- Illinois’ First District Appellate Court affirmed the dismissal of a foreclosure action filed by the purchase money mortgagee finding the subsequent purchaser, PP Fin Chicago (PP FIN), to be a bonafide purchaser and the subsequent mortgagee, Federal National Mortgage Association (FNMA), to be a bonafide mortgagee having no notice that a release of the purchase money mortgage was in fact fraudulently executed and recorded. 5201 Washington Invs. LLC v. EquityBuild, Inc., 2024 IL App (1st) 231403-U, ¶¶ 1, 8.
- Plaintiff, 5201 Washington Invs., LLC (the LLC), appealed the dismissal and argued that PP FIN was not a bonafide purchaser and FNMA was not a bonafide mortgagee because (1) they had notice of the 2015 Mortgage which was timely recorded; (2) The LLC’s servicer, EBF, lacked “apparent authority to execute a release” of the 2015 Mortgage; and (3) PP FIN and FNMA had a duty to inquire further as to EBF’s authority, or lack thereof, to execute the release.
- The appellate court rejected each of these arguments concluding that the 2015 Mortgage provided EBF with at least the apparent authority either as the Lender or as the Lender’s “legal representative” to execute the release on the LLC’s behalf. The Court elaborated that PP FIN’s and FNMA’s reliance on the “chain of title, the recorded Release, a ‘clean’ title evidenced by the purchaser/mortgagee title policies, and the absence of clear proof of fraud or bad faith” meant that neither PP FIN nor FNMA had constructive notice of the LLC’s adverse interest. The Court affirmed the circuit court’s order of dismissal with prejudice.
Click here to read the full article
