to preve nt abuse of the judicial proce ss by penalizing claimants who bring vexatious and hara ssing actions.” Sundance Homes, Inc. v. County of Du Page
, 195 I ll. 2d 257, 285-86 (2001). Rule 137 sanctions are punitive, so the rule should be strictly construed. Sadler v. Creekm ur , 354 I ll. App. 3d 1029, 1045 (2004). ¶ 42 The trial court here denied t he mot ion for san ct i ons, and we will not reve rse absent an abuse of discretion. E.g.
, Dowd & Dowd, Ltd. v. Gleason
, 181 I ll. 2d 46 0, 487 (1998); Edwards v. C ity of Henry
, 385 I ll. App. 3d 1026, 1034 (2008). There is no contention t hat plaintiff’s actions wer e not g rounded in fac t. Def endants argue that throug hout the course of

-11-the litigation, plaintiff “tre ated Def endants eg reg iously .” They also contend that proce eding
to sale, in v i o l at i on of HAMP guideline 3.3, was an unwar rante d, sanctionable action. Howeve r, defe ndants’ char acte rization of plaintiff’s conduct is overly g ener alized. The only specific conduct that defe ndants focus our attention on is p l ai n tiff’s proce eding with the November sale of the Property despite its rec eipt of defe ndants’ second HAMP application. Plaintiff’s conduct over the course of the litigation can rea sonably be viewed as that of a

s er vicer
, acting in its best interests, m ere ly trying to expedite the s ale of the P roper ty after

rec eiving a judgme nt in its favor

. Fur thermore
, the law in this are a was unclea r; neither party

was able to cite authority that a bankruptc y discharg e was a chang e in circu m s t an ce that
q u al i fi ed defe ndants for a succe ssive HAMP application. Absent some alleg ation that plaintiff proc eede d contra ry to established authority in this case, we cannot f ind plaintiff’s actions sanc tionable under Rule 137.

¶ 43 I I I . CONCLUSI ON ¶ 44 Fo r t h e rea sons stated, we reve rse the Kane County circ uit court’ s o rd er gra n t i n g confirmation of the sale of the Property
, v acate the sale, and rema nd the cause so that plaintiff can properly consider defe ndants’ HAMP application. We aff irm the Kane County circ uit court’s orde r deny ing Rule 137 sa

nctions.

¶ 45 Affir

med in part a

nd reve rsed in par

t; cause r emande d.

-12-