Foreclosure

A foreclosure is a legal process by which a mortgage company/bank seeks to take possession of an owner’s home. Ohio is a so called judicial foreclosure state, which means that lender must sue the owner in court and obtain a ruling against the owner if the owner defaults on his mortgage (stop paying the mortgage).

A foreclosure can begin the day after the owner misses his payment, although it rarely happens. In most cases, banks will file the foreclosure after three to four months delinquency. In Ohio, the County Court of Common Pleas has jurisdiction on the foreclosure proceeding. There are normally 11 steps.

1. Notice of default/Intent to accelerate letter/Breach letter
   Although having various names, this notice/letter tells the owner that unless he pays the back-due amount by a certain date, foreclosure proceedings will begin against him.

2. Filing Complaint in the court
   The Complaint must be filed in the court where the property is located. Basically, it recites the facts that the owner has breached the contract, along with other facts, such as the original mortgage, current amount, money owed, all other parties of record, etc.

   The owner has 28 days to respond to the Complaint. This response can be in the form of a Motion to Dismiss, an Answer, or an extension. An Answer is the most common form of response. It must, in certain format, admit, deny or state uncertain to each of the allegations in the Complaint.

   If the owner fails to respond to the Complaint, banks will seek for a “default judgment.” Thus, failing to answer will speed up the foreclosure process. If the owner answers, the likely next step is that bank will file a “Motion for Summary Judgment,” in which bank tells the court that the owner has no legal defense to the foreclosure. In today’s situation, it is true that most people have no legal defense to the foreclosure.

   In many counties, such as Cuyahoga, Magistrates, rather than judges, hear foreclosure cases. The Magistrate processes the case in the same manner, except that his/her judgment is not final until it has been signed by the Judge. Therefore, after Magistrate’s final order, either party normally has two weeks to file a written object with the Judge for his review.

3. Title Report
   This shows a list of all parties interested in the property.
4. Judgment Decree
   After the court has heard the case, it will enter a judgment, which sets out the amount of the debt due on the house, orders the foreclosure, marshals the liens, establishes the priority of payment and orders the property to be sold free of liens.
5. Praecipe (order of sale)
   This must be filed with the clerk within three days after the decree/judgment.
6. Appraisal
   Normally, the property has to be appraised by an appraiser. In Ohio, the starting bid for the foreclosing property will be 2/3 of the appraised value, except when a junior lien is foreclosing.
7. Newspaper publication
   The notice in the newspaper is required to advertise the foreclosure. It must contain the following information:
   1) Time and place of the sale.
   2) The street address and description of the property.
8. Foreclosure Sale
   The sale/auction will be held in the county courthouse where the property is located. The highest bidder is required to deposit ten percent (10%) of the winning bid by certified check or cash with the sheriff, along with other court fees. Then the bidder must pay the balance within a time period. Default will cause the forfeiture of the deposit and other fines.
9. Motion to Confirm the Sale
   This is an order prepared by the bank’s lawyer confirming the sale and the order of payment.
10. Confirmation hearing
    Judge will review the sale and make sure it confirms with the proper procedures.
11. Sheriffs Deed
    After the confirmation hearing, Sheriff Department will prepare Sheriff Deed and give it to the bidder. The court can grant a 30-day delay in some cases (called “Stay”).
    

The time for a foreclosure case used to take between 1 ½ and 2 years, but now that time is much shorter. Because of the large volume, the courts have tried to shorten it to 6 months. Still, the time depends on the particular court.

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