Nationstar Mtge., L.L.C. v. Willis

[Cite as Nationstar Mtge., L.L.C. v. Willis, 2016-Ohio-4721.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MIAMI COUNTY
NATIONSTAR MORTGAGE, LLC :
:
Plaintiff-Appellee : C.A. CASE NO. 2014-CA-36
:
v. : T.C. NO. 13CV491
:
TED C. WILLIS, JR., et al. : (Civil appeal from
: Common Pleas Court)
Defendants-Appellants :
:
...........
OPINION
Rendered on the ___30th___ day of _____June_____, 2016.
...........
JOHN B. KOPF, Atty. Reg. No. 0075060, 41 S. High Street, 17th Floor, Columbus, Ohio
43215
and
JEREMY D. SMITH, Atty. Reg. No. 0088539, 10050 Innovation Drive, Suite 400,
Miamisburg, Ohio 45342
Attorneys for Plaintiff-Appellee
MARC E. DANN, Atty. Reg. No. 0039425 and GRACE M. DOBERDRUK, Atty. Reg. No.
085547, P. O. Box 6031040, Cleveland, Ohio 44103
Attorneys for Defendants-Appellants
.............
DONOVAN, P.J.
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{¶ 1} This matter is before the Court on the Notice of Appeal of Ted C. and Cheryl
A. Willis, filed December 11, 2014. The Willises appeal from the trial court’s November
25, 2014 Judgment Entry and Decree of Foreclosure, issued in favor of Nationstar
Mortgage LLC (“Nationstar”). We hereby affirm the judgment of the trial court.
{¶ 2} On September 19, 2013, Nationstar filed a “Complaint for Money and
Foreclosure” against the Willises, the State of Ohio, Department of Taxation, and the
Miami County Treasurer. According to the complaint, Nationstar is the holder of an
Adjustable Rate Note, executed on July 14, 2006, by Ted Willis, and secured by a
Mortgage. Nationstar alleged that by reason of default on the Note, “there is due and
owing thereon the principal sum of $101,174.66 plus interest at the rate of 8.9% (variable)
per annum from May 1, 2013, plus late charges.”
{¶ 3} Nationstar further alleged that it is the holder of the Mortgage that was
executed to secure the above indebtedness, that the Mortgage was recorded on July 31,
2006, and that it “is the first and best lien after real estate taxes on the real estate
property.” Nationstar alleged that the conditions of the Mortgage “have been broken.”
Nationstar alleged that Cheryl Willis “has or may claim to have an ownership interest in
said property.” Nationstar sought judgment against Ted Willis.
{¶ 4} A copy of the Adjustable Rate Note (Exhibit A) and the Mortgage (Exhibit B)
are attached to the complaint, as well as an Assignment of Mortgage (Exhibit C). The
Lender on the July 14, 2006 Note is People’s Choice Home Loan, Inc. (“PCHL”), and the
Note is executed by Ted Willis in the amount of $180,000.00. The Note provides: “I
understand that the Lender may transfer this Note. Lender, or anyone who takes this
Note by transfer and who is entitled to receive payments under this Note is called the
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‘Note Holder.’ ” The Note further provides as follows:
This Note is a uniform instrument with limited variations in some
jurisdictions. In addition to the protections given to the Note Holder under
this Note, a Mortgage, Deed of Trust, or Security Deed (the “Security
Instrument”), dated the same date as this Note, protects the Note Holder
from possible losses that might result if I do not keep the promises that I
make in this Note.
The Note is numbered pages 1-4, and the final unnumbered page of Exhibit A reflects the
following endorsement:
PAY TO THE ORDER OF
_____________________
WITHOUT RECOURSE
PEOPLE’S CHOICE HOME LOAN, INC
A Wyoming Corporation
By__________________________
DANA LANTRY
Title: Asst. Vice President
There is a signature on the line above “DANA LANTRY.”
{¶ 5} The Mortgage identifies Ted and Cheryl as the borrowers, PCHL as the
lender, and MERS (Mortgage Electronic Registration Systems, Inc.) as the mortgagee.
The Mortgage indicates that the real property at issue is located at 606 Robinson Avenue,
Piqua, Ohio 45356. The Mortgage provides in part: “(E) ‘Note’ means the promissory
note signed by Borrower and dated July 14, 2006. * * *.”
{¶ 6} The August 2, 2013 Assignment of Mortgage provides that MERS, as
nominee for PCHL, assigns the Mortgage, with all interest secured thereby, to Nationstar.
-4-
The Assignment of Mortgage provides in part as follows:
FOR GOOD AND VALUABLE CONSIDERATION, the sufficiency of
which is hereby acknowledged, the undersigned, MORTGAGE
ELECTRONIC REGISTRATION SYSTEMS, INC., AS NOMINEE FOR
PEOPLE’S CHOICE HOME LOAN, INC., ITS SUCCESSORS AND
ASSIGNS * * * (ASSIGNOR), by these presents does convey, grant, assign,
transfer and set over the described Mortgage together with all interest
secured thereby, all liens, and any rights due or to become due thereon, to
NATIONSTAR MORTGAGE, LLC, * * *.
Said Mortgage was executed by TED C. WILLIS, JR. AND CHERYL
A. WILLIS to MORTGAGE ELECTRONIC REGISTRATION SYSTEMS,
INC., AS NOMINEE FOR PEOPLE’S CHOICE HOME LOAN, INC. * * *.
***
IN WITNESS WHEREOF, the undersigned has hereunto set its hand
by its proper officer on 8/2/2013 * * *.
MORTGAGE ELECTRONIC RESGISTRATION SYSTEMS, INC.
AS NOMINEE FOR PEOPLE’S CHOICE HOME LOAN, INC. ITS
SUCCESSORS AND ASSIGNS
BY: __________________________
Nadine Homan ASST. SECRETARY
All Authorized Signatories whose signatures appear above are employed
by NTC and have reviewed this documents and supporting documentation
prior to signing.
***
The foregoing instrument was acknowledged before me on 8/2/2013* * *,
by Nadine Homan as ASST. SECRETARY for MORTGAGE ELECTRONIC
REGISTRATION SYSTEMS, INC. AS NOMINEE FOR PEOPLE’S CHOICE
HOME LOAN, INC., ITS SUCCESSORS AND ASSIGNS, who, as such
ASST. SECRETARY being authorized to do so, executed this foregoing
instrument for the purposes therein contained. He/she/they is (are)
personally known to me.
A signature appears on Homan’s signature line above, and the assignment is notarized
by Nicole Baldwin.
-5-
{¶ 7} A Preliminary Judicial Report was filed on September 19, 2013. The Miami
County Treasurer filed an Answer on September 24, 2013. On September 26, 2013, the
Willises filed a pro se “Answer and Request for Mediation,” and on October 1, 2013, the
trial court issued an “Order and Assignment for Foreclosure Mediation.” On October 23,
2013, the State of Ohio, Department of Taxation filed an Answer. On April 24, 2014, the
Willises filed an “Amended Answer and Request for Mediation.”
{¶ 8} On July 23, 2014, the trial court issued a “Notice of Hearing,” thereby
scheduling a pre-trial conference for August 4, 2014. On August 5, 2014, the trial court
issued an “Order to Show Cause,” which provides in part that at the time scheduled for
the pre-trial conference, the Willises appeared but counsel for Nationstar failed to do so,
and the “court has not had any contact from counsel and there has not been a request to
continue the pretrial conference.” The court ordered Nationstar and its counsel to appear
and show cause why the matter should not be dismissed for lack of prosecution. On
August 6, 2014, the court issued an “Amended Order to Show Cause,” thereby ordering
Nationstar and its counsel to appear on August 25, 2014. Also on August 6, 2014,
Nationstar filed a “Notice of Substitution of Counsel.” On August 15, 2014, the court
scheduled the matter for trial on September 30, 2014.
{¶ 9} On that date, the Willises appeared pro se. At the start of the hearing,
counsel for Nationstar moved the court in limine to exclude evidence of “settlement
discussions, mediations discussions, hearsay evidence from my client.” The court
indicated that “whether representations were made about settlements or not made are
probably not going to be something the Court can consider, but * * * we’ll address those
issues as they come up.”
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{¶ 10} Lisa Gibson testified that she is a “Default Case Specialist at Nationstar
Mortgage,” and that she “review[s] loans that are in default, review[s] the notes, mortgage,
demand letter, payment histories, everything regarding the loan.” Gibson stated that she
also attends mediations and testifies on behalf of Nationstar at trial. Gibson testified that
in “preparing for today’s trial, I have reviewed the file thoroughly, * * * I saw the original
Note as well as the Mortgage, the payment history, the breach letter, any loss mitigation
efforts and loan modification offers, everything in * * * that nature.”
{¶ 11} Gibson identified a copy of the Adjustable Rate Note, and she testified that
she “also saw the original [here] today.” When asked on direct examination, “where has
that original been before it was here today,” Gibson responded that the original was in
“our custodial file in Nebraska,” in the possession of Nationstar. When asked about the
terms of the Note, Gibson testified as follows:
* * * It was an adjustable rate mortgage, which means that the * * *
rate is subject to adjust. In this particular Note, it does state that the rate
would never go greater than 14.9%, and never less than 8.9%, and we’re
currently at the 8.9 rate on the file. The monthly payment was in the
amount of Eight Sixty-one twenty-four ($861.24) and it’s indicated that that
payment may change.
Gibson testified that the original lender was PCHL, “a Wyoming Corporation,” and that
the Note bears a blank endorsement, executed by “Dana Lantry, Assistant Vice President
at” PCHL. Gibson testified that if the Note is in default, Navistar can accelerate the
amount due thereon and seek payment of the remaining balance in full, and that it did so
by means of a “breach letter” sent to Ted Willis on July 16, 2013.
-7-
{¶ 12} Gibson further identified “a copy of the recorded Mortgage that was
recorded in Miami County, Troy, Ohio on 7-31 of 2006, and it is executed by Ted. C. Willis
and Cheryl A. Willis as Husband and Wife.” Gibson stated that the Willises executed the
Mortgage on July 14, 2006. Gibson testified that the Mortgage is “the security instrument
that also shows * * * who signed it, where the property is located.” According to Gibson,
pursuant to the Mortgage, Navistar has the right to “collect or be entitled to the property
if payments aren’t made.” Gibson stated that if the Note goes into default, Navistar “will
file a foreclosure and proceed with foreclosure.” She stated that Notice is required, and
that Nationstar accordingly sent a “demand letter.”
{¶ 13} Gibson identified a copy of “the breach, or also referred to as the demand
letter sent to Ted C. Willis by first class mail,” which she stated is provided for by the
Mortgage. Gibson stated that the demand letter was sent to the “mailing address that we
have for Mr. Willis on file, which is 1008 Colleen Drive, Piqua, Ohio.” She stated that the
Robinson Avenue property, according to “our records, is a rental property.” Gibson
stated that the demand letter was sent after “the loan was forty-five days past due,” and
she testified that the letter gave Ted the option to pay what is past due, and advised that
foreclosure is the likely consequence of failing to bring the loan current.
{¶ 14} On cross-examination by Ted, Gibson identified a copy of the “Customer
Account Activity Statement, which is also referred to as the payment history.” Gibson
testified that she “reviewed it thoroughly in preparation for trial today, and noted that the
last payment received on the case was on 5-31 of 2013, which we now show it due for
June 1st of 2013.” Gibson stated that Nationstar maintains such a record for all of its
loans. She stated that the Note is in default as of June 1, 2013. Gibson stated that
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Nationstar owns the Mortgage at issue by means of the Assignment of Mortgage, which
she states was “recorded August 14th of 2013 in Miami County, Troy, Ohio, by the County
Recorder, Jessica A. Lopez.”
{¶ 15} The following exchange occurred in the course of Cheryl’s cross-
examination of Gibson:
***
Q. But I guess my only question then, are any of these documents,
have they been robo signed?
***
A. No they have not.
Q. Can you verify that they haven’t been robo signed?
***
A. * * * Based on the Exhibits that were presented to me, it’s within
my understanding to - I may state that – what documents are you referring
to specifically? The only ones that were signa – the ones that were signed
were by Mr. Willis that were presented in Court. The only one would be
the Assignment of Mortgage, which based on the fact that it was endorsed,
signed by the Vice President of that previous servicer?
Q. Relative to the foreclosure, were any of the documents relative
to the foreclosure robo signed?
A. Not to my knowledge, there was – to my knowledge there was
no robo signing involved.
{¶ 16} After Nationstar’s exhibits were admitted, Ted called Cheryl to the stand,
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and she testified that she was notified of the foreclosure proceedings in September, 2013,
and that at that time, “[w]e were still in the modification process.” When Ted asked
Cheryl to describe what occurred in the court-ordered mediation, counsel for Nationstar
objected, and the court indicated, after reviewing the mediator’s report, that “it indicates
that plaintiff currently is reviewing defendant’s application for HAMP Tier 2 modification,
and will decide by end of November 2013 whether Defendants qualify for Tier 2. So I
mean it’s not like there was an agreement reached, and the case was settled.” The court
asked Ted to explain his purpose in adducing testimony about the mediation process,
and Ted responded as follows:
The purpose of the discussion of the mediation was based upon
Nationstar’s attorney what they had shared with us that they were going to
do. In giving that information, we wanted to make clear to the Court that
there was no follow through from Nationstar after that meeting had taken
place. That’s one of the reasons why we wanted to present this information
to the Court that during the mediation we were told that “x” amount of days
that we would receive documents and certain other things pertaining to
come (sic) to a conclusion of this foreclosure. We never received those
documents. And that’s why I was asking Cheryl A. Willis pertaining to the
information that was spoken to us in that mediation by the attorney of
Nationstar.
{¶ 17} The court responded that the information Ted sought to adduce is “just not
relevant” and “it’s not going to change the outcome of this case at all.” The following
exchange occurred:
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BY MR. WILLIS:
Q. According to the knowledge that you have pertaining to this
particular case, how many times had the information been submitted to
Nationstar pertaining to the foreclosure information that had been submitted
to myself?
MR. WILLIAMS: Objection. Relevance.
THE COURT: Overruled. She can answer that.
BY M[S.] WILLIS:
A. In this process, since the foreclosure, I guess we have submitted
about at least, at the very least three packets of the same documents.
***
Q. * * * Next question I need to ask you, pertaining to the information
that you had submitted on numerous occasions to Nationstar, are you
aware of any information or contact by Nationstar * * * such as a phone call
that was admitted by Mildred Glasburg or any information that was
pertaining in the Exhibit that we submitted to the Court?
A. Nothing that we submitted here, but she called them many, many
times. Many, many times. Sometimes weekly.
Q. Are you aware of a phone call that was submitted to Mildred
Glasburg representing Nationstar pertaining to this particular foreclosure?
A. Oh yes.
Q. Can you share information from that phone call that was
submitted?
-11-
MR. WILLIAMS: Objection.
MR.WILLIS: Your Honor we submitted to the Court an actual
document that actually was notarized by the administrator of our Mortgage
from Nationstar. The document pertained to information that Nationstar
presented to myself as a settlement or offer that would have been,
according to me, resolved; that would not have taken us to this position.
So this is the reason why I asked Cheryl A. Willis information pertaining to
the - - what Nationstar called our administrator, basically giving information
pertaining to this particular case. That information has been submitted to
the Court, and I’m just asking is she aware of it, that information on what
was explained in that document.
***
MR.WILLIS: * * * If I may, Your Honor, the reason of this question
is to – according to the plaintiffs that we have not responded in a manner
pertaining to the Mortgage itself. Neither from our position that from what
they have submitted to us that we have not replied back to them in a manner
that would resolve this case.
THE COURT: Well, again, you’re getting into what would be
considered settlement negotiations, and settlement negotiations are not
legally relevant during – at trial.
MR. WILLIS: Okay.
THE COURT: So I’d have to sustain his objection and again the
only – only issues that are relevant is [“]Did you make the payments or not”
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and – and the issue of trying to - failed efforts to who’s fault that – that –
the - the- re-negotiation of the loan, who’s fault that was, whether you tried
to do everything you could, or they didn’t, aren’t relevant anymore.
MR. WILLIS: I understand but may I ask the Court if Nationstar has
contacted us and made reference that a settlement had been reached, and
they breached their contract with us, based upon the information that we
have received that what they offered me and then later came back and
changed that offer without giving me prior notice or information pertaining
to that offer is exactly why I’m asking her this question. If they called us
and made a reference that a certain dollar amount had been implemented
and that we had qualified for whatever – whether HAMP 1 or HAMP 2
program, and yet they then changed their mind on us is what brought us to
this litigation here today.
THE COURT: Except that neither one of you are the person that
had discussion with Nationstar, is that correct?
MR. WILLIS: Correct.
***
MR. WILLIS: And the administrator that has been assigned to that
Mortgage, from us, as a representative of that Mortgage, and we talked to
Nationstar over the phone to let them know that they may contact all
advertisements, all information pertaining to this foreclosure, pertaining to
the loan modification was to go by Mildred Glasburg. And they agreed.
THE COURT: But she’s not here today.
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***
MRS. WILLIS: That’s why she sent the notarized letter.
MR.WILLIS: But she sent a letter of notarization validating the
statements that she has made as true and binding.
THE COURT: Well unfortunately she would need to be here today
to testify. They can’t cross examine a – this is not – this would be
considered hearsay and it doesn’t fall within any of the legally recognized
exceptions to a hearsay * * * statement.
MR. WILLIS: And if I may ask, would it be an interest that either
Nationstar can validate or non-validate that the call had been made from
their office?
THE COURT: If you had a witness here who is going to testify to
that.
MR. WILLIS: I would like to call back actually the witness that had
came here before, if I may.
MR. WILLIAMS: Your Honor, that testimony would not be relevant,
and there’s no proffer that Ms. Gibson participated in any such
conversation.
***
MR. WILLIAMS: The loan file doesn’t include out-of-court
statements about whether settlement was reached or not.
* **
THE COURT: Well what she should know or she shouldn’t know is
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a matter that will have to be determined when – I mean you can call her –
I’ll just give you a chance to call her and put her on the witness stand when
you’re done with your wife.
***
RE-CROSS EXAMINATION OF LISA GIBSON
BY MR[]. WILLIS:
Q. According to the knowledge of the file that you have represented
from Nationstar, do you have knowledge of any phone contact that was
made to Mildred Glasburg pertaining to this particular foreclosure?
***
A. I do not have knowledge of that call.
Q. * * * Secondly, my next question to you would be for the signing
of the actual original Note * * * for Nationstar from Peoples’ Choice –
A. Correct.
Q. - you have stated to the Court that you do have the actual blue
ink pertaining to – do you have –
A. Absolutely yes. * * *
Q. Do you have in your file at this time (sic)?
A. Yes we do.
Q. Would you present that to the Court?
A. I can have my attorney show that to you, or * * * they’ll take care
of the formalities but we do have the blue ink signature.
***
-15-
MR. WILLIAMS: Your Honor this - * * * document is not marked
as an Exhibit.
THE COURT: Well why don’t you * * * show it to Mr. Willis, then
show it to the Witness.
***
MR. WILLIAMS: (TO MR. WILLIS)
You can see the –
MR. WILLIS: I am very aware –
MR. WILLIAMS: - the initials there on the bottom of the front –
MR. WILLIS: I am very aware of the file, sir.
BY MR. WILLIS:
Q. From this document that has been submitted -
A. Correct.
Q. – the original blue ink –
A. Yes.
Q. – in the transfer from People’s to Nationstar –
A. Yes.
Q. – has there been any documents to your information pertaining to
this particular Note, pertaining to the actual re-signing of the document of
2006, was those documents ever robo signed?
A. Not to my knowledge, no. It has a blank endorsement on the
back, and what a “blank endorsement” means is that People’s Choice can
pretty much sell that loan to whoever they choose.
-16-
***
{¶ 18} The following exchange occurred:
MR.WILLIS: * * * I would like to also, Your Honor, if I may, present
to the Court the actual letter that was submitted to – to myself by Nationstar.
This is actually the letter that was stated from – in the loan mod of March
the 12th, 2014. * * *
THE COURT: Before you talk about what’s in the letter –
MR. WILLIS: Yes sir.
THE COURT: Have you shown the letter to Mr. Williams?
MR. WILLIS: Sure. I ask to show them the letter sir.
***
MR. WILLIS: If I may Your Honor, according to the letter that had
been submitted to me by Nationstar, it had been process (sic) of over two
years that –
THE COURT: Do you want to testify about the letter?
MR. WILLIS: Oh yes.
THE COURT: Then you’ll need to come up here to the witness
stand.
***
THE COURT: Bring the letter with you.
MR. WILLIS: Yes sir.
{¶ 19} Counsel for Nationstar objected to “testimony from the letter * * * as
hearsay and more importantly not relevant to the issues that are before the Court * * * on
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our action on the Note and Mortgage,” and the court indicated that it would allow “the
witness [to] testify, and we’ll address any hearsay issues if and when they come up.”
The letter at issue was marked as Defendants’ Exhibit 4, and Ted testified as follows:
A. * * * Defendant’s 4 is a letter dated March 12, 2014, and it states
“Payments must be made via western union or moneygram” and the
payment is May 1, 2014 in the amount of Two Thousand Two Hundred
Forty-six dollars and ninety-two cents ($2,246.92). It states in the letter
that the modification payment is Eight forty-five ($845.00), excluding the
escrow, which is the taxes upon the property of Three Hundred and Thirteen
Dollars ($313.00), and the estimated total amount of payment would be
Eleven Hundred and Fifty-eight Dollars and nine cents ($1,158.09). In
receiving this letter, Your Honor, we had received several letters from
Nationstar –
THE COURT: Who is the letter from?
A. The letter is from Nationstar Mortgage Corporation.
THE COURT: Okay.
A. In receiving this letter from Nationstar, we contacted Nationstar.
One of the things that we had submitted to Nationstar was that the previous
letter that we had received * * * from them, actually was actual (sic) a
contradiction to the first letter that we had received.
***
THE COURT: This letter – Defendant’s Exhibit 4 –
A. Yes.
-18-
THE COURT: - it contradicted an earlier letter, is that what you’re
saying?
A. Absolutely. Absolutely.
THE COURT: Okay.
A. So from that contradiction, we were trying to seek clarification of
which one of these two letters that had been received to us, which one was
the binding letter, because the other letter that we received was also
supposed to be binding. Now from that particular letter that we received in
March, we were confused, because the previous letter stated completely
something different. And each time that the letters that we had received
from Nationstar, it seemed that it was continually to be a repetitious cycle
that whatever they stated to us, we could not believe in it. Because every
three to four to six months, there was always something that was changing.
THE COURT: See here * * * Mr. Willis, we are once again back in
why a refinancing failed, and again I know it’s your position that they couldn’t
be trusted in anything they said, but whether they couldn’t be trusted, or
whether it was simple miscommunication, or whether there was something
more – something else involved are just – it’s not going to - it’s not relevant.
A. The only reason why in stating this Your Honor is that in order
for us as a client to make a payment to Nationstar, we needed to find out
which one of the letters that we had been submitted was binding. So in
reference to - if we received a letter that was pertaining to us to make the
judgment or make this Mortgage current or due, and then yet six months
-19-
later we receive another letter that changes everything and we were asking
which and why are we receiving letters or information pertaining to trying to
bring this Mortgage due, which one of these things should we adhere to?
THE COURT: You weren’t trying to bring the Mortgage current, * *
* you were going to get a different Mortgage Note.
A. Correct.
THE COURT: As opposed to - * * * and the only thing that I can deal
with –
A. Yes sir.
THE COURT: - in this case is the Note that was – was identified as
the original Mortgage Note. The other Notes that could have superseded
this never came into existence, and again I understand it’s your position that
their fault should make a difference in the Court’s enforcing the Note that I
have in front of me, * * * it doesn’t. It just – I have no legal basis to do that.
A. * * * My question then would be to the Court, * * * how can a
client or a Mortgage holder send the payment, when they don’t know what
the amount is from Nationstar. So if Nationstar is sending me a letter
stating that this is the amount that is due, and that they have concluded and
then they send me another letter saying, no this changes, how can the client
make a payment to bring restitution?
THE COURT: Because you’re talking about payment on a different
obligation.
A. I understand.
-20-
***
THE COURT: * * * the Note that you signed was in default, and they
have apparently accelerated it, which means the only amount that could
have avoided the foreclosure was the payment of the entire balance of the
original Note that was signed. And anything short of that was just a
negotiation * * * to avoid * * * the foreclosure which would follow from the
acceleration of the original Note. * * * however strongly you feel about
Nationstar’s failures, it’s not something that I can consider and will change
the outcome of this case.
{¶ 20} The following exchange occurred on Ted’s cross-examination by counsel
for Nationstar:
***
Q. * * * You mentioned that the settlement letters, * * * the loan
modification letters were contradictory, correct?
A. Yes.
Q. And you brought one here today that was an actual offer of
workout with terms that you considered to not be attractive. Is that correct?
A. Correct.
Q. And – and so you didn’t sign that document?
A. Correct.
Q. But you saw the Note earlier, you did sign the Note, correct?
A. Correct.
Q. And – and the Mortgage, you signed it?
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A. Correct.
Q. And you promised to pay the money back?
A. Correct.
Q. And then was there a time when you were unable to pay the
money back?
A. Correct.
Q. And you – you did receive the breach letter that was sent telling
you that you could cure the default, if you paid a certain amount of money?
A. Correct.
Q. And * * * either you didn’t have the money to make that payment
or you decided not to make that payment, is that correct?
A. Didn’t have the money.
Q. The letter that you say you received that was contradictory to the
one that you showed us here today, you didn’t bring that in. Is that correct?
A. No.
Q. And is that because you don’t have that letter?
A. Didn’t have time to prepare for it.
Q. Okay but that letter wasn’t a contract offering a workout
agreement, with a signature line for you that you could have sent in, is that
correct?
A. That is incorrect.
Q. So why didn’t you send it in, if – if it was an offer that was to
modify the contract and that was an attractive term to you?
-22-
A. That was the information we were preparing to wait for from
Nationstar to submit to us.
Q. But you said that you received the contract offer that had a
signature line for you to return.
A. We received information pertaining to an offer from Nationstar if
we would sign.
Q. So you did not receive a contract to sign –
A. I did receive a letter from Nationstar pertaining to a contract for
me to sign. I did not sign the letter.
Q. And – and the letter that you saw, that you received March 29th
had terms that you didn’t like, so you didn’t sign that. Is that correct?
A. Different from the terms that we had previously received, no I did
not sign it.
{¶ 21} At the conclusion of Ted’s cross-examination, Cheryl indicated to the court
that she had “one question for the Nationstar representative,” and the following exchange
occurred:
Q. * * * Who from Nationstar, since you don’t have any knowledge
of robo signing, who from Nationstar * * * verifies that no robo signing on
foreclosure documents had taken place?
***
A. To my knowledge, we have a Quality Assurance Department that
verifies all the loans that come in on the boarding process, when a loan is
service-transferred.
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{¶ 22} On November 6, 2014, the trial court issued a “Decision Granting
Judgment to Plaintiffs on Complaint in Foreclosure,” which provides in part as follows:
***
At trial, the plaintiff demonstrated that Ted C. Willis executed an
adjustable rate note that was secured by a mortgage on 606 Robinson
Avenue, in Piqua, Ohio, a rental property. The mortgage was executed by
both Ted and Cheryl Willis. The plaintiff also demonstrated that the
conditions of the note and mortgage had been breached in that Ted Willis
had not paid the note in accordance with its terms. Specifically, the note
has been in default since the last payment was received on May 31, 2013.
The defendants feel they were misled by Nationstar about their ability
to modify the loan. The parties did attempt to mediate the foreclosure
action, and the plaintiff did offer a loan modification that the defendants did
not sign. Notwithstanding the disagreement over Nationstar’s failure to
offer a loan modification acceptable to the Willises, the plaintiff has
established the elements of a foreclosure action. The court also finds that,
after considering the equities, the plaintiff is entitled to a decree of
foreclosure and to an order from the court that the property subject to the
mortgage shall be sold at sheriff’s sale in accordance with law.
Counsel for the plaintiff shall prepare a Judgment Decree of
Foreclosure consistent with this decision and the evidence presented at
trial.
***
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{¶ 23} On November 20, 2014, a “Notice of Filing of Final Judicial Report” was
filed, along with an “Affidavit Regarding Military Status.” On November 25, 2014, the
“Judgment Entry and Decree in Foreclosure” was filed, which provides in part:
***
The Court * * * finds that there is due to Plaintiff on the Note principal
in the amount of $101,174.66 plus interest on the principal amount at the
rate of 8.0% per annum from May 1, 2013, adjusted as per the terms of the
Note. The Court finds that there is due on the Note all late charges
imposed under the Note, all advances made for the payment of real estate
taxes and assessments and insurance premiums, and all costs and
expenses incurred for the enforcement of the Note and Mortgage, except to
the extent the payments of one or more specific such items is prohibited by
Ohio law.
As a result, the Court hereby enters judgment for the amount due on
the Note in favor of Plaintiff and against Ted C. Willis, Jr.
The Court finds that the Mortgage was recorded with the County
Recorder and is a valid and subsisting first mortgage on the Property. The
Court further finds that the parties to the Mortgage intended that it attach to
the entire fee simple interest in the Property. The Mortgage is, however,
junior in priority under Ohio law to the lien held by the County Treasurer to
secure the payment of real estate taxes and assessments. All amounts
payable under Section 323.47 of the Ohio Revised Code shall be paid from
the proceeds of the sale before any distribution is made to other lien
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holders.
***
IT IS THERFORE ORDERED, ADJUDGED AND DECREED that
unless the sums found to be due to Plaintiff are fully paid within three (3)
days from the date of the entry of this decree, the equity of redemption of
the defendant title holders in the Property shall be foreclosed and the
Property shall be sold free of the interests of all parties to this action. In
addition, an order of sale shall issue to the Sheriff of Miami County, directing
him to appraise, advertise and sell the Property according to the law and
the orders of this Court and to report his proceedings to this Court.
{¶ 24} On December 11, 2014, Willis filed a “Combined Motion to Stay Sheriff’s
Sale and for Waiver of Supersedeas Bond of Defendants Ted C. Willis, Jr. and Cheryl A.
Willis.” On December 17, 2014, a “Praecipe for Order of Sale” was issued. On the
same date, the trial court issued an “Order Granting Stay of Execution Upon Posting
Supersedeas Bond.”
{¶ 25} Willis asserts two assignments of error herein which we will consider
together. They are as follows:
THE TRIAL COURT ERRED BY GRANTING A JUDGMENT AND
DECREE OF FORECLOSURE,
And,
THE TRIAL COURT ERRED BY GRANTING A JUDGMENT OF
FORECLOSURE WHEN IT WAS AGAINST THE EQUITIES BECAUSE
APPELLEE PROMISED NOT TO PROCEED WITH FORECLOSURE
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DURING THE LOAN MODIFICATION PROCESS.
{¶ 26} According to the Willises, the Assignment of Mortgage attached to the
Complaint was purportedly executed by MERS as nominee for PCHL to Nationstar on
August 8, 2013, “but the assignment actually appears to have been executed by an
employee of Nationwide Title Clearing (‘NTC’).” Further, according to the Willises, in “the
top left corner of the assignment it states when recorded return to Nationstar c/o NTC and
right below the signature of Nadine Homan i[t] states, ‘All Authorized Signatories whose
signatures appear above are employed by NTC and have reviewed this document and
supporting documentation prior to signing.’ ” The Willises assert that Nationstar “never
produced any evidence at trial that NTC was authorized to execute an assignment of
Appellants’ mortgage signing for MERS or acting on behalf of original lender [PCHL].”
The Willises assert that they “specifically questioned [Nationstar’s] witness about robo-
signing in their case.”
{¶ 27} Regarding their first assigned error, the Willises assert that Lisa Gibson’s
testimony “does not appear to have been made upon personal knowledge and was not
sufficient to support a judgment and decree of foreclosure for * * * Nationstar.” According
to the Willises, although Gibson “states that the original note had been in the custodial
file in Nebraska, [Nationstar’s] witness never testified that [Nationstar] had possession of
Appellant Willis’s original note when the Complaint” was filed.
{¶ 28} The Willises argue that Gibson “never testified as to where the blank
endorsement was, whether it was on the back of the note or by an allonge. The
Complaint * * * merely has a note and then a separate piece of paper with an indorsement
in blank from [PCHL].” The Willises argue that if the “indorsement appeared on an
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allonge then [Gibson] would have needed to testify that the allonge was affixed to the
original note at the time the complaint was filed and was currently affixed to the note.
See R.C. 1303.24.” The Willises assert that Gibson “never mentioned an allonge and
had never seen the original note prior to the day of trial so she lacked personal knowledge
to testify regarding the appearance of the original note prior to September 30, 2014.”
{¶ 29} The Willises assert that pursuant to R.C. 1303.31(A), “lack of possession
of the original note would prevent * * * Nationstar from being entitled to enforce the note.”
According to the Willises, “Nationstar did not establish that it was a holder of the note
because Appellee did not establish that it had possession of the original note at the time
this case was filed.” Accordingly, the Willises argue, “Nationstar was not entitled to
enforce Appellant’s note under R.C. 1303.31(A)(2) as a nonholder in possession because
Appellee may not have had possession of the original note. Possession of a copy of the
note would not entitle Appellee Nationstar to enforce the note or mortgage.” The Willises
rely in part on BAC Home Loan Serv. v. McFerren, 2013-Ohio-3228, 6 N.E.3d 51 (9th
Dist.).
{¶ 30} The Willises assert as follows:
The assignment of Appellant’s mortgage admits that the assignment
was not executed by an employee of original lender [PCHL] or MERS. The
assignment was executed by an employee of NTC. Although the
assignment claims an NTC employee was authorized to execute the
assignment, Appellee Nationstar conducted a trial without presenting any
documentary evidence that a separate company such as NTC would have
authority to assign Appellants’ mortgage. The trial court erred by granting
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a judgment of foreclosure without evidence to establish that the assignment
was valid.
***
At trial Appellant Mrs. Willis cross-examined Appellee’s witness Lisa
Gibson on the issue of whether any documents in the foreclosure had been
robo-signed. When Appellant Mrs. Willis asked for verification that
documents had not been robo-signed the Appellee’s witness responded:
The only one would be the Assignment of Mortgage,
which based on the fact that it was endorsed, signed by the
Vice President of that previous servicer? * * *
There are two significant aspects of Appellee’s witness Lisa Gibson’s
response. First, Appellee’s witness demonstrated her lack of personal
knowledge about the documents because she incorrectly stated that the
assignment of mortgage was signed by the Vice President of the previous
servicer when the face of the assignment purports to have been executed
by an Asst[.] Secretary and not by a servicer. * * *
Second, based on this statement by Appellee’s witness she seems
to be admitting that the assignment of mortgage was invalid so the trial court
erred by granting a judgment of foreclosure.
{¶ 31} Regarding the Willises’ second assignment of error, they assert that it was
inequitable for the court to grant a judgment of foreclosure since Nationstar filed its
complaint against them “when they were still in the modification process,” and the “review
was not concluded after the mediation ended.” The Willises direct our attention to
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Cheryl’s testimony that Nationstar “represented ‘that no foreclosure would happen if we
were in the modification process,’ ” and they assert that “the court did not fully address
this issue.” Willis directs our attention to this Court’s decision in Wells Fargo Bank, N.A.
v. Fortner, 2d Dist. Montgomery No. 26010, 2014-Ohio-2212. Finally, Willis asserts that
in the course of the trial, “the judge made comments about the relevance of the loan
modification discussions and did not properly consider the representations made by
Appellee and the lack of a good faith review of the documents by [Nationstar] when the
trial court was supposed to weigh[] the equities of foreclosure.”
{¶ 32} Nationstar responds that “the Willises waived their standing defense by not
asserting it at trial,” and that “there is sufficient evidence in the record to show that
Nationstar had standing.” Citing Bank of Am., N.A. v. Kuchta, 141 Ohio St. 3d 75, 2014-
Ohio-4275, 21 N.E.3d 1040, Nationstar asserts that while “a challenge to a trial court’s
subject matter jurisdiction may be raised for the first time after judgment, the Ohio
Supreme Court recently held that standing is not a question of subject matter
jurisdiction.” According to Nationstar, the Willises “allowed the Trial Court to exercise
jurisdiction by not informing the Judge and requesting proof at trial that Nationstar had
supposedly invoked jurisdiction without having an interest in the proceeding. By failing
to assert standing as a defense at trial, the Willises waived it, and they cannot assert it
for the first time on appeal.”
{¶ 33} Nationstar asserts, alternatively, that “even if the Willises did not waive
standing (and they did), the Willises have not demonstrated that the Trial Court’s decision
is against the manifest weight of the evidence which was presented at trial.” Nationstar
asserts that the “majority of the Ohio Courts of Appeal have followed the plain language
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of [Fed. Home Loan Mtge. Corp. v. Schwarzwald, 134 Ohio St. 3d 13, 2012-Ohio-5017,
979 N.E.2d 1214] and held that a plaintiff in a foreclosure action need only establish an
interest in the note or the mortgage at the time the suit is filed.” According to Nationstar,
“when a note and mortgage refer to each other, a plaintiff who is an assignee of the
mortgage is entitled to enforce both the note and the mortgage even if there is no
evidence that the plaintiff is in possession of the note.” Nationstar directs our attention in
part to this Court’s decisions in Fed. Home Loan Mtge. Corp. v. Trissell, 2d Dist.
Montgomery No. 25935, 2014-Ohio-1537, and Bank of N.Y. Mellon v. Clancy, 2d Dist.
Montgomery No. 25823, 2014-Ohio-1975.
{¶ 34} According to Nationstar, since it “presented uncontested evidence at trial
that it had been assigned the Mortgage before the date of the Complaint, Nationstar had
provided some competent and credible evidence from which the Trial Court could find
that Nationstar had standing when the Complaint was filed.” Nationstar asserts that it
“had also presented the original Note at trial, and moved a copy of the original Note and
a copy of the recorded Mortgage into evidence, again without any objection by the
Willises.” Pursuant to Trissell and Clancy, according to Nationstar, “because the Note
and Mortgage refer to each other, the evidence of the Assignment alone was sufficient to
demonstrate standing.”
{¶ 35} Nationstar argues that the Willises’ challenge to the validity of the
Assignment of Mortgage fails for three reasons, namely that Willis “did not present this
issue to the Trial Court,” that the Willises “are not a party to the Assignment and lack
standing to challenge its validity,” and that “the uncontroverted evidence in the trial court
record refutes, rather than supports, the Willises’ argument that the Assignment was not
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signed with authority.” Nationstar argues as follows:
* * * The assignment itself is notarized, states that it is being signed
by MERS through one of its assistant secretaries, Ms. Homan, and provides
in the notarization that Ms. Homan is personally known to the notary and is
“authorized” to sign the Assignment. * * * Within the Assignment, Ms.
Homan also states that she is signing as a “proper officer.” * * * This
evidence was admitted without objection. * * * There was some competent
and credible evidence in the trial record from which the Trial Court could
conclude that Ms. Homan was, in fact, an assistant secretary of MERS with
authority to execute the Assignment.
The Willises suggest that there also had to be additional evidence
that “employees of NTC had authority to assign” the Mortgage. * * * No such
evidence was necessary because there is nothing in the record that
suggests that NTC ever held the interest in the Mortgage. MERS held the
interest in the Mortgage, not NTC. The record shows that the Assignment
was, in fact, executed by MERS, through one of its assistant secretaries,
Ms. Homan. It does not matter if Ms. Homan was also employed by NTC,
McDonalds, or the United States government. The record reflects
uncontroverted evidence that she was an assistant secretary of MERS who
signed the notarized Assignment as a “proper officer” and someone who
was “authorized” to do so. * * * The Willises presented no evidence to the
contrary.
{¶ 36} Nationstar asserts that alternatively, “the record contains competent and
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credible evidence from which the Trial Court could have concluded that Nationstar had
standing via the Note.” According to Nationstar, the “Judgment Entry does not make an
express finding as to when Nationstar came into physical possession of the Note, and the
Willises did not request findings of fact. Accordingly, this Court should affirm if there is
some evidence from which the Trial Court could have concluded that Nationstar
possessed the Note on the day it filed the Complaint.”
{¶ 37} Finally, Nationstar asserts that foreclosure is the appropriate remedy.
Nationstar argues that “settlement discussions cannot be used to refute the validity of
Nationstar’s claim for foreclosure.” According to Nationstar, “to the extent that the
Willises argue that Nationstar’s alleged statements are enforceable agreements not to
foreclose, the Stature of Frauds precludes that result. Contracts that fall within the
Statute of Frauds * * * must be in writing signed by the party against whom the contract
is being enforced.” Nationstar argues that, “[a]ccordingly, oral agreements to modify
mortgage loans are unenforceable.” Nationstar argues that it “had no duty to modify the
Note and Mortgage, regardless of whether or not the parties were in negotiations.”
Nationstar asserts that “Ohio courts have routinely held that a lender does not act in bad
faith by pursuing its contractual remedies instead of a modification.” Nationstar argues
that the Willises’ reliance upon Fortner “is misplaced.” According to Nationstar, “to the
extent that the Willises argue that Nationstar broke its promise to review them for a loan
modification * * * there is no evidence that Nationstar ever made such a promise. That
alleged promise came from a statement in the Mediator’s report that the Judge read
during trial, not from affirmative evidence presented by the Willises.” Finally, Nationstar
asserts that even if it “had a duty to engage in loss mitigation efforts, the evidence is that
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the parties completed the loss mitigation process and were unable to reach an
agreement.”
{¶ 38} The Willises’ initial arguments are addressed to whether Nationstar
obtained the right to enforce the July 14, 2006 Note. According to the Willises,
Nationstar was unable to establish that it is entitled to enforce the Note as a holder, or as
a non-holder in possession, pursuant to R.C. 1303.31(A)(1) and (2).
{¶ 39} As this Court noted in U.S. Bank v. Christmas, 2d Dist. Montgomery No.
26695, 2016-Ohio-236, ¶ 27,citing Clancy and McFerren:
The Ohio Supreme Court held in Federal Home Loan Mort. Corp. v.
Schwartzwald, 134 Ohio St. 3d 13, 2012–Ohio–5017, 979 N.E.2d 1214, that
“the plaintiff in a foreclosure action must have standing at the time that it
files its complaint.” Wells Fargo Bank, N.A. v. Horn, 142 Ohio St. 3d 416,
2015–Ohio–1484, 31 N .E.3d 637, ¶ 12. “ ‘The requirement of an “interest”
can be met by showing an assignment of either the note or mortgage.’ ”
Bank of New York Mellon v. Clancy, 2d Dist. Montgomery No. 25823, 2014–
Ohio–1975, ¶ 12, quoting Fed. Home Loan Mtge. Corp. v. Koch, 11th Dist.
Geauga No. 2012–G–3084, 2013–Ohio–4423, ¶ 24. But see BAC Home
Loan Serv. v. McFerren, 2013–Ohio–3228, 6 N.E.3d 51, ¶ 13 (9th Dist.)
(requiring a showing of an interest in both the note and mortgage).
Accordingly, “a properly assigned mortgage is ‘sufficient to demonstrate * *
* standing under Schwartzwald.’ ” Clancy at ¶ 28, quoting HSBC Bank
USA v. Sherman, 1st Dist. Hamilton No. C–120302, 2013–Ohio–4220, ¶ 15.
{¶ 40} As noted above, the documents attached to Nationstar’s Complaint reflect
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that Ted and Cheryl executed the Mortgage on July 14, 2006. The Mortgage refers to
the Note of the same date. The Mortgage reflects that MERS is the nominee of PCHL,
and the Assignment of Mortgage reflects that MERS, as the nominee of PCHL, conveys,
grants, assigns, transfers and sets over the Mortgage, “with all interest secured thereby,
all liens, and any rights due or to become due thereon” (which include the Note) to
Nationstar. As this Court noted in Trissell, such “cross-referencing between the
instruments is sufficient to establish a rebuttable presumption of intent to convey both the
mortgage and the note.” Id., ¶ 15.
{¶ 41} While an assignment of mortgage is sufficient to transfer both the Mortgage
and the Note herein, the Willises claim (for the first time on appeal) that the Assignment
of Mortgage was improper because it was executed by an employee of “NTC,” namely
Nadine Homan. We need not address this argument, however, since the Willises are not
a party to the Assignment of Mortgage, as Nationstar asserts, and they accordingly lack
standing to challenge its validity. In Clancy, this Court determined that Clancy lacked
standing to challenge the validity of the Note and Mortgage therein, in reliance in part
upon the Eighth District’s decision in Bank of New York Mellon Trust Co. v. Unger, 8th
Dist. Cuyahoga No. 97315, 2012-Ohio-1950, ¶ 35. In Unger, as here, the assignee of a
mortgage sought foreclosure, and the Ungers, as mortgagees, challenged the validity of
the assignments of the mortgage. Id., ¶ 2. The Eighth District reasoned as follows:
In order to have standing to assert a claim in Ohio, a party must
demonstrate an “injury in fact.” * * * “An injury in fact requires a showing that
the party suffered or will suffer a specific injury, that the injury is traceable
to the challenged action, and that it is likely that the injury will be redressed
-35-
by a favorable decision.” * * *
***
* * * The mortgage assignments did not alter the Ungers’ obligations
under the note or mortgage. Mellon filed the foreclosure complaint based
on the Ungers’ default under the note and mortgage, not because of the
mortgage assignments. The Ungers’ default exposed them to foreclosure
regardless of the party who actually proceeds with foreclosure. The
Ungers, therefore, failed to show they suffered or will suffer any injury, the
injury is traceable to the mortgage assignments, and it is likely a favorable
decision will remedy the injury. The trial court properly granted Mellon’s
motion for summary judgment because the Ungers lacked standing to
challenge the mortgage assignments. * * *
{¶ 42} As in Unger, as the Willises are not a party to the Assignment of Mortgage,
they lack standing to challenge its validity. Since the assignment does not alter Ted’s
responsibilities and obligations under the Note, and since Ted admitted on cross-
examination that he defaulted on the Note, his default exposed him to a foreclosure action
regardless of the identity of the plaintiff who may prosecute such action.
{¶ 43} Regarding the Willises’ final argument, in reliance in part on Fortner, 2014-
Ohio-2212, that the trial court’s judgment of foreclosure was against the equities, we
agree with Nationstar that foreclosure is the appropriate remedy, and we conclude that
Fortner is distinct from the matter herein. In Fortner, the Fortners appealed from a trial
court order confirming the sale of their home in foreclosure after overruling their motion
to set aside the sale. Id., ¶ 2. This Court determined that “the Fortners’ affidavit raises
-36-
the issue of whether Wells Fargo made representations that it would not proceed with
foreclosure while the Fortners’ loan-modification was pending, and whether the Fortners
reasonably relied upon that representation to their detriment.” Id., ¶ 2. This Court
reversed the trial court’s judgment confirming the sale and remanded the matter for further
proceedings. Id.
{¶ 44} By way of background, Wells Fargo obtained a default judgment against
the Fortners after they failed to enter an appearance in the foreclosure action against
them, and an order of sale was issued. Id., ¶ 3. After the premises were sold, but before
the sale was confirmed, the Fortners filed a motion to set the sale aside, supported by
Cody Fortner’s affidavit, in which she averred that she and her husband completed an
application for a loan modification, and Wells Fargo advised them “that the foreclosure
action would be put on hold pending the review of the application and not to worry.”
Id., ¶ 5 (emphasis in original). The trial court denied the motion to set aside the sale and
“later entered an order confirming the sale.” Id., ¶ 7. On appeal, the Fortners asserted
in part that “Wells Fargo engaged in ‘trickery’ by misleading them, causing them to believe
that the property would not be sold while their loan modification application was pending.”
Id., ¶ 7.
{¶ 45} This Court noted that the trial court failed to consider the effect of the
pending loan modification application, and noted that attached to Cody’s affidavit was “a
document entitled ‘Homeowner Assistance Form,’ which the Fortners filled out, with their
signatures next to the handwritten date of July 1, 2012.” Id., ¶ 10. This Court noted, and
concluded, as follows:
In a case discussing whether filing a foreclosure action while
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engaging the homeowner in loan modification discussions constitutes
frivolous conduct, this court, in Bank of New York Mellon v. Ackerman, 2d
Dist. Montgomery No. 24390, 2012–Ohio–956, ¶ 8, stated:
That modification discussions were ongoing did not bar
the bank from seeking foreclosure. The Ohio Supreme Court
said in one foreclosure case that “[the lender]'s decision to
enforce the written agreements cannot be considered an act
of bad faith.” Ed Schory & Sons, Inc. v. Soc. Natl. Bank, 75
Ohio St. 3d 433, 443, 662 N.E.2d 1074, 1996–Ohio–194.
The Court then quoted the Seventh Circuit Court of Appeals:
“ ‘firms that have negotiated contracts are entitled to enforce
them to the letter, even to the great discomfort of their trading
partners, without being mulcted for lack of “good faith.” ’ ” Id.,
quoting Kham & Nate's Shoes No. 2, Inc. v. First Bank of
Whiting, 908 F.2d 1351, 1357 (7th Cir.1990). “Indeed,” said
the Court, “[the lender] had every right to seek judgment on
the various obligations owed to it by [the borrower] and to
foreclose on its security.” Id. In a recent Tenth District
foreclosure case, U.S. Bank Natl. Assn. v. Mobile Assoc. Natl.
Network Sys., Inc., 195 Ohio App. 3d 699, 2011–Ohio–5284,
961 N.E.2d 715 (10th Dist.), before the bank filed a
foreclosure action it and the borrowers had agreed in a letter
to negotiate about the borrowers' obligations. The borrowers
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asserted that the letter agreement was a binding contract that
modified the loan to require the parties to negotiate. They
contended that the bank failed to negotiate, breaching the
modified loan. Until the bank negotiated, argued the
borrowers, it should be estopped from foreclosing. The Tenth
District rejected this argument for several reasons. Pertinent
among them, the court said that the bank had the right to
initiate foreclosure proceedings. The court found that a
provision in the loan documents provided that “the bank was
entitled to immediately initiate foreclosure proceedings in the
event of default.” U.S. Bank at ¶ 1. “The bank's decision to
pursue its contractual remedies,” said the court, “cannot be
considered to be an act of bad faith.” Id., citing Ed Schory at
443, 662 N.E.2d 1074. Also, in a Fifth District foreclosure
case, Key Bank Natl. Assoc. v. Bolin, 5th Dist. Stark No. 2010
CA 00285, 2011–Ohio–4532, the trial court granted summary
judgment for the lender on its foreclosure complaint. The
borrower argued that the trial court erred and abused its
discretion by doing so because the lender acted in bad faith
and misrepresented to the borrower that she could participate
in a loan modification program. The appellate court rejected
this argument. It found that no provision in the mortgage
document “prevent[ed] the lender from insisting on the strict
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performance of the mortgage obligations.” Key Bank at ¶ 37.
And the court found that no provision required the bank to
allow the borrower to participate in loan modification.
The opinion went on to hold that the trial court did not err in rendering
summary judgment against the homeowners, because they did not submit
competent evidence supporting their claim that “they signed and notarized
a loan-modification agreement with the bank and they have been ‘willing
and able to pay each month’ under its terms.” Ackerman at ¶ 16–17.
Unlike Ackerman, the Fortners did submit an affidavit supporting the
Home Owners Assistance Form. However, that form does not purport to be
a loan modification agreement; rather it purports to be an application for
loan modification. Furthermore, the form contains an acknowledgment that
it does not constitute a waiver of the bank's right to proceed with foreclosure.
Another distinction with Ackerman involves the fact that the Fortners' Home
Owners Assistance Form was completed four months after the entry of the
default judgment and decree of foreclosure, while the Ackermans claimed
that they actually entered into a loan modification agreement prior to the
entry of the foreclosure judgment.
In the case before us, because a judgment of foreclosure had already
been entered, the parties had not entered into any modification agreement,
and there is no claim that the Fortners were making payments under a
modification agreement, we would conclude that the pendency of the loan
modification application was not a basis for setting aside the sale, but for
-40-
Cody Fortner's affidavit. In her affidavit, she avers that Wells Fargo made a
representation that it would not proceed with the foreclosure action while
the loan modification was being discussed. This raises the issue of whether
that representation was, in fact, made, and whether the Fortners reasonably
relied upon it to their detriment. This issue was not addressed by the trial
court.
Id., ¶ 11-14. Since the trial court “erred by failing to address the issue of whether Wells
Fargo made a representation to the Fortners upon which they reasonably relied to their
detriment,” this Court reversed and remanded the matter for further proceedings. Id., ¶
21-22.
{¶ 46} We conclude that, unlike in Fortner, there were no remaining issues for the
court to resolve herein. The record reflects that Nationstar filed its complaint on
September 19, 2013, and that Nationstar and the Willises engaged in mediation. The
court’s review of the mediator’s report indicates that Nationstar reviewed the Willises’
application for modification and “will decide by end of November 2013 whether [the
Willises] qualify for [HAMP] Tier 2.” As the trial court noted, “it’s not like there was an
agreement reached, and case was settled.” Defendants’ March 12, 2014 Exhibit 4,
correspondence from Nationstar to Ted Willis, provides as follows:
***
Payment and signed documents must be received by, May 1, 2014 in the
amount of $2,246.92.
Your modified payment is $845.08 (excluding your escrow of $313.01
– subject to change upon escrow analysis). Your estimated total
-41-
payment per month is $1158.09.
This letter is to inform you of the requirements to complete your loan
modification that was recently granted to you by Nationstar Mortgage.
***
{¶ 47} Attached to the correspondence is an unexecuted Loan Modification
Agreement, as well as a March 12, 2014 “Letter of Acknowledgment” that provides in part
as follows:
Dear Ted C. Willis Jr.,
Attached for execution is the Modification Agreement for your loan serviced
by Nationstar Mortgage, LLC. * * *
By executing this Letter of Acknowledgment and the Modification
Agreement, you are agreeing to make a qualifying payment of $2,246.92
dollars (“Qualifying Payment”) for your Modification Agreement to become
effective. * * * If you fail to make this qualifying payment * * *, the
Modification Agreement shall be deemed invalid and Nationstar Mortgage,
LLC shall have no obligation to modify your loan in accordance with the
terms of the Modification Agreement. (Emphasis added).
***
{¶ 48} The record reflects that following mediation and an offer of loan
modification, Ted did not execute the Loan Modification Agreement, and we have no basis
to conclude that, since he was not in agreement with its terms (which included the
invalidation of the agreement upon his failure to make the qualifying payment), that
-42-
foreclosure “was against the equities.” In other words, Nationstar had the right to initiate
foreclosure proceedings.
{¶ 49} Since Nationstar obtained the right to enforce the Note, the Willises lacked
standing to challenge the Assignment of Mortgage, and foreclosure is the appropriate
remedy, the Willises’ assigned errors are overruled, and the judgment of the trial court is
affirmed.
..........
HALL, J. and WELBAUM, J., concur.
Copies mailed to:
John B. Kopf
Jeremy D. Smith
Marc E. Dann
Grace M. Doberdruk
Hon. Christopher Gee