My mortgage lender foreclosed on my
house. How would I know if the lender had the right to file the foreclosure?
A: Every mortgage loan has two important
documents: the note and the mortgage. The note is your agreement to pay the
lender. The mortgage is the document that gives the lender the right to foreclose
if you don't make the payments due under the note. Your lender can gain the
right to bring a lawsuit against you in one of two ways. First, your mortgage
might have been assigned to the lender before your foreclosure case was
filed. If so, a document called “assignment
of mortgage” would be attached to the foreclosure complaint, and the name on
that assignment would be the name of the plaintiff (that is, the person or
entity bringing the foreclosure suit, such as your lender or an entity your
lender has designated). Second, the plaintiff might hold your note, although this
may be difficult to establish. Sometimes
the note will include a stamp that says “endorsed to [plaintiff],” indicating
that the plaintiff probably held the note. In other cases, the note will say
“endorsed to (blank).” In such a case, the plaintiff is not specifically named
and can bring the case only by having physical possession of the note when
filing the foreclosure case.
My house is in foreclosure
and will be taken soon. Is there
anything I can do to make sure my rights are protected?
Your foreclosure complaint will have a note and mortgage attached
to it. An assignment of mortgage also may be attached. If the mortgage is either in the plaintiff’s name
or is assigned to the plaintiff, then the foreclosure is probably valid. If
not, look at the note. If the note is made payable to the plaintiff, then the
foreclosure is probably valid. If the note is endorsed in blank, the plaintiff
should have alleged in the complaint that it holds the note, and later will
submit an affidavit stating that it holds the note. If the plaintiff did not
take any of these steps, there could be a defect, and this may entitle you to
have the case dismissed.
My property was sold at a
foreclosure sale a couple of years ago.
Now I understand that a Supreme Court of Ohio decision may affect the
validity of that sale. Is that true?
Possibly. On October 31, 2012, the Supreme Court of Ohio
issued its decision in Fed. Home Loan
Mtge. Corp. v. Schwartzwald. In that case, the court found that the
lender’s right to bring a foreclosure case is determined on the date that a
complaint is filed. To have the
“standing” necessary to bring a foreclosure case, the plaintiff must either
hold the note or have been assigned the mortgage. If your foreclosure was filed
and the plaintiff either did not hold the note or was not assigned the mortgage
at the time of filing, the foreclosure may not be valid.
What will happen to future
foreclosures in Ohio in light of this Supreme Court of Ohio decision?
In the post-Schwartzwald
world, lenders will be very cautious to make sure that they have the right
to bring the foreclosure in the first place. As the law currently stands, the
plaintiff can bring the foreclosure if the plaintiff either holds the note or
was assigned the mortgage. However, a case is now being appealed to the Supreme
Court of Ohio to determine whether the plaintiff must hold both the note and the mortgage of record in order to
bring the foreclosure case.
This “Law You Can Use” column was
provided by the Ohio State Bar Association. It was prepared by J. Michael
Debbeler, a partner in the Cincinnati firm of Graydon Head. Articles appearing
in this column are intended to provide broad, general information about the
law. Before applying this information to a specific legal problem, readers are
urged to seek advice from an attorney.
Labels: foreclosures, homeowners, mortgage lender