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CLIENT ADVISORY - December 4, 2007
Ohio Attorney General Enters Assignment of Mortgage Fray
by: Larry R. Rothenberg, Esq.
As we indicated in a recent advisory, some Federal Court judges in Ohio dismissed a number of pending Federal Court foreclosure cases, because the assignments of the mortgages to the plaintiffs, if any, were not dated prior to the dates the cases were filed. The Federal Court judges were assuming that a loan is not owned by the assignee until the assignment of the mortgage is signed.
We contend that the judges' assumption is clearly erroneous. Ohio law supports the concept that the purchaser of a loan becomes the owner of the loan upon closing of the sales transaction, even if the assignment of the mortgage is executed later. Hence, attorneys have always commenced foreclosures in Ohio while simultaneously following up for the execution of an appropriate assignment. As long as the assignment was obtained prior to filing a motion for judgment in the foreclosure case, there was never an issue. The position taken by the Federal Court judges was surprising. The State Courts, where the great majority of foreclosures are filed, are not required to follow the Federal Court's position, but may use their position as a precedent.
Ohio Attorney General, Marc Dann, has now entered the fray by filing motions to dismiss state court foreclosures where the assignment to the plaintiff was not submitted with the complaint. If we are served with such a motion in any of our cases, we will respond and attempt to avoid a dismissal. However, in view of the media firestorm unfairly portraying lenders as not complying with the rules, the Federal Court dismissals, and now the Attorney General's action, there can be no guaranty that the state court judges will listen to our side.
A dismissal of a case that has been pending for any period of time is obviously costly, both in terms of time and money. One firm even had a case dismissed "with prejudice," which is a bar to filing a new case on the same claim.
For now, we strongly recommend that new foreclosures be delayed until any necessary assignment to the plaintiff has been executed. If the necessary assignment is not available when we are ready to file the complaint, we will be contacting you on a case-by-case basis to discuss the situation. If you would like to give us blanket instructions as to how you would like for us to handle these situations, please contact Larry Rothenberg at lrothenberg@weltman.com or call 216-685-1135.
Larry Rothenberg is a Partner managing the Foreclosure/Eviction department of the Cleveland office of Weltman, Weinberg & Reis Co., L.P.A. He is the author of the Ohio Jurisdictional Section contained in the treatise, "Dunaway, The Law of Distressed Real Estate". The firm handles foreclosures and related litigation throughout Ohio, Kentucky, Indiana, Illinois, Pennsylvania and Michigan. Larry can be reached at (216) 685-1135 or via e-mail at lrothenberg@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 www.weltman.com for more information, company facts and attorney profiles. (c)2007