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» mediation programs in Illinois; the new rule will not change those processes. Practice and Procedure. Rule 113 will be the most impactful of the three. According to the court, it is intended to supplement, not replace, the Illinois Code of Civil Procedure that governs the state's foreclosure process. It imposes new legal obligations not required by the Illinois General Assembly when it passed the Illinois Mortgage Foreclosure Law. To begin with, the rule requires a copy of the note, "as it currently exists" with all indorsements and allonges, to be attached to the foreclosure complaint. This requirement is intended to address evidentiary issues and prevent unnecessary delays caused by discovery and motion practice (presumably motions to dismiss for failure to attach the note to the complaint). The rule does not make provision use of a lost note affidavit in the event the actual note is lost, destroyed, or stolen. However, the rule states that assignments of mortgage need not be attached to the complaint. The rule provides a form affidavit of amounts due and owing to prove up damages when moving for judgment. Presumably, use of the form affidavit is sufficient when moving for judgment, and it is recommended that all mortgagees and servicers use an affidavit substantially similar to the form affidavit when moving for entry of a judgment of foreclosure. The form affidavit requires mortgagees and servicers to adopt new affidavit execution procedures to ensure the affiant has requisite knowledge of the creation, storage, and production of business records. Early versions of the affidavit specifically referenced Lender Processing Services' (LPS) Mortgage Servicing Package (MSP). Servicers that subscribe to MSP may want to contact LPS to request the necessary training to ensure employees properly execute affidavits. Mortgagees and servicers that use proprietary or other commercially available servicing platforms should review their procedures to ensure the affiant can fill in the blanks relating to "the source of the information, method, and time of preparation of the record to establish the computer program produces an accurate record," and the name of the computer program or software used. The documents relied upon in executing the affidavit, as well as the defendant's payment history, must be attached to the affidavit. Rule 113 also requires the circuit clerk to notify the borrower of entry of the default and entry of the judgment of foreclosure. The required notice encourages a defaulted borrower to file a motion to vacate, and it must state the amount of the judgment. The rule also contains provisions for the appointment of private selling officers in all counties, notices of surplus funds, and the appointment of a special representative when foreclosing on a deceased mortgagor. Loss Mitigation Affidavit. Rule 114 requires the mortgagee to file an affidavit identifying the borrower's loss mitigation options and the status of those efforts at or prior to moving for entry of a judgment. While this affidavit is only required when the mortgagor has appeared or answered, it is recommended that the affidavit be filed prior to moving for judgment to avoid a situation where a borrower appears at the judgment hearing but does not contest entry of the judgment. When executing this affidavit, the affiant must be familiar with all loss mitigation options available, whether proprietary, through the investor or GSEs, federal regulators' consent orders, or the multistate servicing settlement. While the Illinois Supreme Court was slower to act than other high courts, the impact of the new rules cannot be understated. Mortgagees and servicers will have to review their processes to ensure proper documentation at the time of referral to an attorney. Further, affiants will now have to fully understand the servicing program used and testify that they are familiar with the program and that it is trustworthy. This "From the Bench" contribution was provided by Jonathan Nusgart, senior attorney with Freedman Anselmo Lindberg, LLC, in Naperville, Illinois. IN THE NEWS Fay Servicing Sees Annual Revenue Increase 250% Fay Servicing, a special servicer based in Chicago, announced annual revenue increased 250 percent in 2012. The special servicer says its growth is mainly due to the increase in business volumes from existing customers, as well as incentive fees from pay-for-performance deal structures. The improving supply of residential whole loans for sale has also attracted new clients to the servicer. Fay Servicing also touted success with borrowers who were 90 days or more past due. More than half of homeowners who were 90 days or more past due who began VISIT US ONLINE @ DSNEWS.COM using the company's servicing platform managed to avoid foreclosure, according to a company release. "Last year was an exciting year for us from a growth perspective, and we pride ourselves on being able to maintain a strong business while also helping borrowers," said Ed Fay, CEO of Fay Servicing. "We are committed to educating borrowers to help them make the best financial decisions and believe we will increase the number of borrowers that avoid foreclosure in 2013 with our mitigation efforts." Delinquency Rate Falls 14% from 2011, but Remains Elevated At the end of 2012, the national mortgage delinquency rate slid nearly 14 percent over a one-year period, while more than 80 percent of metropolitan areas saw their rates decline, according to a TransUnion report. The Chicago-based credit reporting bureau says the rate of mortgages past due 60 or more days dropped to 5.19 percent in Q 4 from 6.01 percent in the same quarter in 2011. The delinquency rate also declined 4 percent from 5.41 percent in Q 3, marking the fourth consecutive quarterly decrease. "The national mortgage delinquency rate experienced its largest yearly decline since the conclusion of the recession, though we still remain far above normal levels," said Tim Martin, group VP of U.S. housing at TransUnion. According to the credit bureau, a normal mortgage delinquency rate ranges from 1.5 to 2 percent. At its peak during the mortgage crises, the national delinquency rate shot up 54 percent in 2007, 53 percent in 2008, and 50 percent in 2009, TransUnion reported. Then, in 2010, the delinquency rate retreated, falling 7 percent in 2010, 6 percent in 2011, and now 14 in 2012. "For the most part, newer vintage mortgage loans are not the reason for the stubbornly high delinquency rate. They are performing relatively well," Martin explained. "The elevated delinquency levels that we still are experiencing are a result of older vintage loans—borrowers who haven't been making their payments for a rather long time that are still in the system, inflating the overall rate." From Q 3 to Q 4, 12 states saw an increase in their delinquency rate, and just three states experienced no improvement year-overyear, according to TransUnion. The three 91

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