Tuesday, January 29, 2013

Title Insurance Underwriter Cautions Its Ohio Agents Of Effect Of New Case Law Regarding Foreclosure Standing Requirements

From the General Title Insurance Company Blog:

  • The Fed. Home Mtg Corp. v. Schwartzwald case recently decided by the Ohio Supreme Court has turned foreclosure standing requirements around.

    This was the case in which the Ohio Supreme Court held that a lender must have standing to foreclose on the date the complaint is filed in order to proceed to final judgment. If they do not “hold” the mortgage and note, via assignment or otherwise, on the date the complaint is filed they are not the real party in interest for purposes of foreclosure and they are not entitled to a judgment through the jurisdiction of the court.

    As a result of this case, we required all Ohio title agents to use the following requirement on all future title insurance commitments with the admonishment that further guidance would be forthcoming: “Per the Ohio Supreme Court’s holding in Fed. Home Loan Mtge. Corp. v. Schwartzwald, 2012-Ohio-5017, the Insurer requires filing and proper service of a new Complaint in Foreclosure naming the assignee under Instrument dated DATE, and filed for record on DATE, in the YYYY County, Ohio Recorder’s Office, as the plaintiff and real party-in-interest in said action.”

    Since lack of jurisdiction cannot be cured by the passage of time, defeated with a laches or bona fide purchaser defense and impervious to prospective application, we must now take the steps to except the result of the Schwartzwald case entirely.

    Therefore, all Ohio title agents should replace the requirement above with the following language, including those transactions insuring the successful bidders at Sheriff’s Sale, or said purchaser’s lender and insuring parties to an REO transaction.

    What is the new guidance for Ohio title agents? In the event you find a foreclosure where at the time of the filing of the complaint the lender was not the holder of the note and mortgage, please use the following guidance for Ohio purchase transactions, including those involving Sheriff’s Sales and REO transactions:

    The Policy does not insure, and the Company will not be liable for attorney’s fees and defense costs, against loss or damage by reason of an attempt to void and set aside the foreclosure judgment and subsequent sale, or a decree voiding and setting aside the foreclosure judgment and subsequent sale, in case captioned ____________v. ____________, Case No. ___________, [name of county] Court of Common Pleas, Ohio.”

    The above-referenced exception must appear in both the title commitment and the title insurance policy.
For more, see Ohio Agents: Be Aware of Recent Ohio Case Law (Dec.10, 2012).

Thanks to Deontos for the heads-up.

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