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Appellate Court of Illinois (Second District): No Commemorative Assignments in Foreclosures

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It finally happened. After several disappointing decisions, the Appellate Court of Illinois has finally released a foreclosure-related opinion that I can get behind. On September 25, 2012, the court filed its opinion in Deutsche Bank National Trust Co. v. Gilbert. The opinion is not yet published in the case reporters, but can be found here. Practitioners wishing to cite to the case can find it on Westlaw. The Westlaw citation is 2012 WL 4434093. 

With that out of the way, let's get into the case itself. 

In Gilbert, Deutsche Bank was suing in its capacity as the trustee of a mortgage-backed security trust. These cases are all-too-common in Illinois. The home owner, James Gilbert, argued that Deutsche lacked the standing to bring the foreclosure lawsuit because it had not established that it owned the mortgage and note associated with his home.

In order to demonstrate that it had the standing to sue, Deutsche presented an assignment of mortgage that was signed after Deutsche filed the foreclosure lawsuit. In Illinois, a plaintiff must have standing to sue from the time the case is filed -- retroactively obtaining the standing to sue is ineffective under state law. However, plaintiff banks have successfully argued that assignments can "commemorate" events that took place sometimes years before the document is signed. 

These so-called commemorative assignments have been problematic for foreclosure defense attorneys in the past. Often, these assignments would be supported by an affidavit stating the specific date on which the loan was allegedly assigned. Some judges would accept these documents as absolute proof of the plaintiff bank's standing. The Gilbert opinion indicates that the days of the commemorative assignment are numbered in Illinois. 

The Gilbert court correctly notes that there is very little case law regarding these types of assignments in Illinois. It then looks to New York law for persuasive authority. Ultimately, the Gilbert court holds that assignments must be dated prior to the beginning of litigation to confer standing on a plaintiff. Plaintiffs that present assignments dated after the beginning of litigation do not have standing to sue. 

The court does not explicitly state that commemorative assignments are worthless. Based on the language of this ruling, an assignment could state, "this document commemorates an assignment that took place on June 1, 2001," and be potentially valid. However, that is not the case with most assignments presented by plaintiff banks. The Gilbert opinion appears to be highly problematic for plaintiff banks given their current operation procedures. 

Also worth noting is that the Gilbert court applied the specific terms of Illinois Supreme Court Rule 191 in its analysis of Deutsche's affidavit. Rule 191 requires that affidavits filed in support of motions for summary judgment include the documents upon which the affiant relies. It also requires that affidavits include the proper evidentiary foundation for introducing evidence. It has been my experience that some judges allow plaintiffs to obtain summary judgment without complying with Rule 191. This ruling strictly enforces the language of Rule 191. It is my hope that practitioners can rely on this ruling to persuade trial courts to do the same. 

I look forward to using this case -- it has given me a bit of hope that this isn't the only home owner-friendly opinion that we'll see.