Foreclosure is the legal process of a lender enforcing the mortgage against the property of a homeowner or landlord. If you are a tenant, you probably make routine payments to the landlord for the property you are renting.
Fighting Default Foreclosure Judgments in Ohio
Fighting a Default Foreclosure Judgment is a difficult task, but you have options.
If a court has entered an order on foreclosure against you recently, it is time to act. You may be able to either vacate or set aside the judgment, but your options are time sensitive. When it comes to motions to vacate and to set aside the judgment, trial courts can lose jurisdiction to help you if you do not act timely. One of the maxims of the law is “the law serves the vigilant, and not those who sleep on their rights.” This is especially true in post-judgment proceedings. When dealing with post judgment reconsideration, there are generally two methods that are useful at the trial court level (the court that entered the foreclosure judgment against you) – a motion to vacate based on a failure of the bank in bringing their case, and a motion to set aside the judgment and allow you to reenter the case based on certain criteria such as newly discovered evidence or excusable neglect. You are essentially asking a sitting judge to undo either the complete foreclosure judgment or a portion of what he or she entered.
Motion to Vacate a Foreclosure Judgment
If the bank has failed to follow the proper procedures and Civil Rules when they bring their case, the court can vacate the judgment. This means that the judge sets aside the judgment as if it never happened. If the bank wants to continue the foreclosure, they have to initiate a new case from the beginning. There are two main reasons that a court will vacate a default judgment: (1) excusable default and (2) lack of personal jurisdiction. Excusable has two parts: (1) a reasonable excuse for not filing an Answer within the 30-day time; and (2) a meritorious defense (a good defense).
Excusable Default: Common examples of a reasonable excuse are you were ill, incarcerated, or that you could not answer the Summons for some other good reason. You would also have a reasonable excuse if, in response to the Summons, you telephoned the attorneys for the plaintiff and they told you not to bother filing an Answer. A meritorious defense is a reason why you don’t owe the money, not a reason why you can’t pay. For example, you would like to use the defense of statute of limitations. You can also dispute the amount of the debt. Disputing the amount of the debt, combined with improper service, can be a sufficient reason for the court to grant an order vacating the default judgment.
Lack of Personal Jurisdiction (Improper Service): The court can also vacate a default judgment if you were not properly served with a Summons. If you seek to vacate a judgment because of improper service, you do not need to cite a meritorious defense (or any defense). The disadvantage of seeking to vacate a judgment on the grounds of improper service is that you have the burden of proving the bad service, which you must do at a hearing before the judge. Proving improper service can be difficult depending on the facts of your case.
Motion to Set Aside a Foreclosure Judgment
If there is a good reason why you were simply unable to respond to the bank’s lawsuit before the judgment, you can file a motion to have the court set aside the default judgment. Here, you are asking the judge to set aside your default judgment: because of your mistake, inadvertence, surprise, or excusable neglect; because of the other side’s fraud, misrepresentation, or other misconduct; because the judgment has been satisfied, release, or discharged; or because other reasons of justice and equity require it.
In Ohio, the rule for setting aside a default judgment is explained in GTE Automatic Elec., Inc. v. ARC Industries, Inc. The GTE test says that (1) you must have a meritorious defense, (2) you are entitled to relief under Civil Rule 60(B), and (3) the motion is made within a reasonable time and, for reasons under Civ.R. 60(B)(1)-(3), not more than one year after the judgment was entered.
If you can show that you meet each element of the GTE test, the court can set aside the default judgment and allow you to reenter the case as if the deadline had not passed. This means you can then file an Answer and your defense, and the case will proceed from there.
Act quickly to protect yourself from a Default Foreclosure
If you find yourself facing a default judgment from a bank in a foreclosure lawsuit, you should act quickly to protect your interests and your home. Your best option is to get an attorney on your side to review everything and present you case to the court. Contact Doucet & Associates to help ensure that your rights are protected.
A Mortgage Servicer Must Show Compliance with Housing and Urban Development Regulations Prior to Initiating Foreclosure Action
In Wells Fargo, N.A., vs. Awadallah, 41 N.E.3d 481 (2015), the Ninth District held that where a note and mortgage requires compliance with HUD regulations, such compliance is a condition precedent to bringing a foreclosure action. A condition precedent is something that must occur before something else will or can occur. Ms. Awadallah’s promissory note and mortgage were prepared on Federal Housing Administration forms and required that the bank, as a condition of receiving federal money, meet all HUD requirements prior to filing a foreclosure action. Under HUD, Wells Fargo was required to have a face-to-face interview with Ms. Awadallah, or make a reasonable effort to arrange such. At minimum, Wells Fargo was required to send a certified letter to Ms. Awadallah and make at least one trip to see her at the mortgaged property. It failed to do so.
Wells Fargo failed to present evidence to the Ninth District regarding their reasonable effort to make a visit to Ms. Awadallah’s home, which is expressly required under her note and mortgage and federal regulation. Wells Fargo argued that they didn’t need to meet that requirement because after the foreclosure action was filed, the parties attempted to settle the case in mediation. Wells Fargo argued that the purpose of the in-person meeting, as required under HUD, is to consider loss mitigation and that court-sponsored mediation serves the same purpose. The Ninth District disagreed, stating that mediation after the foreclosure action has been initiated does not show compliance with the federal regulation. Wells Fargo failed to strictly comply with standard regulations set forth to protect consumers. Thus, Wells Fargo did not satisfy the conditions precedent to filing a foreclosure action against Ms. Awadallah. Therefore, Wells Fargo was not entitled to succeed on its motion for summary judgment. The Ninth District reversed the judgment and sent the case back for further proceedings.
Defending Foreclosure: The Basics and How to Use Them
Receiving a court summons for foreclosure is frightening. You find yourself pondering questions you never thought you would encounter. Can you save your home? Will your credit report be affected? Where will your family live?
The bank is telling the court that it has a right under the mortgage to foreclose on you. However, keep in mind that you have rights too, and it is legal, ethical, and smart to assert all of your rights with the help of an attorney when facing foreclosure.
Efficient foreclosure defense can allow you to stay in your home while you litigate your case, and we help many of our clients to save their home. However, if you are looking at other options, we can also help you obtain a deficiency judgment waiver in the situation that you leave your home, such as in a foreclosure sale, short sale, or deed in lieu of foreclosure agreement. We also help many clients to apply for and obtain a loan modification that reduces their principal, interest rate, and monthly payment.
Some of the defenses that experienced foreclosure defense attorneys employ to delay or dismiss foreclosures are:
Failure of Condition Precedent
The terms of the Note, Mortgage, and federal guidelines generally require specific steps the bank has to take before it can begin a foreclosure. If the bank fails to comply with the requirement to serve the homeowner with notice of default or to conduct necessary meetings with the homeowner, the court may dismiss the foreclosure.
Lack of Standing
When foreclosure proceedings begin, a lawsuit must be filed and served against you. You become the defendant, and the bank is the plaintiff. The bank must demonstrate to the courts they are the party legally entitled to foreclose on you. This is the legal concept of “standing”. You can bring the plaintiff’s standing into question as a foreclosure defense, and they must prove that they have the standing to foreclose. As the news has shown over the last several years, ownership of a mortgage can be a complicated thing with most loans being securitized, bought and sold multiple times. The bank’s errors, improper or incomplete documentation, or fraud may cause them to have a hard time proving their standing. If they can’t prove it, the lawsuit may be dismissed.
Unfair Lending Practices
If your bank has been deceptive about your loan, acted unfairly, or failed to disclose required information, you may be able to challenge foreclosure based on these bad acts. The Truth In Lending Act (TILA) requires lenders to disclose a great deal of information, including the annual percentage rate, payment schedule, and other information about the loan. Lenders who do not give borrowers the correct information TILA requires have broken this law.
There are many other defenses that may be raised, such as unconscionable terms, foreclosing on an active service member, and failure to properly invoke the court’s subject matter jurisdiction. But a homeowner can’t use one of these foreclosure defenses if they don’t know the defense exists or how to properly raise it. There are federal and state laws intended to protect homeowners, and those defenses can delay or dismiss foreclosure proceedings.
If you find yourself facing a bank in a foreclosure lawsuit, you know they have their attorneys working to protect the bank. Your best option is to get an attorney on your side to review everything and protect your interests. Contact Doucet & Associates to help ensure that your rights are protected.
Defending Against Foreclosure: Notice Requirements & Certified Mail
If the bank wants to foreclose on a home, often if must send one or more letters via certified mail to the borrower. If the bank fails to do this, it can be a solid defense to foreclosure for the homeowner. Knowing if the bank is required and has not done so can help save your home and possibly get the foreclosure dismissed.
When a bank files for foreclosure, there are certain actions the bank has to have taken to comply with this contract formed by the mortgage and the note. These actions are known as “conditions precedent.” Specifically, a condition precedent is an event which has to occur before the title (or other right) to the property will actually be in the name of the party receiving title. That is to say, these are the actions the bank must take before they legally claim ownership of the property mortgaged.
One important condition precedent is the notice requirement. When the borrower misses a payment, the bank needs to inform the borrower that he is behind. Or when the bank wants to accelerate the loan and declare the outstanding balance due, the bank needs to tell the borrower that this has occurred. It is common that these notices are required to be sent and delivered by certified mail. One of the most critical parts of certified mail is the proof of delivery.
Every mortgage should contain a clause inside it that details when and how the bank needs to inform the borrower that they are in default. One example of a such a clause would be that notice is to be given “by mailing such notice by certified mail addressed to Borrower at the Property Address * * *. Any notice provided for in this Mortgage shall be deemed to have been given to Borrower or Lender when given in the manner designated herein.”
Therefore, the conditions precedent under the mortgage are that the bank must both provide notice to the borrower and that this notice must be sent by certified mail. In Childers, the court reversed a grant of summary judgment in favor of the homeowner when there was no evidence provided that the notice required by the mortgage had ever been mailed. Contimortgage Corp. v. Childers (May 4, 2001), Lucas App. No. L-00-1332.
In Ohio, the courts have found that the failure of the bank to satisfy the certified mail condition precedent requirement is a defense to the bank’s foreclosure:
- In 2004, the Ohio Ninth District Court of Appeals found that the bank failed when there was no evidence that the notice had been received, finding that “although [a] unsigned letter is labeled as “certified mail,” [the mortgagor] produced no certified mail receipt, acquisition of which is ordinarily the reason for sending a letter via certified mail.” Mortgage Elec. Registration Sys., Inc. v. Akpele, 2004-Ohio-3411, ¶ 12.
- In 2007, the Ohio Twelfth District held the same way in where a mortgage required notice to be sent by certified mail, and the bank said the notice was sent but could provide no evidence it was sent that way. First Financial Bank v. Doellman, 12th Dist. Butler No. CA2006–02–029, 2007-Ohio-222.
- In 2009, the Ohio Tenth District held that the mailing of a notice of default to a mortgagor by certified mail did not satisfy the condition precedent notice and delivery requirement when the certified mail envelope was returned unclaimed. “Notification that certified mail is being held for a recipient is undeniably distinct from delivery of the certified-mail contents.” Nat’l City Mortgage Co. v. Richards, 2009-Ohio-2556, ¶ 28, 182 Ohio App. 3d 534, 545, 913 N.E.2d 1007, 1015.
The final case is important in that it shows that the certified mail requirement means more than just the bank putting the letter in the post. Certified mail is a way of guaranteeing delivery and the bank cannot claim that the notice was received where it has knowledge that the borrower did not get the certified letter. The court turned to the dictionary and held that “delivery must presume the giving or yielding of possession or control to another. See Black’s Law Dictionary (7th Ed. 1999); Webster’s Encyclopedic Unabridged Dictionary (Random House 1997).” Richards, 913 N.E.2d at 1016.
So if there is a foreclosure action filed against you, pull out your mortgage documents and see if there is a certified mail notice requirement, or bring the paperwork into us and let us do the work for you. The notice and condition precedent rules can be powerful weapons against the bank. If we can show that the bank failed to perform according to their obligations, you might be able to save your home.