Deut Sche Bank Trust Co. of Ams. v. Jones
107 N.E.3d 117
Ohio Ct. App.2018Background
- In 2006 David and Caroline Jones executed a $150,000 note to First Magnus and a mortgage in favor of MERS as nominee for First Magnus for a Cleveland multifamily property.
- An allonge payable to Deutsche Bank as trustee for RALI was attached to the note; the mortgage was assigned to Deutsche Bank Trust (RALI trustee) in 2012 and later to Deutsche Bank in 2016.
- Deutsche Bank filed for foreclosure in July 2016, alleging default and acceleration with a balance of $142,475; it moved for summary judgment supported by the note, assignments, and an affidavit from loan servicing officer Jesse Rosenthal.
- The Joneses opposed, arguing (1) HUD face‑to‑face interview regulations (24 C.F.R. § 203.604(b)) applied as conditions precedent and were not satisfied, (2) Deutsche Bank lacked standing (challenging endorsements/allonge), and (3) Rosenthal’s affidavit was hearsay / insufficient to prove default and damages.
- The magistrate granted Deutsche Bank summary judgment; no objections were filed and the trial court adopted the decision. The court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument (Deutsche Bank) | Defendant's Argument (Jones) | Held |
|---|---|---|---|
| Whether HUD face‑to‑face interview regulations were incorporated and required before foreclosure | Mortgage documents govern loan; HUD regs not incorporated so no face‑to‑face requirement | Mortgage referenced Fannie/Freddie uniform instrument; HUD regs therefore apply and were not complied with | HUD regulations were not incorporated into the mortgage; no conditions precedent under 24 C.F.R. §203.604(b) applied |
| Sufficiency of affidavit/business records to prove default, acceleration, and amount due | Rosenthal had personal knowledge of loan servicing records, authenticated note, assignments, and payment history | Rosenthal lacked personal knowledge and relied on hearsay business records | Affidavit plus attached business records met Civ.R. 56(E) requirements; evidence sufficient to prove default and damages |
| Standing to foreclose (possession/endorsement/allonge issues) | Deutsche Bank was in possession of the note with an allonge indicating payee and had assignments of the mortgage; therefore a proper party to enforce | Allonge undated/not properly affixed; endorsements/assignments defective so Deutsche Bank lacks standing | Possession of the note and recorded assignments supported Deutsche Bank’s standing; borrowers lack standing to challenge assignments |
| Borrower’s ability to contest assignment validity | Not addressed as a defense; plaintiff need only show entitlement to enforce the instrument | Assignment chain and MERS/pooling issues render assignments invalid | Borrower (not a party to assignments) cannot challenge validity of assignments; challenge fails |
Key Cases Cited
- Fed. Home Loan Mtge. Corp. v. Schwartzwald, 979 N.E.2d 1214 (Ohio 2012) (plaintiff must have standing to sue; party must have personal stake and concrete injury)