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Ohio House Bills 480 and 489 were among the 32 bills signed into law on December 19, 2018. The new laws will take effect 91 days thereafter. H.B. 480 amends certain provisions regarding foreclosure sales by court-authorized private selling officers. H.B. 489 requires a written notice with specified information to be sent to a debtor in default if the debt is secured by a junior lien on residential real property, and requires mortgage servicers to be registered in Ohio. 

H.B. 480: Changes for Private Selling Officers’ Sales

Private selling officers should take note of the following amendments to the prior law: 

• Clarification of time frame for bidding:
  

The prior law required private selling officers’ online sales to be open for bidding for a minimum of seven days. The amendment clarifies that private selling officers’ online sales are to be open for bidding for a minimum of seven calendar days, without regard to any legal holidays. 

• Elimination of certain restrictions for automatic second sales if there were no bidders at a first sale:

Under the prior law, if a residential mortgage loan foreclosure was scheduled for sale at a physical location, (i.e., not online), a pre-scheduled second sale would automatically take place between seven and 30 days after the first sale, if there were no bidders at the first sale. If there were no bidders at the first sale online, the prior law made it necessary to file a motion to obtain a court order for the clerk of courts to issue a new order of sale, and for the new sale to be advertised for an additional three weeks. This resulted in a delay and additional cost with no benefit. Because most private selling officers and some sheriffs conduct foreclosure sales online, commentators questioned why the automatic second sale procedure should not also apply if the first sale were online.  

The amendment deletes the restriction, so the automatic second sale procedure will apply to all residential mortgage loan foreclosures regardless of whether the first sale was at a physical location or online.  

The second sale must be scheduled between seven and 30 days after the first online auction. The amendment strangely defines the date of the first online auction as being the first day it is open for bidding, rather than the last day. Therefore, the private selling officer should schedule the second sale for no later than 30 days after the first sale was open for bidding

• Details for multi-parcel auctions:

The Act also provides some additional details for multi-parcel auctions of real or personal property in which multiple parcels or 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. All advertisements (but not road signs) of such a multi-parcel auction must provide the details regarding the type of auction.

H.B. 489: What Junior Lien Creditors and All Mortgage Servicers Must Implement by March 18, 2019

H.B. 489 implements new Ohio Revised Code Section 1349.72, which requires a person collecting a debt in default, secured by a junior lien on residential real property, to send a written notice via U.S. mail to the debtor's residential address prior to collecting - or attempting to collect - any part of the debt.

Unlike the federal Fair Debt Collection Practices Act, H.B. 489 appears to apply to persons or entities collecting their own debts, as well as to third-party debt collectors. 

The Act does not state that it applies only to residential real property occupied by the debtor. Therefore, it would seem to apply to rental property as well.

The notice must be in at least 12-point type, and state the following:

• 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 Chapter 7 or 13 of the United States Bankruptcy Code; and
• A statement that a debtor that qualifies under Chapter 13 of the Bankruptcy Code may be able to protect the residential real property from foreclosure.

Upon receiving a debtor’s written request, a copy of the note and the loan history must be provided. The Act imposes civil liability (but bars class action liability) for a compliance failure. Civil liability can be avoided if: (1) the failure was not intentional and resulted from a bona fide error, notwithstanding the maintenance of procedures reasonably adapted to avoid such an error; (2) within 60 days after discovering the error, the debtor is notified of the error and the manner in which full restitution is intended to be made; and (3) reasonable restitution is made to the debtor.

H.B. 489 also amends Ohio Revised Code Section 1322.07(A), by adding, "mortgage servicer" to the list of entities required to obtain a certificate of registration from Ohio’s Superintendent of Financial Institutions. The amendment contains an ambiguity as to whether mortgage servicers will also be required to maintain a brick and mortar office in Ohio, but based on the legislative history, it seems that registration in Ohio and maintaining an office in any state should suffice.  Mortgage servicers should have their attorneys review this issue, as this advisory should not be deemed legal advice.

For complete copies of the Acts, click here (H.B. 480) and here (H.B. 489).

For additional information, please contact Larry R. Rothenberg. Mr. Rothenberg is a Shareholder in Weltman’s  Real Estate Default Group, which focuses on residential and commercial real estate foreclosures, evictions, and title insurance issues. With more than 35 years of legal experience, Mr. Rothenberg is AV Rated by Martindale-Hubbell, and has been listed in 15 editions of Ohio Super Lawyers.