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Ohio Supreme Court reverses lower court foreclosure order

A couple from Southwest Ohio tried to enter into a short sale in 2009. Many people in Ohio have sought that type of transaction in the wake of housing market collapse and the foreclosure crisis. A third-party, however, later bought the couple's home at a sheriff's sale. Not only did the short sale fall through, but the company that bought the home sought to foreclose upon the home.

Their story is not unique when it comes to what caused the financial troubles. The Xenia, Ohio couple fell into hard times during the economic collapse. In 2008, the husband lost his job, placing a great strain on the household budget. The couple went into default on their mortgage payments by January 2009. They sought the short sale and signed a contract fora deal by spring.

A mortgage company separate from the company that originally granted the mortgage looked to foreclose upon the home and filed by a complaint for the process. At the time the complaint was filed in court, the company had not obtained an interest in the property. In May 2009, the company obtained the promissory note from the original mortgage company, and a trail court allowed the foreclosure to go through, despite the short dale contract.

The Ohio Supreme Court ruled Wednesday that the trial court had granted the foreclosure in error. The high court says that the foreclosing company did not have any right to foreclose when the complaint was filed. The fact that the company later obtained an ownership interest in the property does not cure the defective foreclosure complaint. The Ohio Supreme Court overturned the lower court and dismissed the foreclosure proceeding under Ohio law.

Source: The Cleveland Plain Dealer, "Ohio Supreme Court rules for homeowners in foreclosure case," Reginald Fields, Oct. 31, 2012

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