Third Fed. S. & L. Assn. of Cleveland v. Rains
2013 Ohio 4602
Ohio Ct. App.2013Background
- Third Federal filed foreclosure in Dec 2010, attaching Note A and Note B and alleging default; judgment and order of foreclosure entered Sept 2011 after magistrate granted summary judgment.
- Rains, pro se, opposed summary judgment arguing Third Federal lacked standing because Note A was endorsed in blank; she did not object to the magistrate’s decision.
- Rains appealed (Rains I) but voluntarily dismissed that appeal; property sold at sheriff’s sale June 2012 and sale was confirmed (Rains II), an appeal that this court found moot/forfeited.
- In Jan 2013 Rains (with counsel) moved to vacate the writ of possession and void the September 2011 judgment, asserting Third Federal was only a servicer and not the note-holder when suit was filed.
- Trial court denied the motion; on appeal the Eighth District affirmed, holding Third Federal was the real party in interest at filing because it produced an unendorsed note payable to Third Federal and had possession of the notes.
Issues
| Issue | Plaintiff's Argument (Third Federal) | Defendant's Argument (Rains) | Held |
|---|---|---|---|
| Standing / real-party-in-interest at time of filing | Third Federal was the note holder (note attached payable to Third Federal) and in possession of the notes, so it could enforce the note. | Third Federal sold the mortgage to Fannie Mae in 2003 and thereafter acted only as servicer; Note A bore an endorsement in blank so Third Federal lacked standing to sue. | Court held Third Federal had standing: the attached unendorsed note showed it was holder; even if endorsed-in-blank, possession makes it enforceable as bearer under R.C. 1303.25(B). |
Key Cases Cited
- Fed. Home Loan Mtge. Corp. v. Schwartzwald, 134 Ohio St.3d 13 (Ohio 2012) (holding lack of standing at outset cannot be cured later; plaintiff must have interest when suit filed)
- CitiMortgage, Inc. v. Patterson, 135 Ohio St.3d 1414 (Ohio 2013) (discussing that a foreclosing party must be holder of the note or have an assigned mortgage when filing; possession of bearer paper establishes holder status)