Skip to Content Top

Illinois Supreme Court Rule 114 -- The Loss Mitigation Affidavit


Illinois Supreme Court Rule 114 establishes a new procedural requirement in Illinois mortgage foreclosure cases -- the loss mitigation affidavit. 

Although the National Mortgage Settlement prohibits Bank of America, JPMorgan Chase, Wells Fargo, Citibank, and GMAC from engaging in dual-tracking (considering a loan modification while moving for judgment in court), it only applies to those five banks. The Consumer Financial Protection Bureau's new servicing guidelines prohibit the behavior for all servicers, but those standards do not take effect until January 10, 2014. 

Rule 114 creates an additional bulwark against dual-tracking by requiring foreclosing lenders to submit an affidavit to the court that outlines the loss mitigation programs available to borrowers, what steps were taken to offer those options to the borrower, and the status of those loss mitigation efforts.

The Rule provides a sample loss mitigation affidavit. A footnote to that affidavit explains that the affidavit must discuss ALL applicable loss mitigation programs, "including but not limited to those available under the Making Home Affordable Program, the 2012 National Attorney General Settlement, or the FHA, VA, or USAD insured-loan programs. Also identify any "in-house" loss mitigation regularly provided by the mortgagee for a mortgage loan of this type. The footnote also explains that "eligible" means that the loan can be considered for loss mitigation, not that it ultimatley qualifies or that loss mitigation is guaranteed.

If the lender does not comply with Rule 114, foreclosure courts are empowered to stay the foreclosure case or deny entry of a judgment. This Rule only applies when the borrower has filed an appearance or a responsive pleading in the case. 

Of the three new Rules issued by the Illinois Supreme Court, this one is by far the most borrower-friendly. It also gives borrowers a very valuable remedy if they get involved in their foreclosure case from the outset. Requiring lenders to acknowledge that loss mitigation is available and to explain how they attempted to work with the borrower carries a strong implication that loss mitigation must be explored before moving on to foreclosure. If a lender does not comply with the rule, then the case can be stopped in its tracks until the lender complies. 

The CFPB's new servicing rules will ultimately require that borrowers be considered for loss mitigation before foreclosure, but this Rule is an excellent measure in the meantime. Moreover, the CFPB requirements may work well with this Rule, as it has a built-in enforcement mechanism that applies directly to Illinois courts. The CFPB servicing rules are biding on mortgage servicers, but do not necessarily give homeowners as direct of a remedy as this Rule does. 

Another added benefit of this Rule is that these affidavits will become part of the public record. If a mortgage servicer wants to claim it works with customers to avoid foreclosure, then its affidavits had better prove that claim. Adding these affidavits into the public record allows consumers to hold servicers accountable in a broader context.