Overview of Ohio Foreclosure Cases January 2013 July 2013 Stephanie Moes Legal Aid Society of Southwest Ohio, LLC AFFIDAVITS AT SUMMARY JUDGMENT Fed. Natl. Mtge. Assn. v. Brunner, 2013-Ohio-126 (6th Dist.) Sixth District holds that bank's affidavit fails to satisfy requirements of Civ. R. 56(E). FNMA filed motion for summary judgment supported solely by affidavit signed by individual from an unspecified company in an unspecified position who said that he had personal knowledge of relevant account records and information. Court concluded that merely asserting that affiant had personal knowledge was insufficient when affiant failed to identify his connection to FNMA or how he had knowledge of relevant records. Fifth Third Mortgage Co., v. Perry, 2013-Ohio-3308 (4th Dist.) Fourth District holds that affidavit by homeowner created genuine issue of material fact that defeated summary judgment motion of lender. Affidavit included facts that Fifth Third had entered into a payment plan with homeowners that would prevent Fifth Third from foreclosing on the home. Fifth Third presented a different version of the facts. Court addressed argument by Fifth Third's counsel that the homeowner's affidavit was "a self-serving affidavit containing no more than bald contradictions of the evidence offered by the moving party." Court explained that an affidavit is not invalid solely because it was executed by a party and submitted to aver facts in opposition to summary judgment. Question of whether affidavit is competent looks at whether it is made on personal knowledge. Because the homeowner's affidavit set forth matters within his personal knowledge, it should be considered. Fifth Third Mortgage Co. v. Wizzard, 2013-Ohio-3084 (12th Dist.) Court finds that homeowner's affidavit attesting that a notary was not present when she executed a mortgage did not create a genuine issue of material fact to defeat summary judgment motion. In reaching this conclusion, court finds that the affidavit was self-serving as it did not have any corroborating materials attached that supported the homeowner's statements. GMAC Mtge., L.L.C. v. Jackson, 2013-Ohio-2150 (3d Dist.) Homeowner opposed lender's motion for summary judgment with argument that lender had unclean hands when it advised homeowner to miss payments so he could participate in the loan modification process. Court finds that based on affidavit of homeowner, trial court properly granted summary judgment. Court notes that "it seems somewhat implausible that a bank would advise a client in good standing on his mortgage to miss payments." 1
CONSUMER SALES PRACTICES ACT Anderson v. Barclay's Capital Real Estate, Inc. 136 Ohio St.3d 31, 2013-Ohio-1933 Ohio Supreme Court holds that a borrower's residential mortgage loan is not a "consumer transaction" as defined in R.C. 1345.01(A) and that an entity that services a residential mortgage loan is not a "supplier" as defined in R.C. 1345.01(C). Pfeifer and O'Neill dissent. DEFAULT JUDGMENT CitiMtge., Inc. v. Fangman, 2013-Ohio-3316 (12th Dist.) In straightforward reading of Civ. R. 55(A), court finds that default judgment improperly entered when homeowner who had appeared in case was not provided with notice of a default hearing by plaintiff or the trial court and the trial court never held any hearing before entering a default judgment in favor of CitiMortgage. EQUITABLE ACTION Third Fed. Say. & Loan Assoc. of Cleveland v. Schlegal, 2013-Ohio-1978 (9th Dist.) Homeowner is widow who is on mortgage but not note. After death of her husband, lender accelerated the entire amount owed and refused to accept payments from the widow. Court first found that lender had not met its burden to prove that a default on the note had occurred. The court then said even if the husband's death did constitute a default, the trial court erred in granting the lender's motion for summary judgment "without first considering whether equity favored foreclosure." The court noted that foreclosure is a two-step process, and before a court may order foreclosure it must look at the equities. FHA U.S. Bank N.A. v. Stanze, 2013-Ohio-2474 (2d Dist.) Homeowners argue at summary judgment stage that lender was not entitled to foreclosure judgment because lender failed to comply with HUD loss mitigation regulations incorporated into the loan agreement. Homeowners had not raised this argument in their answer. Court held that whether compliance with HUD regulations is either a condition precedent or an affirmative defense, homeowners were required to plead it at answer stage. BAC Horne Loan Servicing, LP v. Taylor, 2013-Ohio-355 (9th Dist.) Ninth District follows First, Fourth, Fifth, and Second in finding that failure to follow HUD regulations governing FHA loss mitigation is a defense to foreclosure and prevented lender from obtaining foreclosure judgment at summary judgment stage. SALRF\SAM\PresentationsToreclosures\2013 Real Estate CBA 081213.docx 2
HAMP MODIFICATIONS Gilchrist v. Saxon Mtge Servs., 2013-Ohio-949 (10th Dist.) Homeowner filed claims against servicer for breached trial period plan. Homeowner alleged having made all three trial period plan payments and not receiving permanent modification under HAMP. Court found that lawsuit not brought against proper party. Saxon was only servicer and had signed the TPP merely as an attorney in fact for some trustee. Because Saxon was not a party to the TPP, court held it could not have breached it. REAL PARTY IN INTEREST/STANDING BAC Home Loans Servicing, LP v. Mapp, 2013-Ohio-2968 (12th Dist.) On May 28, 2010, MERS "acting solely as nominee for Countrywide assigned the mortgage to BAC Home Loans Servicing. At the time the mortgage was assigned, the homeowner stated that Countrywide no longer existed. The court interpreted the homeowner's motion for relief from judgment as a motion to vacate a void judgment because the court did not have jurisdiction. The court remanded to allow the trial court to determine whether MERS had the authority to assign the mortgage and/or the note as the nominee for Countrywide in light of the claim that Countrywide was no longer in existence when the mortgage was assigned to BAC. Deutsche Bank N.A. v. Whiteman, 2013-Ohio-1636 (10th Dist.) Homeowners raise defense that the assignments of the note and mortgage because they were executed by "robo-signers" and were in violation of PSA were fraudulent and invalid. Court reiterates its holding from a 2012 case that "because a debtor is not a party to the assignment of a note and mortgage, the debtor lacks standing to challenge their validity." Court further held that motion to dismiss under Civ. R. 12(B)(1) based on the fact that Plaintiff did not have standing was also of no merit. Court held that standing may not be challenged under a Civ. R. 12(B)(1) motion to dismiss. Court also found Schwartzwald inapplicable because assignment of note and mortgage and filing of complaint predated Schwartzwald. Fannie Mae v. Trahey, 2013-Ohio-3071 (9th Dist.) Fannie Mae files two copies of the promissory note in the case, each containing different endorsements. The first note attached to the complaint was indorsed by Sirva Mortgage in blank. The second note attached to the second amended complaint was indorsed by Sirva Mortgage to CitiMortgage and CitiMortgage indorsed this note in blank. Fannie Mae did not provide any evidence at time of summary judgment as to when the indorsements were made. Based on these two indorsements, the Court found genuine issue of material fact as to whether Fannie Mae was a holder of the promissory note at the time the complaint was filed. Fifth Third Mtge. Co. v. Orebaugh, 2013-Ohio-1730 (12 th Dist.) Court held that lender was real party in interest as holder of note although Fannie Mae owned the note and mortgage. 3
Flagstar Bank, FSB v. Harvey, 2013-Ohio-2666 (9th Dist.) In light of Ohio Supreme Court Schwartzwald decision, Ninth District remands to trial court to determine whether Flagstar Bank, FSB had standing when it filed its complaint. Question arose as to whether Plaintiff had standing based on assignments of mortgage evidencing transfers from MERS acting solely as nominee for Flagstar Bank, FSB, a Federally Chartered Savings Bank to Flagstar Bank, FSB and note that did not have the same chain of transfers as mortgages. Indymac Bank F.S.B. v. Borosh, 20130-Ohio-1180 (8th Dist.) Homeowners argue that foreclosure should be voided because IndyMac lacked standing to bring the foreclosure action under Schwartzwald. Court held that Schwartzwald did not apply to the case because IndyMac had amended its complaint as a matter of right to correct the issue prior to the Borosches filing a responsive pleading. Court finds that "even if IndyMac lacked standing when it filed the original complaint, it cured that defect by filing the amended complaint and attaching the assignment of the mortgage." Natl. City Real Estate Serv. L.L.C. v. Shields, 2013-Ohio-2839 (11th Dist.) Homeowner argues that Freddie Mac owned his loan and that this raised a genuine issue of material fact as to whether Natl. City was the holder of the note at the time of the foreclosure action. Court carefully walked through Ohio's version of U.C.C. to determine who may enforce a note. Under U.C.C., a holder of a note is not additionally required to prove it is the "owner." Court found that sufficient evidence in record showed that Natl. City was the holder of the note at the time that it filed its complaint. Homeowner had not presented evidence to rebut evidence of Natl. City. Homeowner also argued that a genuine issue of material fact existed regarding Natl. City's standing as Natl. City had submitted two versions of the note in different pleadings. One version contained no indorsement and the other was indorsed to Natl. City. Court found that homeowner failed to explain how the existence of these two "slightly-different' versions supported his claim that Natl. City lacked standing. U.S. Bank N.A. v. Gray, 2013-Ohio-3340 (10th Dist.) Court holds that a plaintiff can be a holder of a note sufficient to have standing in a foreclosure case by having "constructive possession" of a note. Constructive possession exists when an agent of the owner holds the note on behalf of the owner. The fact that SPS held the note on behalf of US Bank was sufficient to provide standing. Court also notes that to show standing, a plaintiff need only establish an interest in the note or mortgage at the time the suit is filed. To meet all elements to entitle it to foreclosure, however, court looks to see that plaintiff has established that it is the current holder of both the note and mortgage. U.S. Bank, N.A. v. Kapitula, 2013-Ohio-2638 (12th Dist.) Court upheld trial court default judgment finding no merit to argument that U.S. Bank lacked standing. Court found that the Kapitulas failed to present any evidence in support of their argument that U.S. Bank did not have standing other than an affidavit of Mr. Kapitula. 4
REDEMPTION RIGHT IN TAX FORECLOSURE In re Foreclosure of Liens for Delinquent Taxes v. Parcels of Land Encumbered with Delinquent Taxes, 2013-Ohio-1400 (5th Dist.) A tax foreclosure of land and a mobile home occurred and was purchased by a third party. Mortgagee Vanderbilt Mortgage filed motion to stay confirmation of sale and a notice of redemption. Vanderbilt Mortgage paid off the county tax bill to satisfy the county's interest in the property. Court held that Vanderbilt Mortgage did not have right to redeem the property prior to the confirmation of sheriff's sale. Court found that statute only gave former owner right of redemption. Court found that Vanderbilt Mortgage had ability to protect its interest by bidding at the sheriff s sale and that holding otherwise would undermine the integrity of sheriff's sales for tax delinquencies. STATUTE OF FRAUDS Fifth Third Mortgage Co. v. Perry, 2013-Ohio-3308 (4th Dist.) Court holds that an assumption of a mortgage is not barred by Statute of Frauds. Court also holds that oral agreements which merely extend the time of payment due under a mortgage debt are not barred by Statute of Frauds. VOLUNTARY DISMISSAL OF FORECLOSURE CASES Countrywide Home Loan Servicing v. Nichpor, 136 Ohio St.3d 55, 2013-Ohio-2083 Lender granted judgment. Sheriffs sale conducted, and property purchased by third party. Subsequently, lender filed a notice of voluntary dismissal and then re-filed the complaint. Ohio Supreme Court holds that after a judgment entry granting foreclosure and order of sale, the foreclosure action cannot be dismissed pursuant to Civ. R. 41(A)(1)(a). 5