There have been several recent cases which impact Default Litigation in Ohio over the past month. Most notably, on December 13, 2018, Ohio’s 8th Appellate District issued a decision which held a mortgage servicer who acquired the mortgage loan account was a “nonbank mortgage lender” and thus, by definition is included in the type of transaction which Ohio’s Consumer Sales Practices Act covers. Murphy v. Ditech Fin., L.L.C. 2018-Ohio-5041. As noted previously in this update, the new Legislation provides limitations to liability to the Ohio Consumer Sales Practices Act if certain conditions are met.
In addition, on December 31, 2018, Ohio’s 9th District issued a decision regarding standing and how a creditor must establish possession. Fed. Natl. Mtge. Assn. v. McFerren, 2018-Ohio-5319. In the McFerren decision, the court found that a note, endorsed in blank does not, on its face, establish who is in possession of the note and when that possession transpired. That the supporting affidavit must attest to how and when the entity became the holder of the note and generally the affiant must produce supporting business records, other than the note, to establish possession.
This same District had issued a decision in August of 2018 which found that a foreclosing plaintiff lacked standing due to a break within the chain of the assignments of mortgage and the note indorsements/allonges. H.S.B.C. Bank U.S.A. v. Brinson, 2018-Ohio-3467. The Brinson decision focused on Ohio law which makes clear that a note cannot be assigned, it can only be negotiated. If a note is merely assigned, then there is a claim to ownership and not a transfer of the right to enforce the note. The essential element with negotiation under Ohio Revised Code §1303.22(A) is that the transfer of possession of the note to a person who by the transfer becomes the holder of the instrument, that the transfer of the instrument occurs when the note is physically delivered for the purpose of giving the person receiving delivery the right to enforce the instrument.
Standing, Affidavits, RESPA and the Consumer Sales Practices Act are all matters which creditors continuously face when in the Default Litigation Arena. 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.
