Illinois Appellate Court holds that Fed Ex shipping label is not conclusive proof that HUD face to face meeting letter was sent

An Illinois Appellate Court recently reversed a mortgage foreclosure judgment finding there was a question of fact as to whether the mortgagee had sent the face to face meeting notice to the mortgagors in compliance with HUD rules.

In U.S. Bank Trust National Association v. Hernandez, 2017 IL App (2d) 160850 (Oct. 17, 2017), the mortgagors asserted as a defense to a foreclosure that the mortgagee failed to comply with HUD regulations requiring, among other things, that the mortgagee send a letter to a delinquent borrower offering to have a face-to-face interview. In support of its summary judgment motion, the mortgagee proffered an affidavit that attached a copy of the HUD-required letter and a Federal Express shipping label. The mortgagors complained that the notice was defective because the regulations require the letter be sent via certified mail from the U.S. Postal Service, not by Federal Express. In addition, the mortgagors averred that they did not receive the certified letter.

The trial court granted judgment in the lender’s favor, and borrowers appealed. On the question of the mortgagee’s compliance with the HUD regulations, the court declined to address whether the use of a private carrier can ever satisfy the applicable regulations. The question it focused on was whether the mortgagee proved the letter was “dispatched” and concluded that it did not.

The Federal Express label offered to demonstrate the letter was “dispatched”, by itself, did not prove that fact. Reviewing information culled from Federal Express’ website, the court determined the label was not proof that the sender actually dispatched the letter. The label is computer generated but the sender may not actually ship the letter after it generates the label. It noted that Federal Express offers proof of delivery but the mortgagee did not submit that proof. In light of the fact that the mortgagors denied receiving the notice and the mortgagee’s failure to prove it was sent, it was error to grant summary judgment.

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