Ohio Supreme Court Stops Foreclosure

November 7, 2012

Misc. Topics

foreclosure help in Ohio A foreclosure action was dismissed by the The Ohio Supreme Court on Oct. 31 because the third-party mortgage company which brought the foreclosure action did not have entitlement to the property at the time it filed the foreclosure.

The fact that the company obtained a promissory note and mortgage after filing did not alter their status, according to the Court.  When Federal Home Loan Mortage Corporation  filed the foreclosure against a Xenia couple, then sold their home at sheriff’s sale, the corporation lacked standing to invoke the jurisdiction of the court.

A lower court upheld the foreclosure and a state appeals court also upheld the ruling, but the high court ruled for the homeowners overturning both lower courts.

The story began in 2006 when Duane and Julie Schwartzwald bought a home in Southwest Ohio for $251,250.  The lender was Legacy Mortgage who sold the promissory note and mortgage to Wells Fargo Bank.  Almost  two year later, Duane lost his job and the couple fell behind in payments.

In January 2009 the Schwarzwalds went into default and two months later in March 2009, Wells Fargo listed the property for short sale.  A short sale is the sale of real estate in which proceeds from selling of the property will fall short of the balance of debts against the property.  The lien holders agree to release liens on the real estate and accept less than owed as the property owner cannot repay the debts in full.

After the short sale listing, the Xenia couple were in a contract to sell their home for $259,900.  At that point, Federal Home Loan Mortgage Corporation filed for foreclosure on the property.  By May 2009, the company secured the promissory note and mortgage from Wells Fargo.  A lower court ruled in Federal Home Loan’s favor and the corporation purchased the Schwatzwald’s property at a sheriff’s sale.

Ohio’s Supreme Court found this chain of events improper.

In an unanimous opinion, written by Justice Terrence O’Donnell, the justice stated:  Federal Home Loan provided “no evidence that it had suffered any injury” when it commenced the foreclosure action. “It failed to establish an interest in the note or mortgage at the time it filed suit,” he wrote.

If you have any questions about a real estate transaction you are involved in, do not rely on the word of someone from a mortgage company or a real estate professional.  In some cases, they may not be familiar with Ohio law on the issue.  Check with an attorney who is experienced in these matters so that you can make the right decision concerning your future.

Call Slater & Zurz LLP at 1-888-534-4850 for a free confidential consultation or send a message from the website at slaterzurz.com.

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About slaterzurz

Slater & Zurz LLP is an Ohio law firm of highly experienced and respected attorneys. Over the last 40 years, we have developed a reputation for getting positive results for clients. We've been trusted with handling over 20,000 personal injury cases and our clients have received more than $120,000,000.

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