Key Points | ILLINOIS’ SECOND DISTRICT FINDS “NEW DEFAULT RULE” DOES NOT APPLY TO PREVENT DISMISSAL OF FORECLOSURE ACTION

1. Illinois’ Second District affirmed the dismissal of Wells Fargo’s complaint which was the bank’s third attempt to foreclose its mortgage lien against borrower Margaret Rodriguez (Rodriguez). Wells Fargo Bank, N.A. v. Rodriguez, 2024 IL App (3d) 230020, ¶ 1. Both the trial court and appellate court agreed that the single refiling rule prevented Wells Fargo from refiling its claim and both courts rejected Wells Fargo’s argument that the prior dismissals created a new cause of action under the new default rule.

2. The Second District explained that each of the three complaints Wells Fargo filed arose from “a single group of operative facts.” The Court also noted an important distinguishing factor in the Rodriguez case in that Wells Fargo accelerated the debt via its September 2012 acceleration letter not by filing the complaint. The Court agreed with Rodriguez that the loan remained in a constant state of default starting in October 2012 so there were no new installment payments coming due and no new defaults.

3. The Court surmised that only the second foreclosure action was permissible under the single refiling rule and affirmed the dismissal of Wells Fargo’s third complaint. This harsh result demonstrates the importance of a thorough review and analysis of the state of a loan prior to filing a foreclosure action, especially if the loan was previously accelerated. Due to the Court’s holding and the nuances raised by this case, we anticipate more litigation on the single refiling rule.

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