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Federal District Court Overturns Unfavorable Conveyances Act Decision

On February 28th, federal judge Michael McCuskey of the United States District Court for the Central District of Illinois reversed the decision of a bankruptcy court judge last year in which the bankruptcy court judge had concluded that Section 11 of Illinois’ Conveyances Act requires that a recorded mortgage must include the interest rate and maturity date of the underlying promissory note in order for the mortgage to survive a challenge by a Trustee in bankruptcy.

In ruling that the mortgage terms recited in Section 11 of the Conveyances Act represented a discretionary safe harbor rather than a mandate, Judge McCuskey cited for support recently enacted legislation initiated by CBAI that amended the Conveyances Act in a manner consistent with his February 28th opinion. Any CBAI member can request a copy of Judge McCuskey’s opinion in the case of Crane vs. The Gifford State Bank from CBAI General Counsel Jerry Cavanaugh or CBAI Paralegal Levette Shade by calling CBAI (800-736-2224) or e-mailing Jerry at jerryc@cbai.com or Levette at levettes@cbai.com.