Another Rubber-Stamped Foreclosure Judgment Gets The Boot From Appeals Court; Trial Judge Fails To Apply Binding Precedent To Standing-Lacking Lender

The Court of Appeals for the First Appellate District of Ohio recently ruled (footnotes omitted, my emphasis added):

• Defendants-appellants Jamie and Gary Gindele appeal the summary judgment entered for plaintiff-appellee Bank of New York on its foreclosure complaint. On appeal, the Gindeles argue that Bank of New York did not acquire its interest until after the foreclosure complaint had been filed, and that under our holding in Wells Fargo Bank, N.A. v. Byrd,(1) Bank of New York’s complaint should have been dismissed without prejudice. We agree.

• In Byrd, we held that “in a foreclosure action, a bank that was not the mortgagee when suit was filed cannot cure its lack of standing by subsequently obtaining an interest in the mortgage.” [...] A thorough review of the record reveals that the sole indication of its interest as mortgagee is an after-acquired assignment; and the bank failed to produce any evidence in the trial court affirmatively establishing a preexisting interest.

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• We likewise reject Bank of New York’s argument that the real party in interest when the lawsuit was filed was later joined by the Gindeles. We are convinced that the later joinder of the real party in interest could not have cured the Bank of New York’s lack of standing when it filed its foreclosure complaint.

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• In a foreclosure action, absent understandable mistake or circumstances where the identity of a party is difficult or impossible to ascertain, a bank that was not the mortgagee when suit was filed cannot cure its lack of standing by subsequently obtaining an interest in the mortgage. Bank of New York failed to establish an enforceable interest that existed at the time it filed suit, and it has not alleged or proved understandable mistake or that the identity of the proper party was not readily ascertainable. Bank of New York’s complaint in foreclosure should have been dismissed without prejudice under Byrd.

For the entire ruling, see Bank of New York v. Gindele, 2010-Ohio-542 (2/19/2010).

(1) 178 Ohio App.3d 285, 2008-Ohio-4603, 897 N.E.2d 722.