Attorneys & Counselors


Illinois Mortgage Foreclosure Law provides two types of defenses: (1) pleas in abatement that defeat the suit but not the cause of action, and (2) defenses that wholly or partially defeat the cause of action. The second type of defense is generally referred to as an affirmative defense, which must actually be a defense to the foreclosure lawsuit. When an affirmative defense is asserted, the failure to reply within 21 days of the last day allowed for filing the answer constitutes an admission of the defense. Counterclaims differ from affirmative defenses in that counterclaims seek affirmative relief, whereas affirmative defenses attempt to defeat the plaintiff’s cause of action. The following list includes a sample of some of the defenses and counterclaims that could potentially be available to a borrower facing foreclosure.


TILA violation

Congress enacted the Truth in Lending Act (TILA) for the general purpose of standardizing credit disclosures to consumers. TILA is codified at 15 U.S.C. §1601 and implemented by Regulation Z, codified at 12 C.F.R. §226. It applies to loans on properties with 4 units or less.  TILA does not apply to business, commercial, agricultural or investment purchases. Violations of TILA can include failing to make disclosures regarding the amount of the loan, finance charge, annual percentage rate, the amount financed and the borrower’s right to rescind.  In Illinois, there is a three-year statute of limitations on a borrower’s right to rescind the contract under TILA, running from the date of the loan. When a lender violates TILA in a way that does not justify rescission, it may also be possible to hold the lender liable for damages. It is also important to note that the right to rescind applies only to transactions secured by the borrower’s principal dwelling and non-purchase money mortgages (refinances).

The Home Ownership and Equity Protection Act (HOEPA) is an act within Regulation Z of TILA that contains a number of rules regulating high cost refinance loans. Material violations of HOEPA can result not only in rescission of the mortgage transaction, but also statutory damages equal to the sum of all finance charges and fees paid by the consumer.

RESPA violation

Passed in 1974, The Real Estate Settlement Procedures Act (RESPA) applies to all federally-related loans secured by the family home and was created with the intention of eliminating kickbacks that unnecessarily increased the cost of settlement services. It also reduces the requisite amount to be placed in escrow for property taxes and insurance payments, and results in more effective disclosure of settlement costs. The statute of limitations in Illinois for a violation of RESPA ranges from one year to three years, depending on which section of the act was violated. The amount of statutory and actual damages available for recovery also vary widely, depending on which section of the act was violated. RESPA is codified at 12 U.S.C. §2601 et seq. and implemented by Regulation X, which begins at 24 C.F.R. §3500. 

FDCPA violation

The Fair Debt Collections Practices Act (FDCPA), codified at 15 U.S.C. §1692 et seq., was enacted to give added protections to consumers who have been pursued by abusive debt collectors. An example of one of these protections is the requirement that the debt collector must cease communication with the borrower when the borrower notifies the collector in writing of his desire for ceasing communication. It also places a number of requirements on the debt collector if the borrower disputes the account. The Act also states that any attorneys fees or charges imposed by the debt collector that were not expressly authorized by the mortgage contract constitute violations. A debt collector who violates the FDCPA may be liable for any actual damages sustained by the violation, additional damages up to $1000 and the costs of the action, including reasonable attorneys fees.

ECOA violation

The Equal Credit Opportunity Act (ECOA), codified at 15 U.S.C. §1691 et seq., prohibits lenders from discriminating based on race, color, religion, national origin, sex or marital status. A violation of the ECOA may also constitute a violation of the Fair Housing Act, codified at 42 U.S.C. 3601 et seq. The Home Mortgage Disclosure Act (HMDA) requires financial institutions to report information related to this act to the public.  The statute of limitations for an ECOA claim is two years. Violations of this act could subject the lender to the borrower’s actual damages, attorneys fees and punitive damages up to $10,000.

HAMP violation

The Illinois Mortgage Foreclosure Law [735 ILCS 5/15-1508(d)(5)] provides that a lender cannot file a new foreclosure suit or sell a foreclosed property while a HAMP application is pending review. Violation of this rule requires Illinois courts to vacate the sale of the property.

Real party in interest

Foreclosure lawsuits in Illinois must be brought in the name of the party who has a legal right to foreclose on the property. The capacity that grants this right to file suit is called “standing”. The note is typically a negotiable instrument, which can be freely transferred by an indorsement or assignment. Similarly, the mortgage, which grants a security interest to the lender in the property, may be transferred by an assignment (but not an indorsement). When the ownership of these documents changes from party to party, the plaintiff must show a proper chain of title in order to show the court it has standing to file the foreclosure action. If the borrower can prove that the plaintiff does not have standing, Illinois courts will sometimes grant a motion to dismiss the lawsuit.

Breach of contract

Under Illinois common law, to show a breach of contract, the party claiming breach must demonstrate: (1) the existence of a valid and enforceable contract; (2) its performance of the contract; (3) breach of contract by the other party; and (4) resulting injury. See Preibe v. Autobarn, Ltd., 240 F.3d 584, 587 (7th Cir. 2001). A breach of contract may be used as an affirmative defense or as a counterclaim, depending upon the breach. Potential recovery for a breach of contract can vary greatly depending on the materiality of the breach. A court could order a provision void, the entire contract void, specific performance or damages.


Illinois recognizes two types of unconscionability – procedural and substantive. Procedural unconscionability general involves oppression or an unfair surprise resulting from a disparity in bargaining power or lack of meaningful choice. Factors to consider can include: the age and education level of the borrower, the inability of the borrower to understand or read the language of the contract, manipulation resulting in oppressive terms, last minute interest rate hikes, a failure to provide accurate required disclosures, etc. Substantive unconscionability, on the other hand, focuses on the actual contract terms, which are unreasonably harsh and so one-sided as to shock the conscience. Factors to consider can include: a disclaimer of warranties, waiver of remedy clauses, liquidated damages clauses, gross disparities between other loans on the market that like situated consumers could obtain, negative amortization loan terms, etc. Courts generally assume each party got what it sought from the transaction, so unconscionability can be very difficult to prove. However, in some circumstances it can provide a borrower with an affirmative defense or counterclaim.

Failure to attach mortgage or note to Complaint

The lender’s failure to attach the mortgage or the note to the Complaint is a procedural defect that can be attacked with a motion to dismiss. Even if the lender attaches the mortgage and note, the documents may be defective in some way. If the terms are inconsistent or in some cases impossible, there may be a defense available. The recoveries for defective mortgages and notes will vary greatly, depending upon the terms that are defective.

Insufficient service of process

In Illinois, service is proper if a summons is served: (1) by the sheriff of your county, or (2) by a licensed process server, or (3) in some cases by publication. The sheriff or licensed process server can properly serve an individual by: (1) giving the summons and complaint to the party personally at their home or another location, or (2) giving the summons and complaint to someone who lives with the party who is at least 13 years old. If the borrower can prove that the service of process was insufficient, the Court may grant a motion to dismiss or a motion to quash service of process. 

Predatory lending

Predatory lending is an equitable defense that can encompass a number of different abusive actions taken by lenders in order to secure a loan. Some signs associated with predatory lending include, but are not limited to: frequent refinancing, extraordinarily high interest rates, deceptive promises or high pressure sales tactics, bait and switch of loan terms at closing, inflated income on loan application, balloon payments in short-term transactions, unreasonably high financing fees or other related charges. Courts have great leeway in determining the recovery available to a borrower who has been a victim of predatory lending practices.