Last year, an Illinois Appellate Court ruled that unless the entity that issued a mortgage was licensed, the mortgage was invalid and unenforceable. As it so happens, in many cases, banks, including large national institutions like Wells Fargo issued mortgages through subsidiaries. The subsidiaries were never licensed, under the assumption that the bank's exempt status obviated any need for the subsidiary to seek a license.

The Appellate Court ruled otherwise. The Illinois Supreme Court declined to hear the parent banks' arguments and the Appellate Court ruling stands.

This gives a homeowners now faced with foreclosure an additional means of defense.  However, as the loans themselves are not disqualified, the value of the defense is limited -- but it does give homeowners a new tool to aid in bargaining with foreclosing lenders.