Two new Ohio laws will have an impact in mortgage servicing in the Buckeye State. Our Lead Ohio foreclosure attorney, Carrie Davis, has put together the following summary which outlines the changes to the Ohio Private selling Officer (PSO) rules (HB 480), as well as the new registration requirement for Mortgage Servicers (HB 489).
– Removes the requirement that private selling officers managing foreclosure auctions report appraisal costs to the court and instead requires the sheriff who does the appraisal to report the cost
– Exempts a PSO who has complied with other reporting requirements in Ohio law from returning an order of sale with proceedings indorsed thereon to the clerk
– Establishes that the seven-day period within which an online foreclosure auction managed by a PSO must be open for refers to calendar days counted by excluding the first day the auction is open
– If a property that is involved in a foreclosure sale is deemed invalid due to the buyer’s failure to pay the deposit, the property can be brought to sale on a provisional second sale date that was listed on the notice of foreclosure
– Allows properties that do not sell at an online foreclosure auction to be brought to subsequent sales without regard to minimum bidding requirements in the same manner that sheriff sales do
– Governs multi-parcel auctions and authorizes the Department of Agriculture to regulate these auctions. A multi-parcel auction is any auction of real or personal property in which multiple parcels are lots are offered for sale in various amalgamations, including as individual parcels or lots, combinations of parcels or lots, and all parcels or lots as a whole. Any contract for a multi-parcel auction must include a statement that specifies that the auction will be a multi-parcel auction
– Prohibits a person from acting as a mortgage servicer without first obtaining a certificate of registration under the Ohio Residential Mortgage Lending Act. Violation of this would be a fifth degree felony, strict liability offense. Registration and application but be accompanied with a $500 application fee
o Entities who are exempt from the RMLA, including any state or federally chartered depository institution, do not need to register
§ Mortgage servicer is defined as an entity that, for itself or on behalf of a holder of a mortgage loan, holds the servicing rights, records mortgage payments on its books, or performs other functions to carry out the mortgage holder’s obligations or rights under the mortgage agreement.
§ Entities that are exempt from this:
· Any entity chartered and lawfully doing business under any law of Ohio, another state, or the United States as a bank, savings bank, trust company, savings and loan association, or credit union, or a subsidiary of such entity that is regulated by a federal banking agency and is owned and controlled by a depository institution
· A consumer reporting agency that is in substantial compliance with the Fair Credit Reporting Act
· Any entity created solely for securitizing loans secured by an interest in real estate, provided it does not service the loans. For this purpose, securitizing means the packaging and sale of mortgage loans as a unit for sale as investment securities
o Each mortgage servicer registrant must designate an employee or owner of the registrant’s business as the operations manager
– The Superintendent can enforce the RMLA against registered mortgage servicers and subjects mortgage servicers to the same penalties as mortgage brokers and mortgage lenders
– Requires a person collecting a debt that is in default and is secured by a junior lien on a residential property to send a specified notice to the debtor regarding the debt
o The notice must be sent via us mail to the residential address to the debtor
o Must be in at least 12 point type and state the name and contact information of the person collecting the debt, the amount of the debt, a statement that the debtor has a right to an attorney, a statement that the debtor may qualify for debt relief under U.S. Bankruptcy Code Chapter 7 or 13 and a statement that a debtor that qualifies under Chapter 13 may be able to protect their residential real property from foreclosure
– Provides a qualified immunity from civil liability to a person collecting a debt described above if the person makes a “bona fide error” and takes certain steps after the effort is made
o Bona fide error means an unintentional clerical, calculation, computer malfunction or programming or printing error
o Within 60 days after discovering the error and prior to the initiation of any action, the owner of the debt must notify the debtor of the error and the manner in which the owner of the debt intends to make full restitution to the debtor
These new provisions will be effective in March of 2019. If you have questions about how these legislative changes will impact you, please contact Carrie Davis at [email protected].