Last November we reported to you that a federal judge in the Northern District of Ohio dismissed several foreclosure actions because the plaintiff had not recorded all assignments PRIOR to filing the foreclosure action and, therefore, had not shown that it was the current owner of the mortgage. We then reported that the Ohio Attorney General had entered the fray by filing motions to dismiss foreclosures in state court where the State of Ohio was a party and where the plaintiff had not recorded all assignments prior to filing the foreclosure. Now the issue has reached the United States Bankruptcy Court for the Southern District of Ohio in Dayton where on February 21, 2008 a trustee filed two adversaries(1), one a class action.
The crux of the trustee's complaint is his belief that:
1. The failure of the current mortgage owner to record all assignments of the mortgage prior to the filing of the bankruptcy petition makes the mortgage voidable and unenforceable; and
2. The trustee's interest in the real property is superior to the mortgage holder's interest because the assignments were not recorded.
The class action involves a loan that was included in a securitization trust and alleged failure to record assignments each step along the way in the securitization process. Both adversaries are in the preliminary stages.
WWR will continue to monitor this issue and advise you of important developments.
If you have any questions on this information, please contact Mr. John L. Day, Jr., Esq.
Mr. Day is a partner in the Bankruptcy Department of the Real Estate Default Group at Weltman, Weinberg & Reis Co., L.P.A. in Cincinnati, Ohio. Mr. Day can be reached at (513) 723-2206 or via e-mail at jday@weltman.com.
Client Advisory is published by Weltman, Weinberg & Reis Co., L.P.A., an organization providing comprehensive creditor representation. The information contained in this advisory is a summary of legal information and is not intended to constitute legal advice on specific matters or create an attorney-client relationship. Contact any of our offices or visit our website at realestatedefaultgroup.com for more real estate related information, company facts and attorney profiles. ©2008
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(1) Noland v. Homecomings Financial Network, Inc., Adversary No. 08-03080; Noland -v- Lehman Brothers Holdings, Inc., Adversary No. 08-03048