Source: http://www.mrgdocs.com/texas-and-illinois-judiciary-update/
Timestamp: 2019-04-20 03:23:25+00:00

Document:
The United States Court of Appeals for the Fifth Circuit on February 13, 2013 affirmed the district court’s dismissal of a defendant bank from the borrowers’ suit for violations of Texas Constitution Article XVI, § 50(a)(6). The Illinois Supreme Court recently adopted mortgage foreclosure rules effective March 1, 2013.
The borrowers obtained a home equity loan from the bank. The borrowers sued the bank in state court for a declaratory judgment, alleging that the loan and accompanying lien on their home were void under the Texas Constitution. The borrowers claimed that the bank had violated the Texas Constitution because the mortgage was signed at their home instead of at an attorney’s office, the lender’s office, or a title company, and the bank failed to give them the notice required by § 50(a)(6). The borrowers further alleged that the bank was required to forfeit all principal and interest. The borrowers also sought actual and exemplary damages and attorney’s fees for defamation, maintaining that the bank had engaged in libel by reporting their delinquency to credit reporting agencies. The bank moved to dismiss the suit as time-barred under the four-year statute of limitations. The lower court dismissed the suit and the Fifth Circuit affirmed.
Under Texas law, the statute of limitations begins to run when a wrongful act causes a legal injury, regardless of when the plaintiff learns of that injury or if all resulting damages have yet to occur. This accrual rule is referred to as the “injury rule,” as opposed to the “discovery rule,” which defers accrual of a cause of action until the plaintiff knows or, by exercising reasonable diligence, should know of the facts giving rise to the claim.
Courts apply the injury rule rather than the discovery rule in cases involving § 50(a)(6) violations because the legal injury rule applies to the creation of unconstitutional liens. Thus, the district court applied the injury rule and ruled that the limitations began to run at the closing of the loan, which rendered the borrowers’ claims too late.
The borrowers knew that the closing documents were signed in their home in violation of § 50(a)(6) and that they were not given notice of their rights as required by § 50(a)(6). Additionally, there was no evidence the bank or its assignor used deception to conceal any constitutional violations. Thus, the borrowers failed to provide any evidence sufficient to extend the statute of limitations period.
The borrowers’ claims that the lien was invalid were rejected because a claim under § 50(a)(6) renders a lien voidable rather than void. Because the limitations period had passed, the lien was no longer voidable and became valid.
Lastly, the borrowers accused the bank of defamation because the bank reported delinquent payments on the borrowers’ credit reports. The alleged defamatory statements were the reports to credit agencies that stated that the borrowers were delinquent on their loan payments. Because the loan was valid and it was true that the borrowers were delinquent, no defamation occurred.
Mortgage foreclosure specific mediation implemented by any judicial circuit must adhere to the requirements set forth in Rule 99 (the rule addressing Mediation Programs) and this rule.
Each judicial circuit that currently has approved local rules for a mediation program may apply that program to mortgage foreclosure cases if applicable. Local rules amended or created to accommodate mortgage foreclosure cases consistent with this rule must be submitted to the Administrative Office of the Illinois Courts (the “Administrative Office”) for review and approval prior to implementation.
Each judicial circuit electing to establish a new mortgage foreclosure mediation program will adopt rules for the conduct of the mortgage foreclosure mediation proceedings. If a judicial circuit elects to establish a new mortgage foreclosure mediation program, the judicial circuit must establish a plan for starting a mortgage foreclosure mediation program that demonstrates the mediation program can be implemented for that particular county or counties at the time of submission of the local rules for approval by the Administrative Office.
Training of judges, key court personnel, and volunteers on mortgage foreclosure mediation.
The requirements of this rule supplement, but do not replace, the requirements provided in the Illinois Mortgage Foreclosure Law (the “Law”). In addition to the documents that must be provided under the law, a copy of the note, as it currently exists, including all indorsements and allonges, must be attached to the mortgage foreclosure complaint at the time of filing.
The identity of the affiant and an explanation as to whether the affiant is a custodian of records or a person familiar with the business and its mode of operation. If the affiant is a person familiar with the business and its mode of operation, the affidavit must explain how the affiant is familiar with the business and its mode of operation.
An identification of the books, records, and/or other documents in addition to the payment history that the affiant reviewed and/or relied upon in drafting the affidavit, specifically including records transferred from any previous lender or servicer. The payment history must be attached to the affidavit in only those cases where the borrower has responded to the foreclosure complaint by filing in court.
The affidavit must contain any additional evidence, as may be necessary, in connection with the party’s right to enforce the instrument of indebtedness.
The affidavit prepared in support of entry of a judgment of foreclosure, by default or otherwise, must not have a stand-alone signature page if formatting allows the signature to begin on the last page of the affiant’s statement.
In all mortgage foreclosure cases where the borrower is defaulted by court order, a notice of default and entry of judgment of foreclosure must be prepared by the foreclosing party’s attorney and will be mailed by the Clerk of the Circuit Court for each judicial circuit. The attorney for the foreclosing party must prepare the notice in its entirety and deliver to the Clerk of the Circuit Court one copy for filing and one copy for mailing within 2 business days after the entry of default. The Clerk of the Circuit Court will mail within 5 business days after the entry of default, by United States Postal Service, a copy of the notice of default and entry of judgment of foreclosure to the address(es) provided by the attorney for the foreclosing party in an envelope bearing the return address of the Clerk of the Circuit Court and file proof thereof. The notice will be mailed to the property address or the address on any appearance or other document filed by any borrower.
Neither the failure to send the notice of default and entry of judgment of foreclosure nor any errors in preparing or sending the notice will affect the legal validity of the order of default, the judgment of foreclosure, or any other orders entered pursuant to the Law and cannot be the basis for vacating an otherwise validly entered order.
Not fewer than 10 business days before the sale, the attorney for the foreclosing party must send notice by mail to all borrowers, including borrowers in default, of the foreclosure sale date, time, and location.
Any foreclosure sale may be conducted by a private selling officer who is appointed in accordance with the Law.
If a judicial sale results in the existence of a surplus of funds exceeding the amount due and owing as set forth in the judgment of foreclosure, the attorney for the foreclosing party must send a special notice to the borrowers advising them of the surplus funds and enclosing a form for presentment of the motion to the court for the funds.
Each judicial circuit will make readily available a form petition for turnover of surplus funds to be included in the Special Notice of Surplus Funds.
In all mortgage foreclosure cases where the borrower(s) is deceased, and an estate has not been opened for the representative to stand in the place of the deceased borrower(s), the court will, on motion of a party, appoint a special representative to stand in the place of the deceased borrower(s).
The status of any such loss mitigation efforts.
The court may stay the proceedings or deny entry of a foreclosure judgment if the foreclosing party fails to comply with the loss mitigation program requirements.
The affidavits, notices, and pleadings mentioned in Rules 113 and 114 may be found on the Illinois Supreme Court’s website athttp://www.state.il.us/court/SupremeCourt/Rules/Art_II/ArtII.htm#113.

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