Robert R. Hoose is Vice President with the Law Offices of John D. Clunk Co., LPA, which is based in Ohio. Hoose is licensed in the federal and state courts in Ohio and Florida and is a member of the Ohio State Bar Association, the Florida Bar Association, and the Akron Bar Association. Hoose recently talked to DS News in depth about Ohio HB 463, a foreclosure reform bill for which he played a key role in developing and working to get it passed in the Ohio State Legislature. Among the changes HB 463 will make are establishing expedited actions to foreclose mortgages on vacant and abandoned residential properties and permitting private sale officers to conduct judicial and execution sales of real property. The bill was included in H.B. 134 and recently passed in the Ohio State House and Senate as part of a larger bill, H.B. 390, and is currently waiting for the governor's signature to become law.
What do you think the impact of this bill will be on the default servicing industry?
The approach we took with the bill was, “How can we help the community and help mortgage servicers and banks at the same time?” We want to get these properties through foreclosure and into the hands of responsible homeowners as soon as possible.
There are two pieces to the bill. There is a vacant and abandoned piece and a piece that modernizes the sheriff's sale (or judicial sale) and post-sale process. There has been a lot of legislation around the country on vacant and abandoned properties, and some of it has been more successful than others. Some attorneys and some states have said their vacant and abandoned laws are unusable. We tried to get something that would be usable and at the same time, have adequate protections for the consumer. Basically, we have to meet three indicia of a vacant and abandoned property, we file a motion with an affidavit, and then we get an order deeming the property vacant/or abandoned. Then there has to be a sale within 75 days of the order. That is a significant time savings in Ohio, because some counties can be as long as six to nine months from judgment to sale. So you save four to six months there.
On the second part of the bill, we tried to modernize the sale process. In Ohio, we use the county sheriffs to hold sales, and they hold them auction style at the courthouse—the old school way of doing it. The new bill will allow for private billing officers or auctioneers to hold sales online, and we're going to have a lot more flexibility in the sales—we'll be able to cancel the sales at any time. Previously, we had to have a court order to cancel a sale, but under the new bill, we'll be able to just cancel and reset the sale date as opposed to canceling the sale date and waiting nine months to get a new sale.
This new bill also allows what we call a private selling officer to hold sales—the person has to be a registered auctioneer and a real estate agent—and basically it's going to put the plaintiff in control of the post-sale process and move it along quickly and more economically, whereas before we had to wait for the sheriff.
Another thing we did is we updated the UCC (Uniform Commercial Code) for Ohio. Prior to this, we were unable to enforce a lost note if the plaintiff was not the person who lost the instrument. That language has been updated to conform with the rest of the country. Now, if you have directly or indirectly acquired ownership of the note and you can show it, then you can enforce the instrument even if it's lost.
Also in Ohio, we have an appraisal on the property and a first sale where the minimum bid starts at two-thirds of the property's appraised value. If there is no bidding at that sale, there is a second sale with no minimum bid. This is an effort to try to get third parties into the property if the property's value is too high to sell it.
Why did you choose to get involved with the bill?
I think it's good for the industry and the community. As lawyers, we want to help our clients, but we also want to help society as a whole. We've all had houses in our neighborhoods become vacant, and it affects the entire community. It brings property values down. It's an eyesore, and you don't want to look at it. You want to get that property to somebody who is a responsible homeowner as soon as possible. Not only is it good for servicers and banks, it's good for the community, too. If we can do that, we can help everybody out. I think that's what this bill does.