OHIO COURT DISMISSES FORECLOSURE ACTIONS BASED ON DOCUMENTATION ISSUE
On October 31, 2007, a judge in the United States District Court for the Northern District of Ohio dismissed, without prejudice, fourteen foreclosure complaints. The court dismissed the complaints because the plaintiffs failed to file copies of executed assignments demonstrating ownership of the mortgages as of the date the complaints were filed.
In each of the complaints, the plaintiffs alleged that they were the holders and owners of the note and mortgage, but the note and mortgage attached to the complaint identified the mortgagee as the original lending institution. In dismissing the complaints, the court emphasized that Ohio law requires an entity assigned an interest in real property to record the interest before it is entitled to receive a distribution from the sale of the property.
The court’s opinion criticized the typical industry practice of an assignee rushing to foreclose and obtaining a default judgment, but failing to record the assignment and thus avoiding responsibility for maintaining the property while reaping the benefits of interest accruing on the judgment. The court also quoted in the opinion plaintiff’s statement, “Judge, you just don’t understand how things work,” and opined that this line of reasoning revealed a “condescending mindset and quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process.”
As a result of this decision, homeowners may be able to gain more time to resolve foreclosure issues while assignees gather proper documentation. However, because the court dismissed the cases without prejudice, the plaintiffs are entitled re-file upon obtaining proof that they are the assignee of the mortgages and notes.
In a similar case pending in the United States District Court for the Southern District of Ohio involving twenty-seven foreclosure actions, the court granted alleged assignees thirty days, as of November 15, 2007, to submit documentation proving ownership as of the date the complaint was filed. If the assignees cannot provide proof of the assignments, the court will likely dismiss the cases.
- Elizabeth Anstaett