2012

Defendants in mortgage foreclosure cases must raise challenges to the plaintiff’s standing early in the
litigation or those challenges are waived, a panel in the Illinois Appellate Court has reiterated. Rejecting challenges to Mortgage Elec. Reg. Systems, Inc. v. Barnes, 406 Ill.App.3d 1 (2010),

Violations of the restraint provisions of citations to discover assets justified a finding of contempt of
court and the appointment of a receiver to investigate the defendant-judgment debtors’ financial affairs, a panel of the Illinois Appellate Court has held.

On its face, the Illinois Collection Agency Act (225 ILCS 425) threatens violators with significant
criminal, administrative and other sanctions for violations of the myriad provisions summarized in Sharp
Thinking Nos. 65 and 66 (June 2012). Less obvious, but equally real, is the threat of civil lawsuits by the
debtors subject to collection activity.

In addition to requiring registration with the Department of Financial & Professional Regulation (see harp Thinking No. 65 (June 2012)), the Illinois Collection Agency Act (225 ILCS 425) contains a plethora
of provisions regulating collection agencies’ conduct. Some of these regulate the agency’s relations with its principal/creditor, but others regulate how agencies may go about attempting to collect the debts assigned to them. We will focus on the latter as they are more likely to result in claims of concern to Sharp Thinking readers.

A judgment obtained by a collection agency that sues in its own name without registering under the Collection Agency Act (225 ILCS 425) is void, an Illinois Appellate Court panel has ruled. However, when registered and holding a written assignment separate from the contract listing the debt with the agency, a
collection agency may sue to collect in its own name, even though it is only an assignee for collection,
another panel has ruled.

As noted in the last two issues of Sharp Thinking, the Fair Debt Collection Practices Act (15 U.S.C.
§§ 1692 et seq.) (“FDCPA”) contains numerous provisions which threaten liability for debt collectors in
the collection of consumer debt. In this issue we address remedies for violations of that Act and
affirmative defenses which can allow collectors to prevail despite a violation.

Individuals who are mistakenly dunned by debt collectors have standing to seek relief under the
Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692 et seq. (“FDCPA”), a federal appeals court ruled recently. However, debts not arising from consensual consumer transactions for goods or services are
not “debts” covered by that act, another appeals court has ruled.

The Obama Administration’s Home Affordable Mortgage Program (“HAMP”) does not contain a
federal private right to sue for violation of its terms, but it also does not preempt otherwise viable state law claims which incorporate terms and standards of the federal program, a federal appeals court in
Chicago ruled last month.