Ohio Case Law Updates

The last month has had a few decisions in Ohio which will have an effect on how creditors pursue foreclosures in Ohio. Issues involving standing, prerequisites to a foreclosure and affidavits continue to dominate the appellate court decisions.

Please remember that when moving for a judgment in Ohio on a foreclosure action, the plaintiff must be able to demonstrate the following:

  1. The Plaintiff is the Holder of the note and mortgage or is a party entitled to enforce the instrument, this can include:
    1. The Holder,
    2. A Non-Holder in possession who has the rights of a Holder,
    3. A person not in possession but who is entitled to enforce the instrument pursuant to § 1303.38 (Lost or Destroyed Instruments)
  2. That the chain of assignments, transfers, endorsements is correct,
  3. That the account is in default pursuant to the terms of the instrument(s),
  4. That all conditions precedent have been met, and
  5. Verify to the court the amount of principal and interest that is due.

Every week it seems that at least a couple of the appellate decisions address an alleged defect in one of the items listed above. If you have any questions about the best practices for a foreclosure, please do not hesitate to reach out to me.

Registering with the Ohio Secretary of State:

The 9th District recently issued a decision in OneWest Bank, FSB v. Wheeler, 2017-Ohio-7925, which addressed the Ohio Revised Code § 1329.10(B) which provides that no person doing business under a trade name or fictitious name shall commence or maintain an action in any court in this state or on account of any contracts made or transactions had in the trade name or fictitious name until it has first complied with § 1329.01 of the Revised Code. In addition, § 1703.03 provides that no foreign corporation shall transact business in this state unless it holds an unexpired license to do so issued by the secretary of state.

The Court held that § 1703.03 does not apply to Federally Chartered Banks, including Savings Banks and in addition, the consumer’s failure to raise this issue as an affirmative defense precluded the court from addressing the issue further.

The take-away for creditors is to ensure you have your licensing and registration in order as this affirmative defense is something which consumers may use in defense of a foreclosure if appropriate.

Authenticating Prior Servicing Records:

The 8th District recently addressed the issue of authenticating prior servicing records. At issue is what is called Hearsay and the exceptions to Hearsay as outlined in the Business Records Exception Evid.R. 803(6). In this case, the issue is whether the affidavit was made upon personal knowledge.

Generally, the Courts in Ohio have held that the Business Records Exception is a valid exception on the basis that if information is sufficiently trustworthy that a business is willing to rely on it in making business decisions, then the Courts should be willing to rely on that information as well. That if an affiant relies on business records for her facts, that does not mean that the facts are not based on personal knowledge. U.S. Bank N.A. v. Stocks, 2017-Ohio-8108.

Further, an Affiant must have personal knowledge of the record-keeping system in which the documents were maintained. Bank of New York Mellon v. Roulston, 2017-Ohio-8400. An Affiant must demonstrate that she is sufficiently familiar with the operation of the business and with the circumstances of the preparation, maintenance, and retrieval of the record in order to reasonably testify on the basis of this knowledge that the record is what it purports to be and was made in the ordinary course of business. Id.

However, at issue in the case before the 8th Dist. is that the affiant was relying on records from a prior servicer and nothing in Plaintiff’s affidavit stated that the affiant had familiarity with the prior servicer’s record keeping system. The Court stated that merely receiving and retaining business records from another company does not demonstrate a “working knowledge of the specific record-keeping system that produced the document.” Id.

In a separate decision, the 8th Dist. held that a plaintiff is not required to provide a complete payment history to satisfy its burden of establishing the amount due. U.S. Bank, N.A. v. Matthews, 2017-Ohio-4075. That, absent contrary evidence, an Affidavit which establishes the necessary elements I have listed above with accompanying statements is sufficient.

As such, when an account that is in default is being transferred from one servicer to another it is imperative that the new servicer be able to authenticate the records created by the prior servicer.

If you have any questions or would like to discuss this or other default related matters in Ohio, Indiana, Kentucky or Michigan. Please feel free to reach out to me at dacox@woodlamping.com.

Thank you!

Dan

This entry was posted in Articles.
  • About the Author

    Daniel A. Cox

    Daniel A. Cox practices primarily in the firm’s Real Estate, Bankruptcy & Creditors’ Rights, and Litigation practice groups, with the majority of his practice focusing on assisting clients manage their commercial and residential foreclosure litigation and default related matters.

  • Contact Us

    Wood & Lamping LLP

    600 Vine Street Suite 2500
    Cincinnati, OH 45202
    513-852-6000 main
    513-852-6087 fax