The mortgagor and his wife owned their home as joint tenants. The mortgagor refinanced the home, signing an agreement with the mortgagee to obtain a loan. The wife also signed the mortgage agreement, but not the related promissory note. Under the wife’s signature, handwritten language read “soleley [sic] for the purpose of waiving homestead rights.” The couple later divorced, and as part of the divorce settlement, the mortgagor quitclaimed his interest in the house to the now-ex-wife, making her the sole owner of the property. Additionally, the ex-wife agreed to assume sole liability for “‘the mortgage, taxes, and insurance.’” The ex-wife eventually defaulted on the loan. The mortgagee filed a suit to foreclose on the mortgage. In response, the ex-wife filed suit to quiet title to the property, claiming ownership free and clear of the mortgage because she did not know her ex-husband mortgagor had refinanced the property, she was not the one who had received the loan funds, and she lacked knowledge of the contents of the mortgage entered into by her ex-husband. Essentially, the property owner argued that, because she lacked knowledge of or receipt of funds, she was not a “borrower” under the mortgage. In the consolidated foreclosure action, the mortgagee claimed that the ex-wife had ratified the mortgage by making payments and was estopped from denying the validity of the lien because she accepted the benefit of the mortgage by living on the property. The trial court granted summary judgment in favor of the mortgagee, would not quiet title, and denied the ex-wife’s subsequent motion to reconsider the matter. On appeal, the issues concerned whether the property owner also qualified as a mortgagor, and, if not, whether she remained liable for the loan under the theories of unjust enrichment, equitable subrogation, or equitable lien.
In Thomas v. U.S. Bank Trust, N.A., 258 N.E.3d 951 (Ill. App. Ct. 2025), the court reversed the lower court’s ruling on summary judgment and remanded for further proceedings. The court first explained that because the mortgagee’s answer had been verified and the property owner’s reply to the answer was unverified, the well-pleaded facts in the mortgagee’s verified answer were deemed admitted. As such, the court considered only the effect of the property owner’s signature on the mortgage with the handwritten qualifying language and the lack of her signature on the note. The court distinguished the joint tenancy here from a tenancy by the entirety in Berg v. eHome Credit Corp., concluding that the mortgagor could mortgage solely his own interest in the property, rather than encumber the entire property with the mortgage. 848 F. Supp. 2d 841 (N.D. Ill. 2012). Additionally, the court found that, despite her signature on the mortgage agreement, the property owner was not a borrower due to the handwritten language beneath her signature and the absence of her signature from the promissory note. In reaching that conclusion, the court interpreted the language of the agreement as a whole, giving effect to each provision and not rendering any language meaningless. As such, the ex-husband mortgagor was the sole borrower, and his undivided half-interest in the property was the only part of the property encumbered by the mortgage. Based on that finding, the court then addressed whether it could affirm the trial court’s finding of liability on the part of the property owner from the record. The appellate court held that the unjust enrichment claim failed because the five-year statute of limitations had run. The court held that the equitable lien and equitable subrogation claims also failed because the mortgagee sought “to enforce the latest agreement instead of reinstituting the last valid agreement.” The appellate court also would not quiet title because of the encumbrance on the ex-husband’s undivided half-interest in the property under the mortgage. The court found that the conveyance of the home to the property owner as a part of the divorce judgment transferred the mortgagor’s encumbered interest in the property to the property owner. Accordingly, the court reversed and remanded to allow foreclosure on the encumbered half-interest in the property.
By Taylor O’Brien [email protected]
Edited By Kristin Meurer [email protected]
Edited By Hayden Mariott [email protected]