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New law by Mulroe protects buyers of foreclosed properties

foreclosure 082418Technicalities were being used to exploit homeowners

CHICAGO – To eliminate a legal loophole that has allowed self-styled “distressed property consultants” to exploit homeowners over decades-old paperwork, State Senator John Mulroe’s sponsored legislation was signed into law yesterday.

An appellate court ruled that the formatting of a summons document rendered a foreclosure case invalid, a move that has encouraged such “consultants” to dig through old foreclosure judgments, offering to reopen them in exchange for a cut of the proceeds from any litigation. The judgment turned on the fact the defendant’s name was printed in an attachment to the summons rather than on the front page.

“This practice exploits both the original homeowner and any subsequent purchaser,” Mulroe said. “This legislation closes a disingenuous loophole and protects homeowners, and I’m glad to see it signed into law.”

Senate Bill 2432 clarifies that a summons is still valid even if it contains a formatting inconsistency, so long as the summons has been issued by a clerk of the court and other basic procedures are duly followed. It also bans distressed property consultants from making agreements with a foreclosure defendant in exchange for a cut of the proceeds.

Lastly, it provides new protections to purchasers of foreclosed property, including:

    •        requiring future purchasers of foreclosed property to be named as parties in actions to reopen the foreclosure
    •        allowing them to remain in the property during the action to reopen
    •        requiring actions to recover foreclosed property to be brought within two years of the date a future purchaser takes possession
    •        and clarifying that a future purchaser who holds the property and pays property taxes for two years holds legal title to the property.

Signed by the governor yesterday, the new law is effective immediately.

Sen. John G. Mulroe

mulroe-2014-150

10th District
(Retired)

Years served: 2010 - 2019

Committee assignments: Commerce and Economic Development; Criminal Law; Executive; Insurance (Vice-Chairperson); Judiciary (Chairperson); Public Health; Subcommittee on Const. Amendments.

Biography: Born July 21, 1959, in Chicago; BBA, accounting, Loyola University; J.D., Loyola University School of Law; member of Chicago and Illinois State Bar associations; full-time attorney; former assistant state's attorney and arbitrator for Cook County; certified public accountant; married (wife, Margaret), four children.

Associated Representative:
Robert Martwick
Michael P. McAuliffe