Ohio Judge’s Foreclosure Ruling Gives Hope to Homeowners, Legal Leg to AG

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  • Posted on: 10 December 2007
  • By: John Michael Sp...

OhioNews Bureau

ONB COLUMBUS: An Ohio common pleas court judge issued a ruling Monday that may stop banks and other lenders who can’t prove they own a mortgage from pursuing a home foreclosure lawsuit. The ruling from Hamilton County in southwest Ohio not only tosses a legal life jacket to many floating in the rising sea of mortgage defaults, but it could further inflate into an legal battleship of sorts that Ohio’s rambunctious and controversial new Democratic Attorney General can deploy in confronting a housing crisis that puts the Buckeye State first in the nation in the percentage of home foreclosures.

OHIO RULINGS FORM AN ISLAND OF SAFETY IN SEA OF HOME FORECLOSURES

In a published report from the Associated Press today, Judge Steve E. Martin’s ruling from last week, in sync with federal court rulings from the past month in Cleveland, Dayton and Columbus, told Wells Fargo Bank that its filing to foreclose on a Cincinnati homeowner was “premature” because the bank didn’t prove that it actually owned the mortgage.

The ruling by Martin and other judges could become the Ghost of Christmas Past come back to haunt the many lenders who are but one player in a complicated, Byzantine world of subprime lenders. Together, they constitute the labyrinth of intricate financial players whose products were -- and some would say still are being used -- to lure pie-eyed Americans desperate to own their share of the American Dream into predatory mortgage practices that produced problematic products that now pose still undetermined perils to lenders here and abroad.

Martin’s ruling wasn’t conjured out of thin air. An analysis performed by a University of Iowa law professor, cited in the AP article, said that of the 1,733 foreclosures studied, 40 percent showed that the plaintiff filing a foreclosure claim, like Wells Fargo Bank, couldn’t prove they owned the mortgage.

From the perspective of Marc Dann, Ohio own raging bull who is a hybrid between the Wall-Street busting former New York Attorney General turned New York Governor Eliot Spitzer and the fabled FBI crime-busting agent Eliot Ness, the ruling serves as a legal port in the turbulent storm that keeps Ohio in the top tier of states with home foreclosure rates.

Dann is reported to be one of several state attorneys general looking to pick a fight with credit rating agencies like Fitch, Moody's and Standard & Poor's over the questionable roles they played in giving a green light to investors to invest in new financial products like structured investment vehicles or SIVs, which are now turning out to be far less credit worthy than they were trumpeted to be.

Ever since Dann, an attorney and former state senator, took control of his army of lawyers in January, his reward for running a Hail-Mary campaign last year that saw him defy the odds and defeat a well-respected Republican officeholder thought to be virtually invincible, his performance record has been one of significant accomplishments that has been counterbalanced by operational gaffs, personal goofs and political blunders.

THE AMERICAN DREAM DISEASE

But the disease of or home foreclosures is spreading beyond our shores, infecting the global lending community. As recently as today, another major foreign bank, UBS AG, based in Zurich, Switzerland, announced it will write off another $10 billion on losses resulting from its exposure to the US subprime lending market. To do so, it’s selling part of itself Singapore and an unnamed Middle East investor.

Joining other US lenders who have a serious bout of the subprime lending flu, the UBS AG write off further fanes the flames of whether the fears of another cycle of recession are unjustified or real. Housing figures cited by CNN on its story about UBS AG’s problems are that about 14 percent of about 7.2 million American homeowners are now in default, which represent approximately $164 billion of housing values. Experts contend that such numbers forewarn of nastier times that could turn into the tipping point of economic recession.

CAN'T WIN FOR LOSING

Ohio’s ignominious housing foreclosure statistics, when combined with another report released today by the Health Foundation of Greater Cincinnati that shows the state’s rate of poverty, now pegged at 16 percent, has risen two percentage points since 2005, , only reinforces the severity of the challenges that lay ahead.

The good news of Martin’s ruling is that homeowners and defense lawyers, including the Ohio AG, have another legal leg to stand on. The bad news, unfortunately, is that the housing and poverty facts are what they are and Ohio doesn’t have any silver bullets to keep these malicious marauders from wreaking more havoc on it.

John Michael Spinelli is a former Ohio Statehouse government and political reporter and business columnist. He now serves as the OhioNews Bureau Chief for ePluribus Media Journal. Find ONB archives here.

If readers have a news tip or story idea about Ohio politics or government, contact the OhioNews Bureau at: ohionews@www.epluribusmedia.org

Comments

Similar decision on foreclosure case in North Carolina.

carol

If I understand correctly, this ruling sides with the investors who bought bundled mortgages from the banks, no?

I believe in order to have standing in court, ie in order to pursue a foreclosure, one must have legal standing. When mortgages are resold and repackaged on the financial markets then who has the actual document. Who has standing to bring a foreclosure?

Who are "the investors." What was once one mortgage is now divided among investors each of whom has a putative share in the risk and rewards.

I don't see how such a ruling "sides with the investors." What it does, it seems to me is to prolong the process until somehow the question of standing is resolved. This can only be to the benefit of the individual at risk of loosing the home as far as I understand it.

carol