Defenses to Foreclosure – Mitigation of Damages

Defenses to Foreclosure – Mitigation of Damages

Defenses to Foreclosure – Mitigation of Damages[1]

Whenever defending a foreclosure it is important to realize that the mortgage between the bank (“mortgagee”) and the borrower (“mortgagor”) is nothing more than a contract.  Under the common law of contracts mitigation of damages is required by the party who is seeking damages.  The requirement that the mortgagee seeking damages mitigate their damages ensures that the mortgagee “remains in the same position it would have been in had the contract not been breached, but at the least cost to the defaulting party.” [2]  The duty to mitigate requires that the injured party, in this example the mortgagee, take reasonable steps to mitigate their damages.[3]

While several courts in Ohio have analyzed and applied the mortgagee’s duty to mitigate damages when pursuing a foreclosure, some courts are still reluctant to impose a duty of mitigation on mortgagees when the mortgage contains language allowing the mortgagee to pursue full payment. [4]  However, in cases in which the duty to mitigate is not required the courts seem to misconstrue the duty to mitigate with whether or not a mortgagee is allowed to foreclose and pursue full payment. The duty to mitigate does not itself prevent the mortgagee from foreclosing and pursuing full payment; rather, it only “requires an injured party to make reasonable efforts… to limit the damages that result from the breach.”[5] Therefore, the mortgagee may still pursue full payment and foreclosure, but if there is an opportunity for the bank/mortgagee to recoup some of their losses, by say accepting a short-sale or working out a modification with the mortgagor, then the duty to mitigate damages requires them to do so or at least make a reasonable effort. When defending a foreclosure the mortgagor’s attorney should look into whether the mortgagee had an opportunity to mitigate their damages. The failure to mitigate damages is an affirmative defense, meaning that the mortgagor’s attorney must prove that the mortgagee failed to mitigate. [6]

[1] By: Timothy J. Cook, Of Counsel, Doucet & Associates Co., L.P.A.

[2] Aurora Loan Servs. L.L.C. v. Sansom-Jones, 2012-Ohio-5477, ¶ 25 (10th Dist.) (citing Frenchtown Square Partnership v. Lemstone, Inc., 2003–Ohio–3648, ¶ 12).

[3] Id.

[4] Fifth Third Mtge. Co. v. O’Neill, 2015-Ohio-3000, ¶ 44 (5th Dist.) appeal not allowed, 2016-Ohio-172, ¶ 44 (2016).

[5] UAP–Columbus JV326132 v. O. Valeria Stores, Inc., 2008–Ohio–588, ¶ 17 (10th Dist.).

[6] See Baird v. Crop Prod. Servs., 2012–Ohio–4022, ¶ 43 (12th Dist.).


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