Banking and Finance Law Report : Banking & Finance Lawyer & Attorney : Porter Wright Morris & Arthur Law Firm : Bankruptcy, Commercial Lending

In a decision that will hearten commercial lawyers, on April 23, 2013, Ohio's Court of Appeals for the Tenth Appellate District relied on lack of standing to reject a mortgagor's attempt to avoid the consequences of his undisputed payment default by accusing the mortgagee, which was the assignee of his note mortgage, of lacking standing and using robo-signers. See Deutsch Bank National Trust Company, as Trustee for Argent Securities, Inc., Asset-Backed Pass-Through Certificates, Series 2006-M1 c/o American Home Mortgaging Servicing, Inc. v. John Whiteman, 10^th Dist. No. 12 AP-536, 2013-Ohio-1636.  In so doing, the court followed other Ohio state and federal courts in holding that a debtor/ mortgagor lacks standing to challenge the validity of assignments from the original creditor/ mortgagee.

Plaintiff Deutsch Bank National Trust Company, as Trustee for Argent Securities, Inc., Asset-Backed Pass-Through Certificates, Series 2006-M1 c/o American Home Mortgaging Servicing, Inc. (the "Bank") was the assignee of a note and mortgage from John Whiteman ("Whiteman") to Argent Mortgage Company, LLC ("Argent"). Five years after the note and mortgage were assigned to the Bank, Whiteman defaulted in payment on the note securing the mortgage and the Bank filed a foreclosure action against him.

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By now, you have probably heard about some of the changes in title policies and title searches caused by the recent oil and gas activity in Ohio.  Title insurers also recently added to their policies a standard exception for any “lease, grant, exception or reservation of minerals or mineral rights.”

Essentially, this language means that any separate mineral interest created at any point in time by any party is now an exception to the title insurance policy, regardless of whether it is expressly disclosed.  In other words, there will be no coverage offered whatsoever if one of those interests negatively impacts the property in the future, even if it was not specifically disclosed in the policy.  And because title insurers will not insure against oil and gas interests, there isn't much incentive for them to include such interests as exceptions in their title searches, especially when the cost of obtaining such information can be staggering.

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