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Ohio Case Should Prompt Floridians Facing Foreclosure to Explore Legal Options

The Ohio Supreme Court made an important ruling late last month with regard to which entities have the right to pursue a foreclosure in that state.

Our Miami foreclosure lawyers understand that numerous loan servicers and so-called “foreclosure mill operators” had filed foreclosure proceedings in numerous foreclosure actions in Ohio. The problem, similarly to what has happened in countless cases in Florida, is that those bringing the lawsuits had no right to actually sue.

That was because, as the Supreme Court justices later ruled, the state’s constitution limits the parties to those that actually have a dispute with one another. This is simple logic. These services did not hold the title to these loans, and therefore do not have the right to sue when the loan goes into default. Essentially, Adam can’t sue Bob for a debt Bob owes to Carrol.

But that’s what’s been happening in courts throughout the country.

It started with what seemingly appeared to be a game of musical chairs. You had lenders and loan services who originated these predatory mortgages between 2001 and 2008. Those mortgages were then packaged and resold to bond holders on Wall Street. Around and around these mortgages were sold, further on down the line. However, the music stopped when the market collapsed. That meant whoever was holding the loan up to that point was likely not able to prove it, as it had changed hands so many times.

But most of the big lenders and loan servicers have outright ignored state laws that require someone to show proof of ownership before foreclosing – because they knew if they had to, they would be unable and therefore muscled their way through as many of these as they could before the robo-signing debacle was discovered.

And now, in Ohio at least, the courts have put a stop to this.

In this case, Duane and Julie Schwartzwald were facing foreclosure of their home by Federal Home Loan. However, Federal Home Loan filed this action before it had obtained an assignment of the promissory note and the mortgage securing this couples’ loan. On that basis, the Schwartzwald’s claimed Federal Home Loan lacked any standing to sue.

Initially, the trial court granted a summary judgment to Federal Home Loan, entering a foreclosure decree. The appellate court confirmed that ruling, deciding that the loan company had remedied its lack of standing by later obtaining an assignment from the real party in the interest.

The Supreme Court, however, ruled that standing is required for the company to invoke jurisdiction in the common pleas court in the very first place, and it is therefore determined as of the complaint filing.

In other words, a company can’t claim they are at some point going to gain ownership of the loan and file a foreclosure on that basis. They have to actually have the that title and other documents in hand.

This is why even if you are behind on your payments and are concerned about being removed from your home, you may have strong legal ground upon which to retain ownership.

Call us today to see how we can help.

If you’re battling foreclosure in Miami or the surrounding areas contact Jacobs Legal for a confidential appointment to discuss your rights. Call (305) 358-7991. Also, don’t miss Miami Foreclosure Attorney Bruce Jacobs on 880AM/the Biz, every Wednesday from 5 p.m. to 6 p.m. on “Mortgage Wars,” discussing foreclosure topics that matter to YOU.

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