Attorney Dan Khwaja: Major reversal in Illinois in US Bank NA v. Hernandez

Editor’s Note:

A Rare Victory for Homeowners in Illinois

Sometimes, it’s the small wins that matter most in foreclosure defense. In U.S. Bank NA v. Hernandez, the Illinois Appellate Court vacated a foreclosure judgment against Jose and Maria Hernandez.

While the court held that U.S. Bank had standing, it found material questions of fact about whether the bank complied with HUD regulations — specifically, 24 C.F.R. § 203.604, which requires lenders to attempt a face-to-face meeting with borrowers before foreclosure.

This ruling means the Hernandez case has been remanded for further proceedings.

The Background of the Case

• Original lender: Franklin American Mortgage Company

• Assignments: Franklin → Countrywide → Bank of America → HUD → U.S. Bank

• Indorsements: The note bore undated indorsements, including a blank endorsement by Countrywide (executed before it merged into Bank of America in 2009).

The Hernandezes challenged:

1. Whether U.S. Bank had standing to foreclose.

2. Whether the bank complied with HUD’s servicing regulation (24 C.F.R. § 203.604) requiring a face-to-face meeting or reasonable attempts before foreclosure.

Standing: The Court’s View

The court ruled in favor of U.S. Bank on standing:

• Possession of a note indorsed in blank is sufficient to establish standing.

• Attaching a copy of the note to the complaint is prima facie evidence of ownership in Illinois foreclosure law.

• Defendants failed to rebut the presumption that U.S. Bank held the note when the case was filed.

HUD Compliance: Where U.S. Bank Failed

The real turning point was HUD servicing requirements:

• HUD requires a certified letter (via USPS) and at least one property visit before foreclosure.

• U.S. Bank presented a FedEx shipping label as proof of mailing.

• The Appeals Court ruled this was insufficient — a label does not prove dispatch or delivery.

As a result, the court vacated the foreclosure judgment and remanded the case.

Why This Matters for Homeowners

This case underscores key foreclosure defense strategies:

• Standing is difficult to challenge in Illinois unless there is strong evidence.

• HUD regulations can be powerful defenses when loans are FHA-insured. Failure to follow them can invalidate foreclosure proceedings.

• Banks often cut corners with fabricated, robo-signed, or incomplete documentation — but courts will act when properly challenged.

The Role of Attorney Dan Khwaja

Attorney Dan Khwaja of Chicago has achieved multiple appellate reversals, including:

• Lopez

• Hernandez

These are some of the only major Illinois foreclosure reversals since 2011. Mr. Khwaja will join Neil Garfield on The Foreclosure Show to discuss these cases and strategies for homeowners.

📍 Serving: Cook County ▪ Lake County ▪ DuPage County ▪ McHenry County ▪ Kane County ▪ Will County ▪ Kendall County ▪ Grundy County
🔗 Visit ilforeclosurelawyer.com

Conclusion

The U.S. Bank NA v. Hernandez decision shows that foreclosure judgments are not always final. Banks must comply with HUD’s regulations, and when they don’t, homeowners can fight back.

⚖️ Takeaway: If your FHA-insured loan is in foreclosure, always investigate whether the lender followed HUD’s face-to-face meeting requirements. A small technical detail could mean the difference between losing your home and winning your case.

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Tags: foreclosure defense
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