Katie bar the door: Deficiency judgment okay with abode service

I recently ran across a new Cook County case and, while the case is interesting, I hesitate to even bring it up because everyone will think that it’s open season now for deficiency judgments in Illinois.

Trust me, it’s not. Deficiency judgments are still nonexistent to rare in Illinois.

The case is Metrobank v. Cannatello, 2012 Ill App 1st 110529. Here’s what happened: Cannatello borrowed almost $200k for a multi-family property in the south side of Chicago from Chicago Community Bank (Metrobank took over Chicago Community Bank along the way). A foreclosure was filed against him and the lender asked for a deficiency judgment of about $50k after the sheriff’s sale.

When the foreclosure started, a member of Mr. Cannatello’s family was served with the summons at his house. He lived elsewhere, not in the property being foreclosed. This is called “abobe” or “substitute” service. Any person over age 13 who answers the door at the defendant’s house can be served on the theory that  the person receving the summons will tell the defendant (and hopefully will not just throw it in the garbage). This applies to all civil cases, not just foreclosures.

To make a long story short, the court said that it was allowable to enter a deficiency judgment after abode service and that personal service on the defendant was not necessary. This is not really a surprising result.

What does this case mean? The case just makes it clear that a deficiency judgment can be entered if a member of your family accepts the summons.

Are lenders starting to get deficiency judgments? No. They are still very rare. This was a loan on a multi-family investment property from a small bank. I have said before that mortgages given by small, local lenders hold a much higher rise of deficiency judgments than your garden variety single-family home mortgage from Wells Fargo or Chase.
Should I answer the door if I am being served with a summons in a foreclosure? That is up to you.  The lender cannot get a deficiency judgment unless there is personal service (the summons is handed to you) or substitute service (summons is give to someone over age 13 at your house).  Deficiency judgments are still extremely rare, so if you are served with the summons it’s not the end of the world because it’s unlikely that a deficiency will ever be entered. But people are touchy about this and, to be honest, it seems like most of them do dodge service. I have talked to people during the period when the process server is trying to serve them and they are, shall be say, a tad jumpy about it, because it’s an unfamiliar situation, and they feel like quasi-criminals because someone is pursuing them. Some accept the summons because they literally can’t take the pressure for the two weeks that the process server attempts service.

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3 thoughts on “Katie bar the door: Deficiency judgment okay with abode service

  1. I have recently stopped making payments for my 1st and 2nd mortgages to Wells Fargo (both used as purchased money-never refinanced) on what was my primary residence for 5.5 years. I have been renting it for almost 3 years now. Tenants’ lease is up June 30th. I will be 3 months, going on 4 months delinquent when their lease expires. I told them I cannot renew their lease because I have to do a short sale. They are planning on moving out by June 30th but asked if they can rent month to month if need be after that. They are trying to buy a home before lease is up and want a time cushion if they can’t close and move into new home by then. I said ok, but only for up to 3 months, meaning they should be out definitely by September 30th. Can Wells Fargo do substitute service to my renters? And what are the odds they would even be trying to serve me by then? I live in Florida now and have for almost 3 years. Is it possible for them to serve me personally down here? Also, I have heard of them trying to serve people at their parents’ house. Can they do that? My mom lives in Illinois about 30 minutes from the property I am delinquent on. I was set on doing a short sale, but now I am wondering if strategic default is better if they cannot serve me personally and get a deficiency judgement. Plus I don’t know if my “hardship” and financials will qualify me for a short sale. I’m prepared to file bankruptcy if I have to. I am using my rent income and paychecks to pay off all other debt (student loans/medical bills) and obviously my current living expenses and bills. Any advice would be appreciated.

  2. Hi Angie

    Service would have to be made on you, not on the tenants. If they have your address in Florida they will give it to the sheriff to serve you there. They sometimes serve the tenants, but usually not. Either way that is not service to you. I had one client served at a parent’s house. It’s not common. The rest of the situation is kind of complicated and I would have to talk it over with you in person. The major issues are: this can’t be claimed as aprimary residence pretty soon and you will owe tax on the 1099 and you have a second mortgage that will actively pursue you separately. If you qualify, you might have to consider filing a chapter 7. I will be happy to discuss it with you.


  3. A couple of comments on the Florida situation. If you own your home in FL and it is now a primary domicile – FL definition, not IRS – it is safe from judgments. All you need to do is “intend” to make it your home; a driver’s license at that address and voter registration make it virtually ironclad, as does the “homestead” application for county tax reduction.

    Secondly, depending on a few technicalities, you can be served in FL by publication. However, this is of little relevance because the home is not in FL. A technical difference is that it is really the home (assuming in FL for the example) that is being served. For a deficiency or any other personal suit YOU must be served personally. Frankly, if you dodge the server, he/she/it goes away. One fly in the ointment would be if the IL courts granted a judgment the plaintiff could file the judgment in FL as a lien. Not likely and within some technicalities that could be fought and vacated. If you are retired and your income is from pensions, IRAs and Social Security, you can ignore it because those can;’t be touched under FL law.

    My suggestion would be to hire an IL attorney to fight any foreclosure type issues in IL by the usual laundry list of complaints, forget the relevance. It is just a snowstorm of paperwork that a smart bank will avoid because of cost. Worst case, pay $5,000. at closing to make it all go away and you go on with your life.

    DO NOT fail to pay those student loans as the feds can withold those amo9unts from Social Security.

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