Thursday, November 15, 2012

Recent Ohio High Court Ruling Could Effect Thousands Of Closed Foreclosure Cases Across State

In Dayton, Ohio, the Dayton Daily News reports:

  • A unanimous Ohio Supreme Court ruling that invalidated the foreclosure of a Xenia couple’s home could have broader implications, effecting hundreds, if not thousands of closed cases across the Dayton region, according to local real estate attorneys.

    I think it’s going to be monumental,” said Randall Smith, staff attorney for the Miami Valley Fair Housing Center. “It’s now going to require lenders to be responsible.”

    For years, the standard practice across Ohio and other states has allowed lenders to file foreclosures even if they don’t have the proper paperwork in order — and can’t show that they own the property, according MVFHC Executive director Jim McCarthy. With mortgages being repackaged and resold repeatedly, the process has become sloppier and harder to track. But local courts have allowed the lawsuits to go forward, with the understanding that the proper paperwork will eventually catch up with those lawsuits.

    We, as consumer advocates, have been arguing that its improper, all along,” McCarthy said. “Just fundamentally, that sounds wrong.”

    On Oct. 31, the Ohio Supreme Court agreed, ruling that a party’s standing to initiate a mortgage foreclosure lawsuit is determined at the time of the filing — meaning that if the lender did not have proper paperwork to show ownership at the time of filing, that lawsuit can be voided.

    It’s unclear what the exact impact will be, and attorneys are trying to determine that. McCarthy called that “the multi-million dollar question.”
  • Here, it is undisputed that Federal Home Loan did not have standing at the time it commenced this foreclosure action,” Justice Terrence O’Donnell wrote in the Oct. 31 decision, which over-ruled the appeals court and caused dismissal of Freddie Mac’s case.

    This is kind of ‘first-year law school stuff,’” said attorney Andrew Engel, who represented the [homeowners], who said the lenders took a “file first, clean up the paperwork later” approach unheard of in other civil actions.
For more, see Court ruling could have broad impact on foreclosures.

For the ruling, see Fed. Home Loan Mtge. Corp. v. Schwartzwald, 2012-Ohio-5017 (Oh. October 31, 2012).

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