Recent Supreme Court Decision Reducing Foreclosure Costs

    The Illinois Supreme Court recently found a provision of the Illinois Code of Civil Procedure requiring plaintiffs to pay additional filing fees in residential foreclosure actions to be unconstitutional. The implications of this ruling are significant, as it means that the costs to file new foreclosures in Illinois will be reduced by as much as $550 per filing.

    The court addressed §1504.1 of the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1504.1), which assessed charges of between $100 and $550 (commonly referred to as “Tier Fees”) to raise revenue for the Illinois Foreclosure Prevention Funds and the Illinois Abandoned Residential Property Fund. The plaintiff filed a class action, arguing that §1504.1 violated the constitutional right to obtain justice freely (the so-called “free access” clause) (Ill. Const. 1970, art. I, § 12). Walker v. Chasteen, 2021 IL 126086, ¶8.

    The Supreme Court agreed with the plaintiff, finding that —to pass constitutional muster, a filing fee must be related to services rendered by the courts or their maintenance. Id. at. ¶42. Finding no “direct, clear, and ascertainable” connection between the services provided by the social programs funded by the Tier Fees and the actual administration of foreclosure proceedings, the Court concluded that the fees violated the free access clause and held §1504.1 to be unconstitutional. Id. at ¶ 48.

    Most Illinois counties (most notably Cook, Lake, Will and DuPage) have already stopped assessing the Tier Fees and we expect the rest to soon follow. Where possible, we have also ceased voluntarily paying the Tier Fees in connection with new residential foreclosure actions.

    The class action lawsuit that resulted in this ruling remains pending and asks that all fees collected under §1504.1 be refunded. The parties are currently engaged in discovery to determine the amount and status of the Tier Fees collected by each county clerk. The Circuit Court of Will County will be assessing the refund request in the near future, and if it awards that relief, we will advise accordingly. In the interim, we recommend filing a few test motions requesting refunds of the Tier Fees in pending cases in other counties to determine how each county will handle such requests.

    Please reach out to us with any questions or concerns or to further discuss the impact of this ruling.