By Moe Bedard & Aaron Krowne
“It is troubling that the plaintiff has filed this case before it had any interest in it,” Hamilton County Common Pleas Judge Steven E. Martin said in a letter to Wells Fargo’s lawyer.
The judge said the foreclosure lawsuit was filed before Wells Fargo owned the mortgage - thus, the suit was premature.
Martin then ordered the Wells Fargo law firm, The Law Offices of John D. Clunk, that the law firm must file proof that its clients actually own the mortgages before filing any new foreclosure actions in Hamilton County. That firm is based in Hudson, Ohio and is the third largest filers of foreclosure actions in Hamilton County, with 48 properties scheduled for the foreclosure auction block in the next six weeks.
The foreclosure warfare has begun and this ruling is the first of its kind by a state court judge in Ohio since the foreclosure debacle started. Ohio has one of the highest foreclosure rates in the country and just recently Ohio Governor Ted Strickland created the “Ohio Foreclosure Prevention Task Force” to combat the foreclosure crisis.
In Ohio, the worst state in the nation by foreclosures, 3.7% of all loans were in foreclosure by the end of the third quarter, up from 3.6% in the second quarter, according to a Mortgage Bankers Association survey. The number of new foreclosures in Ohio rose by about 20% in the same period.
Judge Martin’s ruling could have severe implications on how foreclosures are handled in Ohio and in particular how servicers file future cases. This comes after several recent local rulings from three federal court judges that we had reported on last month. The judges in the earlier rulings came from Cleveland, Dayton and Columbus. All had issued similar opinions in foreclosure cases in the last month that caused a media feeding frenzy.
- Deutsche Bank Foreclosures Tossed Out of Ohio Federal Court - “They Own Nothing!” - Judge Christopher A. Boyko of the Eastern Ohio United States District Court, on October 31, 2007 dismissed 14 Deutsche Bank-filed foreclosures in a ruling based on lack of standing for not owning/holding the mortgage loan at the time the lawsuits were filed.
- The Judicial Integrity of the United States Court is “Priceless” – 27 More Foreclosures Dismissed - In a decision piggy-backing on Judge Boyko’s recent Deutsche Bank ruling (announced on this site Tuesday), Judge Rose has thrown out another batch of foreclosures, making the following summary remarks:
“This court is well aware that entities who hold valid notes are entitled to receive timely payments in accordance with the notes. And, if they do not receive timely payments, the entities have the right to seek foreclosure on the accompanying mortgages.
However, with regard the enforcement of standing and other jurisdictional requirements pertaining to foreclosure actions, this court is in full agreement with Judge Christopher A Boyko for the Northern District of Ohio who recently stressed, ‘That the judicial integrity of the United States District Court is ‘Priceless.’”
- 32 more foreclosures were dismissed on November 14th by Ohio Federal judget Kathleen O’Malley, citing the reasoning of the Boyko decision. Our investigations of this ruling uncovered the fact that the plaintiff was Household Realty Corporation, showing that this issue was not just a “Deutsche Bank problem”.
- In one opinion, a federal judge in Cleveland sought to reverse what he called “a quasi-monopolistic system where financial institutions have traditionally controlled, and still control, the foreclosure process.”
Attorney General Marc Dann has seized the opportunity to flex his legal muscles and is using that decision in an effort to slow foreclosure filings throughout the state by filing motions last week in seven Hamilton County cases and several more in Butler, Montgomery, Franklin and Delaware counties.
Dann is insisting that judges scrutinize each foreclosure case.
The Wall Street Journal reported today;
In Ohio, 31 motions have been filed in cases in five Ohio counties since last month, and more will be filed soon, a spokeswoman for Attorney General Marc Dann said. The motions argue that the plaintiffs, often banks that act as trustees for investors of securities backed by mortgages in the cases, don’t actually hold the promissory note and mortgage, and so don’t have a right to foreclose. The situation occurs in part because mortgage documents and the contracts between borrowers and lenders may change hands multiple times and may not be assigned to the plaintiffs at the time the suits are filed.
Lately, some Ohio state judges have ruled against banks for filing suits without showing proof that they hold the mortgage. Mr. Dann’s motions urge judges to review foreclosure filings in their courts and, as warranted, dismiss actions on the same grounds. Short of that, he encourages judges to order mediation so that “parties can negotiate a workout agreement, thereby resolving their dispute without resort to foreclosure.”
The issue is known as the “real party in interest“ rule, which says that a plaintiff must prove that it has a stake in a lawsuit in order to file it;
“Every action shall be prosecuted in the name of the real party in interest. A personal representative, guardian, bailee, trustee of an express trust, a party with whom or in whose name a contract has been made for the benefit of another, or a party authorized by statute may sue in that person’s own name without joining the party for whose benefit the action is brought; and when a statute of the state of Ohio so provides, an action for the use or benefit of another shall be brought in the name of the state of Ohio. No action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest; and such ratification, joinder, or substitution shall have the same effect as if the action had been commenced in the name of the real party in interest.”
From Cincinnati The Enquirer;
Many lawyers and experts are unclear how far-reaching the effect of the recent landmark orders will be. But a recent analysis by University of Iowa law professor Katherine M. Porter found that 40 percent of the 1,733 foreclosures she studied did not contain proof that the plaintiff owned the mortgage.
Kevin R. Flynn, a lawyer who teaches real estate law at the University of Cincinnati College of Law, said, “If I were a defendant in a foreclosure action, that’s the first thing I’d raise.”
Though the banks might be guilty of taking shortcuts, in most cases, it’s not hard to prove that they own the mortgage, he said.
The Ohio Attorney General has now put this same issue before a number of other judges.
“We’re hoping that judges will stop and take a closer look at these pleadings,” said Nadine Ballard, the chief of the attorney general’s Consumer Protection Section.
The issue is more than just a technicality, she said. Some of the same financial institutions rushing to the courthouse to seize mortgaged property are also claiming that they don’t own those abandoned buildings when served with a tax bill or building-code violations.
“They can’t have it both ways here,” Ballard said.
We couldn’t have said it better ourselves.
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“The issue is more than just a technicality, she said. Some of the same financial institutions rushing to the courthouse to seize mortgaged property are also claiming that they don’t own those abandoned buildings when served with a tax bill or building-code violations.
“They can’t have it both ways here,” Ballard said.”
Ha, ha, ha — now THAT’S funny!!!! Who are the fraudsters again?
Excellent reading
The Lending Crisis as Crack Epidemic
By Carla Baranauckas http://cityroom.blogs.nytimes.com/2007/12/11/the-lending-crisis-as-crack-epidemic/#more-1569
Subprime Mortgages Concentrated in City’s Minority Neighborhoods
By Ford Fessenden
http://cityroom.blogs.nytimes.com/2007/10/15/subprime-mortgages-concentrated-in-citys-minority-neighborhoods/
It’s like we’re taking your house and it’s ours now, but we don’t have to up keep the property and when the taxes are due, who me?
Just wait JacMac, the circus has just begun.
Thanks Robert.
In the mortgage and foreclosure world so much abuse has been tolerated for so long that it had become common practice to simply look away and ignore the facts. Now, things are changing. Those who file foreclosure procedures are now on the hot seat, and rightly so. I applaud the recent decisions by the Ohio judges who have dismissed these cases due to lack of adequate documentation as to who truelly owns the mortgage. I only hope that judges in every state of the Union follows the example of the Ohio judges. And I also hope that every foreclosure case is completely scrutinized before the court. It’s time for the abuses of the past to come to an end.
I go with the crowd that recognizes lending as amoney making endeavor that saw a waiting opportunity to rip the equity out of “subprime” homes he do this through offering financing that they package as a wolf in sheep’s clothing.
Thanks to the efforts of these new day loan sharks we now have a crises appraoching biblical proportions. It s everbody’s job to deal with this and discontinue the denial.
Thank God, we’ve got some THINKING Americans weighing in on this subject. The truth is coming to light, slowly but surely, and just watch as we cut on the lights, you’ll see the roaches scurry away into the dark corners.
I agree Jmac and that is why I posted these thoughtful and accurate comments.
The best one was by Robert Hotchkiss;
“For conservatives when money passes from the wealthy to the poor it is always theft. When it passes from the poor to the wealthy it is always justice.”
When a lawyer knows or should have known that the bank was not the owner, holder, or party of beneficial interest of the note or mortgage, files false claims of ownership in court 85 times in one month, should they be taken to task?
Filing of any False Claim under Title 18 - is Fraud, 5 years of prison and up to $500k fine. See the Federal BK Court Proof of claim form - very bottom line.
When a bank registers a Pool of Notes/MBS with the SEC, sells the Notes on Wall Street, then claims the Notes are lost in their foreclosure complaints - We have a few questions.
Was the note lost before or after the same was registered then sold on Wall Street?
If before, what did the investors buy?
If after, did the bank report the lost note to the regulators?
If the note registered and sold, what is the seller bank doing with it? It belongs to the buyer - right?
Foreclosure (phone removed by Moe)
Wells Fargo has NOT learned from their mistakes!!! Wells Fargo has filed a forceclosure against my home, PRIOR to buying the alleged mortgage! ANOTHER PREMATURE foreclosure action AND lost note. Did the letter from Judge Martin mean a thing to them? I have filed a counter claim, can I request PUNITUVE DAMAGES?? My case has extenuating circumstances and genuine errors.
Wells Fargo should be made to follow the law just as everyone else. I really want this behavior stopped, I am so tired of being abused be yet another corporate powerhouse scam.