Ohio Supreme Court Stands Up to the Mortgage Industry on Standing!

During the first year of law school lawyers are taught basic concepts of law…double jeopardy, res judicata, and standing. Well the Ohio Supreme Court has determined that a bit of a refresher is in order and had the ghosts of first year past pay us all a visit on Halloween!

Someone has standing to file a lawsuit if that someone has a direct interest in or has experienced a harm directly and is suing because of that direct interest or direct harm.

In Federal Home Loan Mortgage Corp v. Schwartzwald, 2012-Ohio-5017, the Ohio Supreme Court unanimously determined that in order to file a foreclosure complaint, the plaintiff must have standing.  In January 2009, due to loss of his job and relocation, the Schwartzwalds defaulted on their mortgage, which at that time was held by Wells Fargo. After entering into a short sale agreement with Wells Fargo the Schwartzwalds were able to secure a buyer on April 8, 2009.  Well despite these efforts of Wells Fargo and the Schwartzwalds, Fed. Home Loan Mrtg. (FHLM) decided to file a foreclosure complaint on April 15, 2009.  FHLM reasoned that due to the upcoming assignment of the mortgage note to them that they could preemptively bring suit.  On May 15, 2009, FHLM actually did get the assignment of the note from Wells Fargo.  The trial court granted FHLM’s motion for summary judgment.

The Second District affirm the decision despite the lack of standing holding that the lack of standing had been cured by the later acquisition of the note.

In apparent recognition of the mortgage issues that Ohio and the country have experienced in the last several years, the Supreme Court unanimously decided to reverse the decision.  Justice Terence O’Donnell penned a very clear decision where the Court held, once again, that standing “is to be determined as of the commencement of the suit.”  This snap shot in time cannot be cured as it is an elementary building block to our jurisprudence.

This is a definite win for home owners and a cautionary instruction for mortgage holders, however all attorneys can glean a refreshing look at our 1L year and remember that the basics matter.

If you are experiencing foreclosure and debt issues, give us a call or fill out the form on this page for your FREE initial consultation.

– Erik R. Blaine, Esq.

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