Mortgage Foreclosure: The In’s and Out’s of Standing to Sue

Lack of Standing as an Affirmative Defense:

Under Illinois law it has been held that a plaintiff is not required to allege facts supporting standing; rather it is the burden of the defendant to prove lack of standing. Therefore, a lender can sue a borrower even where they do not have proof of standing such as assignment of the note.

Standing and the Illinois Bank Act

The Illinois Banking Act allows transfers of all liabilities and interest as a result of a bank merger. Where a lender acquires a mortgage loan through a series of mergers rather than by assignment or endorsement and transfer, the lender (plaintiff) has standing to withstand a standing challenge.

Standing and timing

Standing is not something that is always upheld in favor of the lender (plaintiff). Only the holder of a note may foreclosure on a property. While lack of standing is an affirmative defense, meaning that the defendant has the burden of proving standing does not exist, this is not an impossible burden. Where the documents on their face show that assignment of a note did not occur until months after a foreclosure lawsuit was filed, the defendant can easily meet the required burden. Transferring a mortgage itself is not enough to receive the right to foreclose upon a given property. Where the lender cannot approve they are the holder of a note, they are not entitled to foreclose.

What is Standing?

Standing is a legal doctrine and does not have a simple and concise definition. There are many pieces that make up “standing” and therefore if any one piece of the standing puzzle is missing, standing may not exist. This becomes particularly important in court and in the area of foreclosure.

Borrowers Response

Borrowers are frustrated with the process and that lenders with whom they have no relationship are given standing to sue and foreclosure on the borrowers home simply because of a transfer of the note on the property. Borrowers feel that the lender to whom the note has been transferred typically are not willing to listen to borrowers or to address requests for alternatives to foreclosure. Lender accountability is missing causing borrowers to lose their home to a lender with whom they have no relationship. Standing or not standing, these changes are resulting in homeowners having their homes taken with no alternatives being offered.