When you’re at risk of losing your home, bad advice spreads fast.
For years, struggling homeowners in Illinois have heard myths like:
- “The bank can’t foreclose if they don’t produce the original note.”
- “If the loan was securitized, the lender lost their right to foreclose.”
These arguments have been recycled for over a decade in courtrooms, online forums, and YouTube videos, but they don’t reflect Illinois law. It’s time to set the record straight using actual case law, statutory authority, and plain English
What Is Securitization, And Why Does It Confuse Borrowers?
Securitization is the process of bundling home loans into trusts that sell securities to investors. While less common today, it remains a standard industry practice. These trusts often name Mortgage Electronic Registration Systems, Inc. (MERS) as their nominee, meaning MERS appears on the mortgage as a placeholder for the actual note holder.
Under Illinois law, MERS can initiate foreclosure as a “mortgagee” even if it doesn’t own the note. As held in MERS v. Barnes, 406 Ill. App. 3d 1 (2010), a foreclosure action may be pursued by “the legal holder of the indebtedness, a pledgee, an agent, or a trustee,” and “a plaintiff can maintain a lawsuit although the beneficial ownership of the note is in another person.”
Myth #1: The Lender Must Produce the Original Note
Illinois law does not require the original note to initiate foreclosure.
In CitiMortgage, Inc. v. Moran, 2014 IL App (1st) 132430, the court explained that neither the Illinois Mortgage Foreclosure Law (735 ILCS 5/15-1101 et seq.) nor Supreme Court Rule 113 requires the lender to submit the original note or prove ownership beyond attaching copies of the mortgage and note to the complaint.
As the court said plainly:
“The party holding the note is presumed to own it.” — Moran, ¶ 40.
In fact, when a note is endorsed in blank, it becomes a bearer instrument meaning whoever holds it has the right to enforce it. This principle comes from the Uniform Commercial Code:
“The person in possession of a note endorsed in blank is entitled to enforce it.” — 810 ILCS 5/3-205(b)
Even federal courts applying Illinois law agree. In U.S. Bank, N.A. v. Dunn, 2013 WL 1222054 (N.D. Ill.), the court stated:
“The mere fact that a copy of the note is attached to the complaint is itself prima facie evidence that the plaintiff owns the note.”
What the Law Actually Requires
To make a prima facie foreclosure case in Illinois, a lender must attach:
- A copy of the mortgage;
- A copy of the note;
- and the assignments or allonges.
That’s it. If those documents are attached, the burden shifts to the borrower to raise a valid legal defense. (Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380, ¶ 24.)
Myth #2: Securitization Voids the Right to Foreclose
During the foreclosure crisis, some borrowers turned to “securitization audits” claiming the loan’s transfer into a trust somehow stripped the lender of the right to foreclose.
Illinois courts have consistently rejected that theory.
- In CitiMortgage v. Jackson, 2018 IL App (3d) 170329-U, the court confirmed that securitization had no impact on the servicer’s standing to foreclose.
- In Wilmington Savings Fund Society, FSB v. Hardy, 2018 IL App (3d) 160474-U, the court reiterated:
“A plaintiff in a mortgage foreclosure action establishes a prima facie case by presenting the mortgage and the note.”
Even the Seventh Circuit, applying Illinois law, agreed. In Macon County v. MERSCORP, Inc., 742 F.3d 711 (7th Cir. 2014), the court ruled that Illinois does not require note ownership to be recorded.
Standing: It’s Your Burden, Not Theirs
Many borrowers think the plaintiff has to prove standing. Not so.
In Illinois, standing is an affirmative defense meaning it’s your burden to prove the plaintiff doesn’t have it. (See Lebron v. Gottlieb Memorial Hospital, 237 Ill. 2d 217 (2010); Wexler v. Wirtz Corp., 211 Ill. 2d 18 (2004)).
That’s why courts routinely reject standing arguments when borrowers fail to support them with a sworn affidavit. Cases like PNC Bank, N.A. v. Zubel, 2014 IL App (1st) 130976; Parkway Bank & Trust Co. v. Korzen, 2013 IL App (1st) 130380; and Wilmington Savings Fund Society v. Hardy all emphasize the same point: if you want to challenge the bank’s standing, you must present admissible evidence, not speculation, not internet theories, and not so-called “securitization audits.”
“Show Me the Note” Doesn’t Work in Illinois
This slogan became popular after a 2009 Chicago Tribune article quoted Congresswoman Marcy Kaptur telling borrowers to demand the original note. The advice went viral.
But in actual courtrooms, the argument has never held water in Illinois.
As early as First Federal Savings & Loan Ass’n v. Chicago Title & Trust Co., 155 Ill. App. 3d 664 (1987), Illinois courts have rejected the idea that production of the original note is required.
Courts Are Tired of “Paper Terrorism”
Judges across Illinois are increasingly critical of frivolous filings based on internet myths or “sovereign citizen” theories.
In one case, the court described such tactics as “counterproductive,” even citing FBI warnings that these abusive filings can amount to paper terrorism.
If you dispute the validity of a note or mortgage, you must do so under oath. Otherwise, under Illinois law, you’re deemed to have admitted the document’s authenticity. (See 735 ILCS 5/2-605(b); Hoxha v. LaSalle Nat’l Bank, 365 Ill. App. 3d 80 (2006).)
And if you knowingly swear to something false, that’s perjury.
When Standing Does Matter
Standing can still be a valid defense in narrow situations.
In Cogswell v. Citifinancial Mortgage Co., 624 F.3d 395 (7th Cir. 2010), the plaintiff failed to prove it held the note. The court denied foreclosure. Transferring a mortgage wasn’t enough without proving it was the note holder, the plaintiff lacked standing.
This is one of the few cases where courts did demand proof of note ownership. But such outcomes are rare and highly fact-specific.
Conclusion: Know the Law — Not the Myths
Foreclosure is serious, and misinformation only makes it worse.
Arguments like “they have to show the original note” or “securitization voids ownership” may sound compelling online, but they don’t hold up in Illinois courts. Relying on them can lead to devastating results, including default judgments and unnecessary delays.
If you’re facing foreclosure, don’t gamble on outdated internet theories. Talk to an experienced Illinois foreclosure defense attorney who understands the real law and can actually help you protect your rights.
