Law would make banks file deeds in foreclosures

State Rep. Mike Foley wants to end the mystery about who owns thousands of deteriorating houses in Ohio by forcing the banks that foreclose on the homes to register the deeds.

Across Ohio, a foreclosure hot spot, banks and mortgage companies often end up with homes because owners cannot afford to make their payments. Critics say the lenders hide their ownership - and duck taxes and repair bills - by waiting or refusing to file deeds for properties after they are sold at sheriff's auctions.

A law proposed Tuesday by Foley, a Cleveland Democrat, and Rep. Louis Blessing Jr., a Cincinnati Republican, would clear up the mystery by having county sheriffs file the deeds. It also would compel out-of-town lenders to name a local contact for cities and angry neighbors to speak with when the buildings rot.

Frank Ford of Neighborhood Progress Inc. in Cleveland welcomes the legislation. The nonprofit organization works with neighborhood groups to buy and renovate houses.

"It's bad enough that irresponsible lenders have flooded our community with bad loans that end up in foreclosure," he said. "They compound that by failing to file the deeds, making it impossible for cities or anyone else to hold them accountable."

The proposal may save time for Cleveland Housing Judge Ray Pianka and city inspectors by making sure current owners get the citations when inspectors spot code violations. Because banks don't file their foreclosure deeds, Pianka said, citations often go to people who once owned the homes but lost them to foreclosure months or years earlier.

Lenders are busy at sheriff's sales held each Monday in Cuyahoga County, which had the highest foreclosure rate in the state last year, with 13,610 new cases. At Monday's sale, for example, banks and other lenders bought 193 of 197 properties auctioned.

But months can pass before lenders file what are called sheriff's deeds. A survey taken for Foley by a nonprofit development group in Cleveland's Bellaire-Puritas neighborhood found that some neighborhood transfers languished for more than a year and a half.

Lawyer James Sassano, who represents lenders, said a new law is unnecessary because banks claiming property at auctions are legally considered to be the owners, deed or no deed. To identify a lender, check court records, he said.

Sassano also deflected blame for filing delays in Cuyahoga County, saying the Sheriff's Office takes months to prepare the deeds that transfer the properties.

Patricia Kresty, chief aide to Sheriff Gerald McFaul, said the office used to spend up to six months on deeds. But in the past year and a half, automation and other changes have cut the time to a month or less, she said.

"For the volume we're doing in Cuyahoga County, we're doing very well," Kresty said.

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