Brunner Dissent in Hazel May Add Foreclosure Defense for FHA Homeowners
Homeowners facing foreclosure would do well to read Judge Jennifer Brunner’s thorough dissent in Wells Fargo Bank, N.A. v. Hazel . Hazel defended an action in foreclosure in Franklin County by herself (pro se) and, though ultimately unsuccessful, might have marked a path to defending certain foreclosures for future defendants.
Hazel’s home loan was a Federal Housing Administration (FHA) loan. These loans are governed by the Department of Housing and Urban Development (HUD), and require lenders to follow very specific steps in order to properly foreclose on a home. The loan contract, also known as a promissory note, contained a vague reference to the HUD regulations:
If Borrower defaults by failing to pay in full any monthly payment, then Lender may, except as limited by regulations of the Secretary in the case of payment defaults, require immediate payment in full of the principal balance remaining due and all accrued interest * * * In many circumstances regulations issued by the Secretary will limit Lender’s rights to require immediate payment in full in the case of payment defaults. This Note does not authorize acceleration when not permitted by HUD regulations. As used in this Note, “Secretary” means the Secretary of Housing and Urban Development or his or her designee.
It is settled Law in Ohio that following HUD regulations prior to initiating foreclosure on FHA loan houses constitute “conditions precedent” under Ohio Civ.R. 9(C). However, Judge Brunner would rule that this vague reference to the HUD regulations actually requires lenders to attach the regulations to a Complaint for foreclosure to be in compliance with the pleading requirements of Ohio Civ.R 10(D). She writes:
Even if Wells Fargo were to assert that the conditions precedent were incorporated by reference to HUD regulations, in order to take advantage of Civ.R. 9(C), Wells Fargo would have needed first to comply with Civ.R. 10(D) and attach the documents that are the basis of its claim-including terms set down elsewhere that are incorporated by reference. In other words, Wells Fargo having made a “claim,” was required by Civ.R. 10(D)(1) to “attach to the pleading” a copy of the operative document.
Brunner’s analysis, and Hazel’s efforts, may have created another avenue to challenge the complaint by forcing lenders to attach the regulations to the complaint itself or be subject to dismissal. If nothing else, Homeowners who have FHA loans should be aware of HUD regulation 24 C.F.R. 201.50, know where to find it, and hold the lenders to it.
 Wells Fargo Bank, N.A. v. Hazel, 2016-Ohio-305, cause dismissed, 2016-Ohio-915, 145 Ohio St. 3d 1412, 46 N.E.3d 705, (10th Dist. 2016) (J. Brunner, dissenting).
 Id., at ¶14, emphasis added.
 See for example: BAC Home Loans Servicing, LP v. Taylor, 9th Dist. No. 26423, 2013-Ohio-355, 986 N.E.2d 1028, U.S. Bank, N.A. v. Detweiler, 5th Dist. No. 2010CA00064, 191 Ohio App.3d 464, 2010-Ohio-6408, 946 N.E.2d 777.
 Wells Fargo Bank, N.A. v. Hazel, at ¶36.