Ohio Foreclosure Issues

Ohio Attorney General Marc Dann’s efforts in the mortgage foreclosure arena hit some snags yesterday, with Hamilton County Magistrate Judge Michael Bachman not only rejecting Dann’s arguments, but commenting that the Court had “significant concerns regarding the ethical implications of the Attorney General’s actions.” (Article)

The Attorney General’s position is that lenders can’t foreclose unless they can show that they own the mortgage in default. Under Ohio law any transaction of an interest in real property must be in writing and recorded in the county where the property is situated [ ORC § 5301.25(A) ] Citing Civ.R. 10(D)(1) and Beneficial Mortgage of Ohio v. Jacobs, Dann ‘s motion to dismiss back in December put forth that “Ohio law requires a plaintiff in a foreclosure action attach to the complaint the mortgage deed and note forming the base of the suit.,” and that in the case here, those exhibits didn’t establish that ownership.

Aside from questioning the Attorney General’s motives, the Court dismissed the motion saying, in pertinent parts, that the controlling statute was that “under the Uniform Commercial Code as codified in Ohio, parties to a Note, subsequent holders of the Note, nonholders in possession of the Note who have rights of holders, and persons not in possession of the Note who are entitled to enforce the Note pursuant to other statutory requirements, may enforce the terms of the Note as to each other.” [ ORC § 1303.31(A) ];

“controlling case law states that the current holder of a note, despite having no part in the original transaction, is the real party in interest,” citing Conrad v. Rainey, 125 OSt. 326, 331-332 (1932); and, citing Stewart v. Hopkins, 30 Ohio St. 502, para. 6 of syllabus (1876), that, “as to the parties of a mortgage, longstanding Ohio case law holds that ‘under the laws of this state, an unrecorded mortgage, as between the parties thereto, is valid; and, as to all others, takes effect from the time it is left for record.” (Magistrate’s Decision)