Bayview Loan Servicing, L.L.C. v. Vasko
102 N.E.3d 1204
| Ohio Ct. App. | 2018Background
- 2008: Dane Vasko executed a promissory note and mortgage in favor of Realty Mortgage Corp.; mortgage recorded March 4, 2008. An undated allonge endorsed the note to BAC (later BOA).
- 2012: Appellant Ballenger & Moore obtained and recorded an open-end mortgage on the property (Oct. 19, 2012) securing a revolving note.
- 2014: BOA and Vasko executed a Loan Modification Agreement (Sept. 1, 2014) altering payment schedule, lowering monthly payments, extending maturity; modification recorded Oct. 2, 2014. No new funds nor increased interest rate were provided.
- 2016: BOA filed foreclosure against Vasko and others; BOA later moved to substitute Bayview Loan Servicing, LLC as plaintiff (claiming transfer of the loan), which the trial court granted (Apr. 14, 2017).
- 2017: Trial court granted summary judgment holding the recorded modification did not affect the priority of the original mortgage; later entered final foreclosure judgment in favor of Bayview (Apr. 27, 2017). Appellant appealed.
Issues
| Issue | Plaintiff's Argument (BOA/Bayview) | Defendant's Argument (Ballenger) | Held |
|---|---|---|---|
| Whether a recorded loan modification’s “effective/priority date” relates back to the original mortgage date (i.e., does modification preserve original priority) | Modification relates back; original mortgage’s priority remains; first in time, first in right | Modification’s recording date controls priority; Panzica supports that modifications take effect when recorded and can alter priority | Court held modification did not change priority; modification relates back to original mortgage date for priority purposes (followed Community Action rationale) |
| Whether substitution of Bayview for BOA was improper because BOA did not attach the Modification or directly assign it to Bayview | Substitution proper: Bayview is holder of the note; transfer of the note equitably assigns the mortgage; substitution is procedural and within court’s discretion | BOA failed to attach/assign the Modification to Bayview; assignments show transfer path that may exclude the Modification, so substitution/order should be vacated | Court held substitution was not an abuse of discretion; appellant lacked standing to challenge the mortgage assignment and transfer of the note sufficed |
| Whether the final foreclosure judgment exceeded relief requested in Bayview’s default motion and ignored Ballenger’s recorded mortgage and the Modification | Final judgment simply awarded relief sought in the complaint and predecessor’s pleadings; default judgment may grant what was demanded | Final judgment exceeded Civ.R. 55/Civ.R. 54(C) limits and failed to protect Ballenger’s recorded mortgage and the Modification | Court held trial court did not abuse its discretion; final judgment was consistent with the complaint and default practice; Ballenger’s arguments rejected |
| Standing to challenge mortgage assignments | Bayview: transfer of note conveys equitable assignment; parties without assignment/beneficiary status lack standing to challenge assignments | Ballenger: disputes chain of assignments and contends Modification was not assigned to Bayview | Court: Ballenger was not a party to the assignments nor a third-party beneficiary and therefore lacked standing to challenge them |
Key Cases Cited
- Riegel v. Belt, 164 N.E. 347 (Ohio 1928) (mortgage secures debt; changes to evidentiary form or payment terms not amounting to payment or express release do not discharge mortgage)
- Grafton v. Ohio Edison Co., 671 N.E.2d 241 (Ohio 1996) (standard of review for summary judgment is de novo)
- Panzica Constr. Co. v. Bridgeview Crossing, L.L.C., 39 N.E.3d 529 (Ohio Ct. App. 2015) (found mortgage modifications take effect when recorded and priority is determined at recording date)
- Dupler v. Mansfield Journal, 413 N.E.2d 1187 (Ohio 1980) (appellate court may independently review record on summary judgment)