Unique Concerns When Foreclosing Junior Liens on Real Estate in Ohio

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Unique Concerns When Foreclosing Junior Liens on Real Estate in Ohio

Unique Concerns When Foreclosing Junior Liens on Real Estate in Ohio

Lexology-

There has been some significant activity recently involving the rights and obligations of junior real estate lienorsin Ohio who file foreclosures to realize on real estate liens. The purpose of this post is to discuss that activity and remind lenders and their counsel of one important right of senior lenders that has not changed.

1. In December 2018 Governor Kasich signed an amendment to Ohio’s Residential Mortgage Lending Act. Inter alia, the change provides a new notice requirement for all actions to collect a debt secured by residential real property if the foreclosed lien is a second mortgage or junior lien. Titled Collecting debt on junior liens Ohio Revised Code Section 1349.72 now states in part:

  1. Before a person collecting a debt secured by residential real property collects or attempts to collect any part of the debt, the person shall first send written notice as described in division (B) of this section via United States mail to the residential address of the debtor, if both of the following apply:
    1. The debt is a second mortgage or junior lien on the debtor’s residential real property.
    2. The debt is in default.
  2. The written notice shall be printed in at least twelve-point type and state the following:
    1. The name and contact information of the person collecting the debt;
    2. The amount of the debt;
    3. A statement that the debtor has a right to an attorney;
    4. A statement that the debtor may qualify for debt relief under Chapter 7 or 13 of the United States Bankruptcy Code, 11 U.S.C. Chapter 7 or 13, as amended;
    5. A statement that a debtor that qualifies under Chapter 13 of the United States Bankruptcy Code may be able to protect their residential real property from foreclosure.
  3. Upon written request of the debtor, the owner of the debt shall provide a copy of the note and the loan history to the debtor. . . .. (bold added)

[LEXOLOGY]

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