The new Illinois Supreme Court rules on foreclosure actions do not exempt commercial loans or commercial properties. In fact, the Court’s loss mitigation rule itself expressly states that it applies to “all actions filed under the Illinois Mortgage Foreclosure Law . . . .”  Illinois Supreme Court Rule 114. All residential and commercial foreclosures are filed under this law, which is another name for Article XV of the Code of Civil Procedure, 735 ILCS 5/15-1101, et seq. Consequently, Rule 114, which addresses loss mitigation affidavits, does apply to commercial foreclosure actions.

Having said that, Supreme Court Rule 114 also expressly limits its application to foreclosure cases in which “a mortgagor has appeared or filed an answer or other responsive pleading.” In other words, if none of the mortgagors make an appearance in the case and it goes uncontested, no loss mitigation affidavit is required to be filed in the lawsuit.

Even when a loss mitigation affidavit is required (i.e., when a mortgagor makes an appearance in the case), Rule 114 does not require a loss mitigation affidavit to be filed with the initial foreclosure complaint, although the mortgagee may choose to do so. Rather, Rule 114 provides that the loss mitigation affidavit must be filed “prior to moving for a judgment of foreclosure” — which generally occurs near the end of the foreclosure proceeding. 

Consequently, if a mortgagor makes an appearance in your bank’s commercial foreclosure proceeding, your bank will need to file a loss mitigation affidavit at some point in the proceeding. However, it simply will need to check the option on the form stating that the borrower is ineligible for your loss mitigation programs because the mortgage is a commercial mortgage.