The Third District of the Appellate Court of Illinois recently issued its final opinion in Bank of America, N.A. v. Basile, 2014 IL App (3d) 130204 (May 20, 2014). The Basile opinion is notable because the Third District issued an award of attorney fees and costs to Bank of America sua sponte (i.e. without BoA asking for them) because it believed the Basiles’ appeal and conduct before the trial court was so frivolous.
To make one thing clear, although I defend a number of residential foreclosure cases, I have never (thankfully) engaged in the bad tactics that the Basile defendants did. There are ways to defend mortgage foreclosure cases without having to violate the Illinois Rules of Professional Conduct or Supreme Court Rule 137. That said, every mortgage foreclosure defense practitioner is now in jeopardy of being hit with an award of sanctions. While the Third District is more bank-friendly than the First District (which is more bank-friendly than my home District, the Second), Basile will be cited in every appellate brief by a mortgage lender to request an award of costs and attorney fees. This will have a chilling effect on the practice of mortgage foreclosure defense in Illinois, and maybe for the better.
The one thing that I found especially interesting and that made me write this post, is the actual monetary amount of the sanction awarded in Basile. The homeowners were hit with $6,752.50 in attorney fees and costs by the Appellate Court. See Basile, ¶ 45. The monthly fair market value of the property agreed to by the homeowners and Bank of America was $1,250.00. See Basile, ¶ 65. Thus, the sanction imposed by the Appellate Court was the equivalent of about 5.5 months of use of the property. Because of their tactics defending the case, the homeowners were able to live rent or mortgage free from 2008 until April 2013, or 65 months.
If the monetary sanction imposed by the Appellate Court was intended to deter this type of bad conduct, it was woefully inadequate. Until the financial penalty for bad-faith mortgage foreclosure defense begins to approach the value created for the homeowner of retaining the property, economically rational homeowners will commence bad-faith defense knowing full well that a penalty will ultimately be imposed.