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Ohio Court Forbids Lenders From Substituting New Documents for Robo-Signed Docs

January 10, 2011

Our Rancho Cucamonga foreclosure defense attorneys wrote last month about drastic measures taken against "robo-signing" in New Jersey courts and a few others around the nation. In response to the disclosure that some lenders knowingly used fraudulently signed documents, these courts have tightened their standards of proof or required additional proof before allowing foreclosures to continue. They were joined in December by the Cuyahoga County Court of Common Pleas, which handles foreclosures in greater Cleveland, Ohio. That court issued revised rules (PDF) in response to numerous motions to extend cases to "ensure that paperwork is proper" -- likely an oblique reference to robo-signing.

The new rules have two prongs. One addresses cases where the lender acknowledges that the paperwork may not be proper and has asked for a delay or to remove the case from the list of pending cases. In those cases, the rules recommend that judges give lenders 30 days to show why the case shouldn't be dismissed entirely. Unless the lender can come up with the correct paperwork within 30 days, this means it will have to end the foreclosure case and start over when and if it does have the paperwork. The rules also require attorneys for lenders to sign affidavits attesting that the paperwork is true and he or she has reviewed it. Lenders' employees signing affidavits must appear personally in court, and if no one is able to honestly sign an affidavit, a lender employee must personally appear with the original note to the property and testify about having reviewed other documents.

As Placentia foreclosure defense lawyers, we think these rules are great for protecting borrowers from rushed or unfair foreclosures -- but they will disrupt the foreclosure machine in the short term. Mortgage documents, including original notes, were repeatedly transferred throughout the housing bubble years, including to financial firms involved in securitization. However, they were rarely physically transferred, possibly by design. As a result, many lenders seeking foreclosure genuinely don't know where the necessary paperwork is. In such cases, the foreclosure would be halted unless a bank employee could give good reasons for the missing paperwork, under oath. However, lenders would still be free to foreclose when they have the proper, verifiable paperwork -- as it should be. It's only those who are trying to rush foreclosures through, without a serious look at whether the case is valid, who will have problems.

Howard Law PC has unfortunately seen many foreclosure cases that these rules would have called into question. Just as lending became a machine during the housing boom, lenders have responded to the rise of foreclosures by making the foreclosure process mechanical, rigid and unresponsive to customers' requests. As a result, even those who are victims of genuine mistakes by the banks have been unable to correct or even explain those mistakes. In many cases, it's only after hiring an Escondido foreclosure defense attorney that these borrowers are able to correct their mortgage records and credit and hold on to their homes. We represent borrowers who believe they can hold on to their homes with a loan modification or other accommodation, or who have been unfairly mistreated and misled by lenders in ways that put their homes at risk.

If you're in default or foreclosure and you're tired of fighting just to get the lender's attention, don't wait any longer before calling Howard Law. For a free, confidential consultation, you can reach us online or call toll-free at 1-800-872-5925.