Foreclosure Reversals In Northern Ohio Appeals Court Gain Steam After Recent State Supreme Court Ruling

In Akron, Ohio, The Akron Legal News reports:

• An Ashtabula County court erred by granting summary judgment in a foreclosure case to a financial institution that had no ownership interest in the mortgage at the time, the 11th District Court of Appeals recently ruled.
  
  Self Help Ventures Fund sued Lois J. Jones of Conneaut in May 2010 after she defaulted on a $61,100 residential home loan from Sky Bank.
  
  According to case summary, Jones bought the home in 2007 before Sky Bank merged into Huntington National Bank. Self Help claimed it was the holder of the promissory note Jones defaulted on.
  
  But although Self Help attached copies of the note and mortgage to the complaint, both showed Sky Bank — not Self Help — was the creditor.
  
  About two months later, Huntington assigned the note and mortgage to Self Help. Self Help then filed a motion for summary judgment against Jones with the new documentation.
  
  The appellant argued Self Help lacked standing but did not dispute defaulting on the note.
  
  In March 2012, the trial court entered summary judgment and a decree in foreclosure against Jones. However, the trial court granted Jones’ stay of the sheriff’s sale pending appeal.
  
  In her appeal, Jones alleged Self Help did not hold the note when it filed the complaint, and therefore lacked standing.
  
  Self Help argued although it did not hold the mortgage when it filed the complaint, it acquired standing when it became the holder after the complaint was filed.
  
  In a 2-1 decision, the 11th District panel reversed the court’s summary judgment and ordered the trial court to dismiss the complaint without prejudice.
  
  The appellate court cited an identical issue before the Ohio Supreme Court in Schwartzwald, supra, in Federal Home Loan Mortgage Corp. v. Rufo. In that case, the [Ohio] Supreme Court held that standing is determined at the time of the complaint.
  
  “Further, the Court held that a mortgage holder cannot rely on events occurring after the complaint is filed to establish standing,” 11th District Judge Cynthia Westcott Rice stated. “Thus, the plaintiff cannot rely on Civ.R. 17(A) to cure its lack of standing by obtaining an interest in the subject of the litigation after the action is filed and substituting itself as the real party of interest.
  
  “Finally, the Court held that when the evidence demonstrates the mortgage lender lacked standing when the foreclosure action was filed, the action must be dismissed without prejudice.”
  
  11th District Judge Timothy P. Cannon concurred. Fellow appellate Judge Diane V. Grendell dissented, calling the dismissal of Self Help’s complaint unwarranted.
  
  “The better course for dealing with scenarios in which the plaintiff becomes a holder of the note and mortgage after the filing of the complaint was that followed by the Ohio Supreme Court in State ex rel. Jones v. Suster,” Grendell stated.
  
  “In that case, the court stated the following: `Although a court may have subject matter jurisdiction over an action, if a claim is asserted by one who is not the real party in interest then the party lacks standing to prosecute the action. The lack of standing may be cured by substituting the proper party so that a court otherwise having subject matter jurisdiction may proceed to adjudicate the matter.’ ”

For the story, see Court must dismiss foreclosure complaint due to lack of ownership.

For the ruling of the Ohio appeals court, see Self Help Ventures Fund v. Lois J. Jones, No. 2012-A-0014 (March 11, 2013).(1)

(1) Representing the homeowner in this case (as well as the successful homeowner in Federal Home Loan Mortgage Corp. v. Rufo) were Anne M. Reese and Philip D. Althouse of the Legal Aid Society of Cleveland, a non-profit public interest law firm that serves low income Ohioans in Ashtabula, Cuyahoga, Geauga, Lake and Lorain counties.