Ohio S. Ct: Standing is jurisdictional at the beginning of the foreclosure

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In a well-reasoned and well-written opinion, the Supreme Court of the State of Ohio analyzed the questions of standing and real party in interest — two doctrines that are all too often used interchangeably. They lead to different results. You can fix “real party in interest” but you can’t fix standing, which is a jurisdictional issue. And standing applies at the moment the foreclosure is started — if they don’t have it they must be dismissed.

The question of wrongful foreclosure based upon standing is interesting because the normal doctrine is that jurisdiction can be raised at any time. But at some point the issue of “finality” comes into play. But it would be wise to consider an action where you believe that jurisdiction was lacking even though the case went all the way through foreclosure and eviction. If jurisdiction was lacking, then any orders for or against either party would be void.

Among the interesting parts of this decision is the concept of “injury,” and by that they mean financial injury. If the party attempting to foreclose has not suffered financial damage, they have no right to sue. They lack standing at the commencement of the action and if they try to correct that by showing up with a new assignment AFTER the action was started, that does NOT cure the issue of standing.

The reason is simple, if the court lacked jurisdiction at the beginning of the action because the party starting the foreclosure had not YET suffered any injury than the case MUST be dismissed. The fact that it wasn’t dismissed by the trial judge does not mean that the court had any right to hear the case. The trial court cannot confer jurisdiction upon itself.

If they want to come back in and go for it again, they could conceivably use the new assignment and pass the threshold for the jurisdictional requirement of standing.  BUT that doesn’t mean you should admit or accept the assignment as having any validity. This is where an inquiry into the assignment, why it wasn’t done before and whether any money was paid for the assignment. If there was no money exchanging hands (which in 99% of cases is true) then even the new forecloser fails the financial injury test.

The deeper you dig the more you will find that the assignment is defective either on its face or that the recitations in the assignment are untrue (“for value received”) or that the person signing the assignment lacked authority or even knowledge as to what he or she was signing.

Once you prove the assignment is materially defective YOU (following Stopa’s strategy) should move for summary judgment in favor of the homeowner or file a renewed motion to dismiss for lack of jurisdiction because the document upon which they rely is fabricated, forged, robo-signed and false.

The Achilles heal of the foreclosures is that virtually none of the pretenders can show actual financial injury. It is presumed to be true by borrowers, their lawyers, opposing counsel and the judge.

But in most cases it is not true. The initial closing was funded by investors whose money was commingled and mangled by the investment banks. The documents from closing and the so-called assignments, endorsements and allonges are neither supported y consideration nor is their any evidence of ACCEPTANCE of the assignment by the assignee.

So you have a financial transaction for which there are virtually no documents and you have a set of documents that are used to trade, buy insurance, make claims on credit default swaps and federal bailouts — none of which are based upon any transaction in which money exchanged hands.

If you can prove that none of the documents were supported by consideration then you have proven that there is no financial injury — which means that you could demand either dismissal on standing, a jurisdictional issue or summary judgment that relies on both the jurisdictional issue and the lack of other evidence.

Schwartzwald opinion

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