Widespread Changes in Ohio Foreclosure Procedures
House Bill 138, effective September 11, 2008, makes sweeping and widespread changes to the substantive and procedural aspects of foreclosures in Ohio. Although the actual implementation of these new standards may vary and each county's procedures must be verified for all current and future foreclosure cases, those currently in progress as of September 11, 2008 should be subject to the former statutes as to substantive matters but will be subject to the procedural changes in the new legislation. Highlights are as follows:
- The court may require mediation of any foreclosure at any point during the proceeding and may require the personal attendance of both the mortgagor and mortgagee.
- The lis pendens date is changed from the date service is perfected on the principal defendant(s) to the date the complaint is actually filed. Although this change doesn't eliminate the requirement that service be obtained on the defendant at some point in the case, it does create some certainty about the point at which subsequent liens are barred.
- In residential foreclosures a Preliminary Judicial Report (PJR) obtained from a title company must be filed within 14 days of the complaint and updated by a Final Judicial Report prior to the court issuing an order of sale. Commercial foreclosures have the option of using a PJR or a standard title commitment.
- The officer making the sale is required to collect certain purchaser information, such as contact information, the name of the purchaser and the name to which title should be conveyed, and other information. This requirement applies to the foreclosing lender as well, should that lender be the successful bidder at the sale.
- An obligation is placed on the parties to have the sale confirmed within thirty days of the sale, and the purchaser must pay the balance due within that time. Failure to do so may be treated as a contempt of court and may result in forfeiture of the deposit. The court is also granted broad authority to stay confirmation to give the defaulting borrower time to redeem the property or "for any other reason the court deems appropriate."
- The deed must now be prepared by the lender's attorney and submitted to the sheriff, who now handles recording. Because taxes, conveyance fees and other charges must be paid prior to recording, lenders are being asked to submit a certain amount of money (varying by county) to cover these costs.
Some of the foregoing changes, such as the revised lis pendens date, will speed the foreclosure process along and make title examination much easier. Other changes will benefit consumers and title agents, such as the residential PJR requirements. Lenders should note, however, that there are a number of pitfalls in this legislation that have the potential to extent foreclosure proceedings. First, the possibility of mediation could result in delay, particularly when the borrower gives at least the appearance of being able to bring the loan current. In addition, the court now has the discretion to stay a sale confirmation to give the defaulting borrower additional time to redeem the property or for any other reason the court deems appropriate. How courts will use this apparently unfettered discretion remains to be seen. In all events lenders will be saddled with additional costs and delays in what is already a time-consuming process.
