CitiMortgage, Inc. v. Bermudez

• Decision Date: 24 January 2014
• Docket Number: No. 1–12–2824.,1–12–2824.
• Parties: CITIMORTGAGE, INC., Successor by Merger to ABN MRO Mortgage Group, Inc., Plaintiff–Appellee, v. Juanita BERMUDEZ and Hector Acevedo, Defendants–Appellants.
• Court: United States Appellate Court of Illinois

2014 IL App (1st) 122824
6 N.E.3d 268
379 Ill.Dec. 191

CITIMORTGAGE, INC., Successor by Merger to ABN MRO Mortgage Group, Inc., Plaintiff–Appellee,
v.
Juanita BERMUDEZ and Hector Acevedo, Defendants–Appellants.

No. 1–12–2824.

Appellate Court of Illinois,
First District, Sixth Division.

Jan. 24, 2014.

[6 N.E.3d 271]

Al Hofeld, Jr., Jeanne M. Charles, Law Offices of Al Hofeld, Jr., Chicago, for appellants.

Michael Gilman, Dykema Gossett PLLC, Chicago, for appellee.

OPINION
Justice REYES delivered the judgment of the court, with opinion.

¶ 1 This appeal arises from a mortgage foreclosure action involving a property owned by defendants Juanita Bermudez (Bermudez) and Hector Acevedo (Acevedo) (collectively defendants).¹ Defendants sought to save their residence from foreclosure by obtaining assistance through the Home Affordable Modification Program (HAMP) a component of the Making Home Affordable Program (MHAP).² It was only after a judgment of foreclosure and sale was entered and the property was sold at a judicial sale that defendants appeared in the lawsuit.

¶ 2 Defendants now appeal from the circuit court of Cook County's denial of their motion to set aside the judicial sale and the order confirming the judicial sale pursuant to section 15–1508(d–5) of the Illinois Mortgage Foreclosure Law (Foreclosure Law) (735 ILCS 5/15–1508(d–5) (West 2012)). Defendants also appeal from the circuit court's denial of leave to file a late reply in support of their motion to set aside the sale, the denial of leave to file a late response to a motion to strike an affidavit, and an order denying them leave to obtain limited discovery concerning HAMP requirements for Freddie Mac mortgages.

¶ 3 For the reasons that follow, we affirm the decision of the circuit court.

[6 N.E.3d 272]

¶ 4 BACKGROUND

¶ 5 On October 2, 2009, CitiMortgage filed a mortgage foreclosure complaint alleging defendants were in default for failing to tender the required mortgage payments on property located at 5140 W. George, Chicago (the property), as of June 1, 2009. Defendants did not file an answer and did not immediately file an appearance.³

¶ 6 On October 7, 2009, defendants retained attorney Matthew Wildermuth (Wildermuth) to assist them in obtaining a permanent loan modification. ⁴ On December 14, 2009, while the foreclosure litigation was pending, defendants received correspondence from CitiMortgage offering them the opportunity to participate in a stated income “Trial Period Plan” (TPP) under HAMP based upon information provided by defendants over the telephone. A TPP is a “three-month forbearance plan time period during which the Borrower makes payments that are an estimate of the anticipated modified payment amount, as one of the preconditions to modification.” HAMP Bulletin 2009–6 § C65.1(a) (Mar. 11, 2009). HAMP guidelines permit a servicer to issue a TPP based upon information either provided verbally or through required documentation.⁵ The letter indicated defendants could qualify for a TPP if they: (1) formally accepted CitiMortgage's offer; (2) executed a hardship affidavit; (3) provided specific documentation as required in an attached checklist ⁶; and (4) tendered three monthly payments in the amount of $1,120.63. Defendants were required to provide all forms, documentation, and the first payment to CitiMortgage by January 1, 2010. Under HAMP guidelines a servicer, such as CitiMortgage, could not issue a HAMP loan modification until it verified the borrower's income and eligibility for a HAMP loan modification. HAMP Bulletin 2009–10 § C65.5 (Apr. 21, 2009). If all conditions were met, defendants would be offered a permanent loan modification under HAMP as early as April 2010.

¶ 7 In response to the letter, defendants submitted their first TPP payment on January 9, 2010. On January 22, 2010, Wildermuth submitted the executed TPP agreement and defendants' financial documentation to CitiMortgage on defendants' behalf. Defendants' hardship affidavit, however, was missing the signature page. Defendants also submitted a joint Internal Revenue Service (IRS) tax form, even though they are not joint filers. The documents required to verify defendants' income were not completely executed, as Acevedo failed to complete a suitable tax transcript release form,⁷ which prevented

[6 N.E.3d 273]

the IRS from releasing tax information to CitiMortgage.

¶ 8 Meanwhile, also on January 22, 2010, the circuit court entered an order of default and judgment of foreclosure and sale pursuant to section 15–1506 of the Foreclosure Law (735 ILCS 5/15–1506 (West 2010)) against the subject property and all defendants. Notwithstanding the order of default and judgment of foreclosure, CitiMortgage continued to communicate with defendants regarding the TPP and voluntarily suspended the foreclosure proceedings pending verification of defendants' financial status.

¶ 9 On March 2, 2010, two months after the acceptance date of the TPP, Wildermuth transmitted additional documents to CitiMortgage by facsimile. Out of these documents, defendants did not complete line five of the tax transcript release form, a provision which was necessary to authorize the IRS to release tax information to CitiMortgage. Additionally, Acevedo identified his past and current residence as the property address, which did not match the address provided in his paycheck stubs and tax transcript release form.⁸

¶ 10 On May 12, 2010, after CitiMortgage requested defendants furnish the necessary supporting documentation, defendants continued to fail to submit an executed hardship affidavit, the most recent quarterly or year-to-date profit/loss statement for Acevedo, and fully executed tax transcript release forms for each defendant.

¶ 11 On August 17, 2010, CitiMortgage forwarded a letter to defendants at the property address indicating that they were ineligible for a permanent HAMP loan modification due to their deficient documentation. As a result, the TPP was terminated.

¶ 12 Thereafter, Wildermuth continued to submit documents on behalf of defendants in an attempt to obtain a permanent loan modification under HAMP. On August 30, 2010, Wildermuth faxed Acevedo's tax form, which was signed on May 12, 2010, and was incomplete, as it was missing the authorization to release his prior tax returns to CitiMortgage. On October 26, 2010, Wildermuth faxed two new tax forms from Acevedo and Bermudez, which were signed on September 27, 2010, but these documents still did not include the third-party authorization. Wildermuth also submitted a letter from Acevedo's employer indicating his year-to-date commissions, which he earned as a real estate agent.

¶ 13 The Sale of the Property and the Motion to Confirm Sale

¶ 14 On February 3, 2011, the property proceeded to judicial sale with CitiMortgage as the highest bidder. On April 11, 2011, CitiMortgage filed a motion to confirm sale and enter an order of possession, which was noticed for hearing on April 21, 2011.

¶ 15 On April 20, 2011, defendants, represented by the Law Offices of Al Holfeld, Jr., LLC, filed a motion for leave to file their appearance and an incorrectly captioned “motion for substitution of counsel.” ⁹ Defendants also filed a combined

[6 N.E.3d 274]

motion to set aside the sale and objection to the confirmation of the sale pursuant to section 15–1508(d–5) of the Foreclosure Law ( 735 ILCS 5/15–1508(d–5) (West 2010)). Their motion asserted that the Law Offices of Al Holfeld, Jr., LLC was retained on April 20, 2011, that defendants had applied for assistance under HAMP, and that the property proceeded to sale in material violation of HAMP. No affidavits or documents were attached in support of their motion. These motions were noticed for hearing on April 29, 2011.

¶ 16 On April 21, 2011, CitiMortgage presented its motion to confirm the sale to the circuit court, which entered a briefing schedule. The order indicated a response to CitiMortgage's motion had already been filed by defendants and CitiMortgage was permitted to file a reply by May 5, 2011. Hearing on the motion to confirm the sale was set for May 19, 2011. There was no indication in the order that defendants' counsel was present in court on April 21, 2011.

¶ 17 Defendants' Motion to Set Aside Sale and Memorandum in Support

¶ 18 On April 29, 2011, defendants presented their motion to set aside the sale and motion for substitution of counsel, the Law Offices of Al Holfeld, Jr., LLC. The circuit court allowed defendants to file a memorandum in support of their motion to set aside the sale and objection to the motion to confirm the sale on or before May 20, 2011. In turn, CitiMortgage's reply date was changed to June 17, 2011. The hearing date of May 19, 2011, was stricken and a new hearing date of June 28, 2011, was set. The circuit court also granted defendants' motion to substitute counsel instanter. Defendants, however, did not file their memorandum until June 20, 2011. On June 28, 2011, the circuit court set a new briefing schedule permitting CitiMortgage to file a reply by July 21, 2011, and set the matter for hearing on July 26, 2011.

¶ 19 Defendants' combined memorandum in support of their motion to set aside the sale and objection to the confirmation of the sale requested the circuit court exercise its “broad discretion” to set aside the sale pursuant to section 15–1508(d–5) of the Foreclosure Law (735 ILCS 5/15–1508(d–5) (West 2010)). Defendants asserted they were offered a TPP by CitiMortgage over the telephone in December 2009, after having provided their financial information. Defendants alleged they executed all relevant documents and made eight payments pursuant to the TPP. Defendants further alleged that because they submitted all their payments under the TPP, CitiMortgage “did not have the discretion to terminate defendants from the HAMP but were mandated to convert their TPP to a permanent modification.” Defendants further asserted CitiMortgage did not request the missing documents...