Pleading Requirements for Illinois Mortgage Foreclosure Complaints Altered

Illinois law requires a Grace Period Notice ("GPN") to be sent to the mortgagor(s) prior to commencing an action to foreclose a mortgage secured by residential real estate.¹ The GPN must include the date the notice was mailed, be headed in bold 14-point type "GRACE PERIOD NOTICE" and include the Illinois Department of Financial and Professional Regulation's current consumer hotline number and website.²  The GPN must also include the telephone number, fax number and mailing address of the mortgagee.³ Additionally, the GPN must state the following in 14-point type:

YOUR LOAN IS MORE THAN 30 DAYS PAST DUE.  YOU MAY BE EXPERIENCING FINANCIAL DIFFICULTY. IT MAY BE IN YOUR BEST INTEREST TO SEEK APPROVED HOUSING COUNSELING.  YOU HAVE A GRACE PERIOD OF 30 DAYS FROM THE DATE OF THIS NOTICE TO OBTAIN APPROVED HOUSING COUNSELING.  DURING THE GRACE PERIOD, THE LAW PROHIBITS US FROM TAKING ANY LEGAL ACTION AGAINST YOU.  YOU MAY BE ENTITLED TO AN ADDITIONAL 30 DAY GRACE PERIOD IF YOU OBTAIN HOUSING COUNSELING FROM AN APPROVED HOUSING COUNSELING AGENCY. A LIST OF APPROVED COUNSELING AGENCIES MAY BE OBTAINED FROM THE ILLINOIS DEPARTMENT OF FINANCIAL AND PROFESSIONAL REGULATION.⁴

Sending the GPN means depositing it into the U.S. mail with first-class postage prepaid in an envelope addressed to the mortgagor at the common address of the residential real estate securing the mortgage.⁵

The Illinois mortgage foreclosure law contains a statutory form complaint.⁶ The form complaint deems certain allegations to be included in the complaint. Specifically, an allegation "that any and all notices of default or election to declare the indebtedness due and payable or other notices required to be given have been duly and properly given" ⁷ is deemed included in all foreclosure complaints that comply with the statutory form complaint. Until recently, most lenders and practitioners considered the GPN in the "other notices" category. As a result, it was not required to specifically plead in every complaint that a GPN was sent.
 
In Bank of America, N.A. v. Adeyiga, a lender filed a foreclosure complaint following the Illinois statutory form complaint.⁸ The mortgagor's answer did not specifically deny receipt of a GPN. However, in response to the lender's motion for summary judgment, the mortgagor alleged he never received a GPN.⁹ In reply, the lender argued that the mortgagor's failure to deny receipt of a GPN in his answer precluded him from raising it as a defense to the entry of summary judgment.¹⁰ The trial court found the lender was not required to present evidence regarding the mailing of a GPN and entered judgment in favor of the lender.¹¹ After the property was sold and the sale confirmed, the mortgagor filed an appeal. On appeal, the appellate court reversed and held the "other notices required to be given" language of Section 5/15-1504(c) does not include a GPN.¹²  The appellate court went further, stating a mortgagor's denial of receipt of a GPN may imply the lender failed to send the required GPN.¹³

The ruling in Adeyiga is significant because the long-standing pleading requirements for mortgage foreclosure complaints must be changed to specifically allege that a GPN was sent. It is important for lenders to have a clear record regarding the sending and mailing of GPNs. Although the statute only requires a GPN to be mailed by first class mail, lenders should consider sending all GPN's by traceable delivery so mailing receipts and delivery confirmation can be recorded. Lenders may find it prudent to adopt specific internal procedures to shield themselves from potential claims or defenses that may occur in the future. These procedures should include documentation regarding who sent the GPN, when it was sent, by what method and whether or not the mailed document was returned to the lender. 

  ¹ See 735 ILCS 5/15-1502.5(b)
  ² See id.
  ³ See id. 
  ⁴ See id. 
  ⁵ See 735 ILCS 5/15-1502.5(c)
  ⁶ See 735 ILCS 5/15/1504
  ⁷ 735 ILCS 5/15-1504(c)(9).  
  ⁸ Bank of America, N.A. v. Adeyiga, 2014 IL App (1^st); 2014 Ill. App. LEXIS 709 
  ⁹ See id. 
 ¹⁰ See id.
 ¹¹ See id.
 ¹² See id. 
 ¹³ See id.