Most national loan servicers wonder why the procedures for foreclosure in Ohio are so cumbersome and time-consuming.  Most of the laws governing foreclosure procedures in Ohio have been on the books for over a half-century.  Although a new bill is pending that is not particularly "lender-friendly", we are hopeful that it might provide an opening to influence positive change.
 
The new bill, Ohio House Bill 138 , was born out of frustration expressed by the cities, which need to notify the property owner with regard to building code violations.  Many purchasers of Sheriff's Sale properties, including some mortgage lenders, intentionally delay the recording of their Sheriff's Deeds, thereby making it much more difficult for the cities to know whom to serve with notices.  The cities have especially expressed their frustration with loan servicers that seem to ignore the cities' notices.

As a result, H.B. 138 was introduced into the Ohio Legislature.  The bill would require that an out-of-state business organization purchasing property at a Sheriff's Sale in Ohio would be required to provide contact information for a natural person who resides in Ohio and is authorized to receive notices or inquiries about the property.  This proposition is obviously troublesome for out-of-state lenders and investors.  But we'll try turning this lemon into lemonade.

In order to bring our concern to the legislature's attention, I convened a series of meetings with all of the law firms handling volume foreclosures in the state, and arranged meetings with State Representative Michael Foley, the chief sponsor of the bill.  After gaining a consensus among the law firms, I presented a full array of proposed revisions to H.B. 138 for consideration by the legislature, in addition to presenting reasons why the requirement for an in-state designee is problematic.
 
My proposed revisions include:
Changing the Lis Pendens date to the date the complaint is filed rather than the date service is complete.   This will significantly shorten the foreclosure process in many cases, by eliminating the need to amend the complaint to join additional lienholders.
Shortening the time for service of the summons by publication from six weeks to three weeks.
Eliminating the costly inclusion of the property's full legal description in the Notice of Service by Publication and in the Notice of Sheriff's Sale.
Authorizing the use of Master Commissioners rather than Sheriffs, in the event Sheriffs are unable to complete Sheriff's Sales promptly due to their backlogs.  This will be a solution to the problem of extreme backlogs by Sheriffs in certain counties.
Setting the minimum bid at the Sheriff's Sale at two-thirds of the Auditor's Fair Market Value, rather than having the Sheriff's hire three appraisers.  This will save time and money.
Waiving the requirement to pay a deposit at the time of the Sheriff's Sale if the property is purchased by any lienholder.  This will simplify the purchase of the property by a lienholder.
Shortening and standardizing the procedure for the order confirming the Sheriff's Sale.
Standardizing the sale date as the date to determine the amount of real estate taxes that are due and payable from the proceeds of the Sheriff's Sale.
Requiring the Clerk of Courts to post information regarding court costs to the docket.  This will facilitate the preparation of the order of distribution of the proceeds from the Sheriff's Sale.
Authorizing the foreclosing attorney to prepare the Sheriff's Deed.  This will relieve the burden on the Sheriff and alleviate the backlog in many Sheriff's departments.
Imposing a strict 30-day period for the purchaser to pay the balance due to the Sheriff to complete the sale, unless an extension is granted by the judge
Standardizing the type of title work required for foreclosures
Some of these proposals would adversely affect revenue being reaped by some vendors, such as Sheriffs' appraisers and publishers of legal newspapers.  Time will tell whether those vendors will impose any political pressure against the implementation of these proposed improvements.
  
While the procedure for foreclosures may be grueling, the process to cause change in the legislation might be even more difficult.  We expect to be able to measure the progress of our initiative during the first quarter of 2008.

If you have any questions on this information, please contact Mr. Larry R. Rothenberg, Esq.
 
Larry Rothenberg is a Partner managing the Foreclosure/Evictions department of the Cleveland office of Weltman, Weinberg & Reis Co., L.P.A. He is the author of the Ohio Jurisdictional Section contained in the treatise, "Dunaway, The Law of Distressed Real Estate". The firm handles foreclosures and related litigation throughout Ohio, Kentucky, Indiana, Illinois, Pennsylvania and Michigan.  Larry can be reached at (216) 685-1135 or via e-mail at lrothenberg@weltman.com

About Safeguard
Safeguard Properties is the largest privately held field services company in the country. Located in Cleveland, OH  and founded in 1990 by Robert Klein, Safeguard has grown from a regional preservation company with a few employees and a handful of contractors performing services in the Midwest, to a national company with over 425 employees.  Safeguard is supported by a nationwide network of subcontractors able to perform any requested superintendence, preservation, and maintenance functions, as well as numerous ancillary services in the U.S., the Virgin Islands, and Puerto Rico.