Key Points | ILLINOIS COURT REVERSED FORECLOSURE JUDGMENT FINDING MORTGAGE ONLY ENCUMBERED ONE-HALF OF THE REAL PROPERTY

1. Last month Illinois’ First District reversed a final judgment of foreclosure entered in favor of US Bank finding the mortgagor, Mr. Miller, only had a one-half interest in the property and could not mortgage more than he owned. Thomas v. U.S. Bank Tr., N.A., 2025 IL App (1st) 230439 (February 27, 2025). Mr. Miller and Ms. Thomas purchased their marital home as joint tenants. They took out a mortgage with RBC Mortgage Company (RBC) in 2002 and later refinanced that loan with a Wells Fargo loan. Only Mr. Miller signed the Wells Fargo note. Although Mr. Miller and Ms. Thomas both signed the mortgage, Ms. Thomas’ signature was qualified with language noting she was signing solely for the purpose of waiving her homestead rights.
2. Thomas and Mr. Miller divorced. As part of the martial settlement, Mr. Miller quitclaimed his interest in the marital home to Ms. Thomas who continued making mortgage payments until defaulting in 2017. Wells Fargo initiated foreclosure proceedings and then sold the loan to US Bank. Ms. Thomas sought to quiet title against US Bank asserting she “should be free of the mortgage” because she did not know Mr. Miller refinanced the property, she did not know that she was signing a mortgage in favor of Wells Fargo, and she did not personally receive the Wells Fargo mortgage proceeds. The trial court granted foreclosure, refused to quiet title against US Bank and Ms. Thomas appealed.
3. The First District reversed the foreclosure judgment because Ms. Thomas did not sign the Wells Fargo note and explicitly clarified that her signature on the mortgage was not as a co-borrower. The Court also found Mr. Miller could only take out a mortgage on his one-half interest since he owned the property with Ms. Thomas as a joint tenant. Lastly, the Court found US Bank’s equitable claims (unjust enrichment, equitable lien or equitable subrogation) to be meritless based on the statute of limitations and the fact US Bank sought to enforce the Wells Fargo loan instead of being subrogated to the RBC mortgage.

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