                                                                     FIRST DIVISION
                                                                     December 3, 2010




No. 1-09-2345



MORTGAGE ELECTRONIC REGISTRATION                                 )      Appeal from the
SYSTEMS, INC.,                                                   )      Circuit Court of
                                                                 )      Cook County
                Plaintiff-Appellee,                              )
                                                                 )      No. 08 CH 3725
       v.                                                        )
                                                                 )
JESSIE BARNES,                                                   )      Honorable
                                                                 )      Jessie G. Reyes,
                Defendant-Appellant.                             )      Judge Presiding.


       JUSTICE LAMPKIN delivered the opinion of the court:

       In this mortgage foreclosure action, defendant Jessie Barnes appeals the circuit court’s

denial of her petition to vacate the foreclosure judgment and sale and to deny the confirmation of

the sale. Defendant argues that plaintiff Mortgage Electronic Registration Systems, Inc.

(MERS), did not have standing to prosecute this foreclosure action and, thus, the circuit court

orders rendered in favor of MERS were void. For the reasons that follow, we affirm the

judgment of the circuit court.

                                       I. BACKGROUND

       In January 2008, plaintiff MERS filed a complaint to foreclose a mortgage against

defendant Barnes, pursuant to sections 15-1504(a)(1) through (a)(3) of the Illinois Mortgage

Foreclosure Law (Foreclosure Law) (735 ILCS 5/15-1504(a)(1) through (a)(3) (West 2008)).

MERS alleged, inter alia, that it was the mortgagee, defendant was in default of her residential
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mortgage loan for $278,113.44 in unpaid principle, and MERS brought the suit as the legal

holder of the indebtedness. MERS attached to its complaint a copy of the mortgage and the note.

The mortgage defined defendant as the borrower, First NLC Financial Services, L.L.C., as the

lender, and MERS as the nominee of the lender and the lender’s successors and assigns. The

definitions section of the mortgage also stated that “MERS is the mortgagee under this Security

Instrument.” Further, page three of the mortgage provided, in pertinent part:

       “Borrower understands and agrees that MERS holds only legal title to the interests

       granted by Borrower in this Security Instrument, but, if necessary to comply with

       law or custom, MERS (as nominee for Lender and Lender’s successors and

       assigns) has the right: to exercise any or all of those interests, including, but not

       limited to, the right to foreclose and sell a Property; and to take any action

       required of Lender including, but not limited to, releasing and cancelling this

       Security Instrument.” (Emphasis added.)

The note secured by the mortgage provided that the lender could transfer the note, and anyone

who took the note by transfer and was entitled to receive payments under the note was “called the

Note Holder.”

       MERS’s complaint was served on defendant on January 31, 2008, but she did not file an

answer, so default orders and a judgment of foreclosure were entered in May 2008. In August

2008, defendant filed an appearance, and the trial court granted her emergency motion to stay the

foreclosure sale until September 29, 2008. On September 30, 2008, MERS offered the highest

and best bid of $221,000, and the property was sold to MERS.


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       In May 2009, MERS moved the circuit court for an order approving the report of sale and

distribution. Defendant, however, filed a petition to vacate the foreclosure judgment and sale and

to deny the confirmation of the sale, pursuant to section 2-1401(f) of the Code of Civil Procedure

(Code) (735 ILCS 5/2-1401(f) (West 2008)) and section 15-1508(b)(iv) of the Foreclosure Law

(735 ILCS 5/15-1508(b)(iv) (West 2008)). Specifically, defendant argued that the judgment of

foreclosure and sale was void because MERS had no interest in the debt secured by the mortgage

on the property. According to defendant, MERS was merely a for-profit electronic registration

and tracking system that some owners and holders of notes utilized to avoid paper transfers of the

ownership of notes and mortgages. Defendant asserted that MERS was not the true owner or

holder of the note and mortgage and, instead, just acted “as a library or holder of information

regarding the true owners and holders of notes and mortgages.” Defendant also argued that

MERS failed to attach any document to its complaint to show that the promissory note had been

assigned to MERS for value.

       In July 2009, the circuit court denied defendant’s petition to vacate the foreclosure

judgment and to deny confirmation of the sale, noting that it was a final and appealable order.

The circuit court also granted MERS’s motion for an order approving the sale but stayed

execution of the order until August 20, 2009. Thereafter, defendant moved the circuit court to

stay enforcement of its July 2009 orders pending disposition of her appeal. The circuit court,

however, denied defendant’s motion to stay, noting that no notice of appeal had been filed yet.

       On September 16, 2009, this court allowed defendant’s motion to file a late notice of

appeal. This court also granted defendant a stay of enforcement of the July possession order until


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further order of this court.

                                           II. ANALYSIS

        Section 15-1508(b) of the Foreclosure Law confers broad discretion on circuit courts in

approving or disapproving judicial sales, and that exercise of discretion will not be disturbed

absent an abuse of discretion. Household Bank, FSB v. Lewis, 229 Ill. 2d 173, 178 (2008).

Defendant, however, argues that her appeal is brought from the circuit court’s denial of her

petition under section 2-1401 of the Code challenging standing, an issue of law, and therefore the

standard of review on appeal is de novo.

        Defendant misstates the procedural posture of this case. Section 2-1401 of the Code,

which provides relief from final orders and judgments after 30 days from entry thereof, is not

applicable here. When defendant filed her May 2009 section 2-1401 petition, the May 2008

foreclosure judgment was not final and appealable yet because the circuit court did not expressly

find that there was no just reason for delaying appeal and MERS’s motion to confirm the sale

was pending before the circuit court. See In re Marriage of Verdung, 126 Ill. 2d 542, 555 (1989)

(unless the court includes Supreme Court Rule 304(a) (now see 210 Ill. 2d R. 304(a)) language, a

mortgage foreclosure judgment is not final and appealable until the court enters an order

approving the sale and directing the distribution).

        Nor was relief available to defendant under section 2-1301(e) of the Code, which

provides that the court may, in its discretion, before final order or judgment, set aside any default

and may on motion filed within 30 days after entry thereof set aside any final order or judgment

upon any terms and condition that shall be reasonable. 735 ILCS 5/2-1301(e) (West 2008). The


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Foreclosure Law governs the mode of procedure for mortgage foreclosures in Illinois (Plaza

Bank v. Kappel, 334 Ill. App. 3d 847 (2002)), and “any inconsistent statutory provisions shall not

be applicable” (735 ILCS 5/15-1107(a) (West 2008)). Section 15-1508(b) of the Foreclosure

Law provides that, after the foreclosure judgment and judicial sale, the circuit court shall confirm

the sale unless the court finds that (i) a required notice was not given, (ii) the terms of the sale

were unconscionable, (iii) the sale was conducted fraudulently, or (iv) that justice was otherwise

not done. 735 ILCS 5/15-1508(b) (West 2008). Because section 15-1508(b) limits the court’s

discretion to refuse confirmation of the sale to those four specified grounds, it is more restrictive

than and, thus, inconsistent with section 2-1301(e) of the Code. If section 15-1508(b) of the

Foreclosure Law did not prevail over section 2-1301(e) of the Code, then the latter would

eviscerate the former because parties could thwart section 15-1508(b) by filing petitions to vacate

nonfinal judgments even after foreclosure sales have been held. Such a practice would

undermine the sale process because bidders would have no confidence that sales would be

confirmed. Therefore, defendant could not utilize section 2-1301(e) of the Code to circumvent

section 15-1508(b) of the Foreclosure Law after MERS filed its motion to approve the sale.

        Defendant also contends that a void judgment can be challenged at any time, and the

circuit court should have vacated the foreclosure judgment as void for lack of subject matter

jurisdiction. In her initial appellate brief, defendant argues that MERS was not the real party in

interest because it was not the true owner or holder of the promissory note and mortgage.

Defendant claims that she did not owe MERS any money and MERS did not purchase the

promissory note in this case from the real party in interest. Defendant contends that, without any


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assignment of the note, MERS had no right to the underlying debt repayment secured by the

mortgage. According to defendant, no adverse interest existed between the parties here, MERS

did not suffer any injury in fact, and, as a result, MERS lacked standing to prosecute this

mortgage foreclosure lawsuit. Defendant concludes that MERS’s lack of standing based on the

lack of any injury in fact meant that true subject matter jurisdiction was not conferred on the

circuit court.

        In her reply brief, defendant seems to have modified her position somewhat. She clarifies

that she does not contest whether MERS had the right to file the lawsuit as the mortgagee or

nominee of the real party in interest. Rather, defendant–noting that MERS did not sue in the

capacity of an agent of a principle–contends that MERS failed to comply with section 15-

1504(a)(3)(N) of the Foreclosure Law, which provides that a plaintiff’s foreclosure complaint

may indicate the capacity in which the plaintiff brings the action, i.e., whether the plaintiff is the

legal holder of the indebtedness, a pledgee, an agent, the trustee under a trust deed or otherwise,

as appropriate. 735 ILCS 5/15-1504(a)(3)(N) (West 2008). Defendant complains that MERS

stated in its complaint that it was the legal holder of the debt and thereby incorrectly implied that

defendant owed money to MERS. Defendant, without citation to any relevant authority, claims

that the Foreclosure Law requires a plaintiff to identify the capacity in which it prosecutes its

lawsuit and this “rule” is the basis for the court’s subject matter jurisdiction. Defendant

complains that MERS did not state in its complaint that it was bringing the suit on behalf of the

actual owner of the note; rather, MERS incorrectly designated itself as the one to whom the debt

was owed and not as the agent for the real owner of the debt.


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       Essentially, defendant argues that the circuit court lacked jurisdiction because MERS

failed to plead proof of standing. We disagree. A foreclosure complaint is deemed sufficient if it

contains the statements and requests called for by the form set forth in section 15-1504(a) of the

Foreclosure Law (735 ILCS 5/15-1504(a) (West 2008)). 735 ILCS 5/15-1504(b) (West 2008).

MERS complied with that form, pled that it was the mortgagee and legal holder of the

indebtedness, and attached a copy of the note and mortgage to its complaint. MERS’s complaint

was legally and factually sufficient and included allegations relative to standing.

       To support her argument that MERS lacks standing, defendant complains that MERS’s

allegation in the complaint as the holder of indebtedness is contradicted by the designated payee

on the promissory note. She also complains that MERS did not attach any documents to its

complaint to show that the note was assigned to it for value, and that MERS stated that it was

suing in the capacity of the mortgagee, not as a nominee. Defendant acknowledges that she

failed to answer the complaint, was defaulted, and did not attempt to vacate her default until after

MERS filed a motion to confirm the sale. Nevertheless, she argues that standing is a

jurisdictional issue that can be raised at any time. We disagree.

       “The doctrine of standing is designed to preclude persons who have no interest in a

controversy from bringing suit,” and “assures that issues are raised only by those parties with a

real interest in the outcome of the controversy.” Glisson v. City of Marion, 188 Ill. 2d 211, 221

(1999). “[S]tanding requires some injury in fact to a legally cognizable interest ***.” Glisson,

188 Ill. 2d at 221. Our supreme court has stated that “lack of standing in a civil case is an

affirmative defense, which will be waived if not raised in a timely fashion in the trial court.”


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Greer v. Illinois Housing Development Authority, 122 Ill. 2d 462, 508 (1988); see also Lebron v.

Gottlieb Memorial Hospital, 237 Ill. 2d 217, 252-53 (2010) (the defendant has the burden to

plead and prove the affirmative defense of lack of standing, which will be forfeited if not timely

raised in the trial court, and, under Illinois law, issues of standing do not implicate the court’s

subject matter jurisdiction). Defendant failed to timely raise the standing issue before the circuit

court where she was properly served with the complaint but failed to answer it, was defaulted,

thereafter participated in the proceedings by successfully petitioning the court for a continuation

of the sale, and subsequently attempted to raise the standing issue after the foreclosure and sale

and in response to MERS’s motion to confirm the sale. Defendant forfeited the standing issue

through her default.

       Furthermore, defendant’s default resulted in her admission that MERS had standing. All

well-pleaded allegations of a complaint are considered admitted by a defendant when held in

default for failure to plead to the complaint. Eckel v. Bynum, 240 Ill. App. 3d 867, 873-74

(1992); Colonial Penn Insurance Co. v. Tachibana, 53 Ill. App. 3d 981, 982 (1977).

Accordingly, defendant admitted the well-pleaded allegations of the complaint when she was

held in default, including the allegation that MERS held an interest in the subject property.

       Defendant’s default notwithstanding, the record establishes that MERS had standing to

bring this foreclosure action. A plaintiff can maintain a lawsuit although the beneficial

ownership of the note is in another person. Kazunas v. Wright, 286 Ill. App. 554 (1936).

Furthermore, Illinois does not require that a foreclosure be filed by the owner of the note and

mortgage. Stalzer v. Blue, 312 Ill. App. 563 (1942); Replogle v. Scott, 299 Ill. App. 270 (1939);


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Bourke v. Hefter, 202 Ill. 321 (1903). Moreover, section 15-1504(3)(N) of the Foreclosure Law

indicates that the legal holder of the indebtedness, a pledgee, an agent, or a trustee may file the

case. 735 ILCS 5/15-1504(3)(N) (West 2008). In addition, the mortgage signed by the parties

indicated that MERS was the mortgagee, and MERS satisfied the statutory definition of a

mortgagee, which goes beyond just note holders to also encompass “any person designated or

authorized to act on behalf of such holder.” 735 ILCS 5/15-1208 (West 2008).

       According to the terms of the mortgage, MERS, as nominee for the lender, had authority

to act to enforce the mortgage. Specifically, the mortgage provided that, “if necessary to comply

with law or custom,” MERS had the right to exercise any or all of the interests granted by the

borrower in the mortgage, “including, but not limited to, the right to foreclose and sell [the]

property.” Under those terms, the parties agreed that MERS could bring foreclosure suits in its

own name. Because defendant expressly gave MERS the right to foreclose as nominee for the

lender, defendant cannot successfully contend now that MERS does not have standing in this

foreclosure proceeding.

       Furthermore, courts in other jurisdictions have found that MERS may bring foreclosure

suits in its own name. See, e.g., Mortgage Electronic Registration Systems, Inc. v. Coakley, 41

A.D.3d 674, 838 N.Y.S.2d 622 (2007) (MERS had standing to bring foreclosure action because

the note was transferred to it, and also because the mortgage terms expressly stated that MERS

had the right to foreclose in the event of a default); Mortgage Electronic Registration Systems,

Inc. v. Ventura, No. CV054003168S (Conn. Super. Ct. April 20, 2006) (MERS had standing to

foreclose as nominee for the lender); Mortgage Electronic Registration Systems, Inc. v. Azize,


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965 So. 2d 151, 153-54 (Fla. App. 2007) (MERS had standing to enforce the note and foreclose

the mortgage even though it lacked the beneficial interest in the note); Mortgage Electronic

Registration Systems, Inc. v. Revoredo, 955 So. 2d 33, 34 (Fla. App. 2007) (MERS had standing

to bring foreclosure action even though it did not own the note); Hilmon v. Mortgage Electronic

Registration Systems, Inc., No. 06-13055 (E.D. Mich. April 23, 2007) (even if MERS was not

the holder in due course of the note, as the named mortgagee it had a legal right to institute

foreclosure proceedings).

       Defendant cites case law from other jurisdictions that questioned MERS’s standing in

foreclosure actions. See, e.g., Mortgage Electronic Registration Systems, Inc. v. Rees, No.

CV03081773 (Conn. Super. Ct. September 4, 2003) (denying MERS summary judgment in a

foreclosure action because there was a genuine issue of material fact as to the ownership of the

note); Mortgage Electronic Registration Systems, Inc. v. Burek, No. 12488/03 (N.Y. Sup. June 7,

2004) (accord). Those cases, however, are not persuasive because there is no indication that they

involved a statutory definition of mortgagee similar to section 15-1208 of the Foreclosure Law,

pleading requirements similar to section 15-1504(a)(3)(N) of the Foreclosure Law, or judicial

admissions by default and forfeiture.

       Finally, defendant cannot establish that the circuit court abused its discretion in approving

the sale. The plain language of section 15-1508(b) requires the circuit court to confirm a

foreclosure sale unless it finds following a hearing that: (1) a required notice was not given; (2)

the terms of the sale were unconscionable; (3) the sale was conducted fraudulently; or (4) justice

otherwise was not done. 735 ILCS 5/15-1508(b) (West 2008). Defendant did not argue or


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present evidence that any of those four grounds existed to justify setting aside the sale. Her only

argument was the adequacy of MERS’s standing, but she forfeited that argument by her default.

Such default notwithstanding, MERS satisfies the definition of mortgagee in section 15-1208 of

the Foreclosure Law (735 ILCS 5/15-1208 (West 2008)), and the trial court could have exercised

its discretion to allow MERS to amend paragraph 3(N) of its complaint to reflect that it was

designated or authorized to act on behalf of the holder of the indebtedness. Because defendant

did not give the circuit court any reason to find that “justice was otherwise not done,” we

conclude that the trial court did not abuse its discretion in approving the sale.

                                        III. CONCLUSION

       For the foregoing reasons, the judgment of the circuit court confirming the sale of the

property in this case is affirmed. Our previously entered stay is vacated.

       Affirmed.

       HALL, P.J., and PATTI, J., concur.




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            REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT


            MO RT GA GE ELE CT RO NIC RE GIS TR AT ION SYS TE MS , INC .,

                                    Plaintiff-Appellee,

                                             v.

                                    JESSIE BARNES,

                                  De fendan t-Appellant.


                                    No. 1-09-2345

                                Ap pellate Co urt of Illinois
                             First District, FIRST DIVISION

                                   Decem ber 3, 2010


            Jus tice Bertina E. La m pkin auth ored the opinion of the cou rt:

                    Presiding Justice Ha ll and Jus tice Patti concur.


                    Ap peal from the Circuit Court of Cook C ounty.
                     The Hon. Jessie G. Reyes, Judge Presiding.


                     COUN SEL FOR PLAINTIFF-APPELLEE
            Freedman Anselmo Lindberg & Rappe LLC, Naperville, IL 60563
                         OF CO UNSEL: Douglas A. Oliver


                     COUNSEL FOR DEFENDANT-APPELLANT
                       Michael Harold Cole, Chicago, IL 60637




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