Under Ohio foreclosure laws, foreclosures must go through court, meaning they are judicial. Most Ohio foreclosures take between eight and nine months, but the pre-foreclosure process can extend the overall timeline.
Investors should be aware that Ohio, like most states, may enact foreclosure and/or eviction moratoriums in response to public health threats or widespread financial crises. For example, in response to the global COVID-19 pandemic in 2020, the state Supreme Court provided guidance to lower courts encouraging them to postpone execution of foreclosure judgments. The only exception to this was in cases of domestic violence. Real estate investors must check all foreclosure forbearance and eviction moratorium guidance in the state and locally when planning to buy Ohio foreclosures and prior to implementing eviction procedures.
The Ohio pre-foreclosure process begins when the servicer attempts to contact the homeowner about delinquent loan payments and options for avoiding foreclosure. However, most real estate investors consider pre-foreclosure to start when a homeowner first misses a mortgage payment, since this is the beginning of the mortgage delinquency and frequently the time at which a homeowner begins to consider selling their property.
In Ohio, as in most states, lenders are usually required to wait until payment is 120 days delinquent to begin the foreclosure process. If the homeowner applies for loss mitigation during this time period, the loan servicer cannot begin the official foreclosure process until the loss-mitigation period has expired, the homeowner has violated one of the terms of the loss-mitigation or loan-modification agreement, or the homeowner has been notified they are not eligible for loss mitigation.
Once all time periods and waiting periods have lapsed, Ohio foreclosure laws require the foreclosing party, usually a lender, to file a lawsuit in court in order to foreclose on the property. When this lawsuit is filed, the borrower receives a summons and a complaint and has 28 days in which to respond in writing. In some cases, the window for response may be slightly longer or shorter. Borrowers in Ohio should be aware that once they have responded in writing to the foreclosing party’s attorney, they must also file that response with the court.
If the borrower does not respond, the court may grant the foreclosing party a default judgment. If the borrower does respond, the case will proceed through court. In the event that the borrower does respond but does not dispute “critical aspects” of the case, such as the amount delinquent or that the money has gone unpaid, then the foreclosing party may request a summary judgment in order to expedite the litigation process so that the property can be sold at an Ohio foreclosure auction.
Ohio courts often offer foreclosure mediation programs designed to help borrowers and lenders reach agreement on foreclosure alternatives. Depending on the county, a court may permit a borrower facing foreclosure to halt the proceedings and request foreclosure mediation at will or there may be a time limit on this option. Foreclosure mediation places the pre-foreclosure process on hold.
Once the foreclosing party receives a judgment in favor of foreclosure, the date, time, and place of the sale must be published in a local newspaper for three consecutive weeks prior to the sale. Ohio foreclosure laws prohibit the sale of the property for less than two-thirds of its appraised value and require the property be appraised by three objective parties prior to the auction.
In some cases, the foreclosure sale may be conducted online. Check with local government offices to find out what type of platform will host the Ohio foreclosure sale.
Ohio permits borrowers to redeem their property at any time until the sale of the property is confirmed by the court. To redeem a property, the borrower must pay off the mortgage loan and all associated fees and interest except for attorney’s fees.
Borrowers may reinstate their mortgages in Ohio by bringing the loan current only if the terms of the loan require the lender to permit this. This means the borrower pays all overdue payments, associated interest, and fees. Although Ohio does not grant borrowers an automatic right to reinstatement, many mortgage terms include it. Furthermore, many lenders will work with borrowers to reinstate the mortgage even if they do not have to.
Ohio foreclosure laws permit deficiency judgments against the foreclosed borrower if the sale of the property does not bring in enough money to pay off the full amount owed. However, since the property cannot be sold for less than two-thirds of the appraised value at the time of sale, deficiency judgment amounts are limited. Lenders have two years after the confirmation of sale to file for a deficiency judgment in most cases.
When a property is sold at an Ohio foreclosure auction, the foreclosing party must file a motion with the court before the sale is confirmed. In most cases, these motions are confirmed quickly and automatically, but it can take a lender between one and 30 days to file the motion. There will be additional time after filing before the motion is confirmed, and, following confirmation, it may take as long as a week for the sheriff’s deed to finally reach the new owner of the property.
In some cases, the new owner will find that the foreclosed homeowner has remained in the property after the sale. To formally evict the residents, the new owner must request a writ of possession from the sheriff’s office. Once this is delivered, foreclosed homeowners will usually have about a week to vacate the property prior to a formal eviction. In total, there is likely to be a timespan of as long as six weeks between when the property is sold at the sheriff’s auction and when the former homeowner must vacate the premises.
In many cases, new owners may offer residents “cash for keys,” wherein the new owner provides residents with some amount of money in exchange for a smooth, timely exit. If the residents do not vacate the property, the new owner must file an eviction suit in order to have them evicted. Real estate investors must remember that Ohio foreclosure laws deal with tenants living in foreclosed homes and former homeowners differently and familiarize themselves with all aspects of Ohio foreclosure laws before investing in a Ohio foreclosure.
The Ohio Supreme Court ruled in November 2012 that lenders may not file foreclosure cases until they have the proper paperwork in hand. The ruling was intended to stop the practice of some foreclosures being granted even though lenders failed to produce vital documentation. Also,common pleas courts cannot hear foreclosure cases unless they are filed by the lender holding the mortgage interest in the property, the justices said in a unanimous ruling.
The problem is not erased simply by later filing the proper documentation before a judge’s decision, the court ruled. The ruling reversed the 2nd District Court of Appeals in a decision in a Greene County case that conflicted with two other appellate rulings on the need for the “real party of interest” to be part of foreclosure filings.
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