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Ohio Senate, House Bills Focus on Lending Industries, Notaries

Posted By USFN, Monday, May 20, 2019

by Ellen L. Fornash, Esq.
Anselmo Lindberg & Associates, LLC
USFN member (IL)

The State of Ohio was busy this past holiday season, passing three different bills, all signed by then-Governor John Kasich on December 19,2018, and scheduled to take effect 91 days after filing with the Secretaryof State.

House Bill 489
Entitled in short as a bill to “address financial institution regulation and consumer protection,” House Bill 489 was initially aimed at undoing some of the effects the Dodd-Frank had on smaller banks and credit unions while still protecting consumers.

The motivation behind the Ohio Financial Institutions Reform Act was to regulate banks only in a manner that would not affect the institutions soundness and security. The Bill permits analytics to be conducted on publicly available information regarding state banks, credit unions and entities registered and licensed in Ohio. However, if an institution meets certain requirements, said institution would be subjected to less frequent regulatory checks of no more than once every 24 months. Failure to comply exposes an institution to civil liability.

House Bill 489 adds a definition of “mortgage servicer” to Ohio Revised Code Section 1322, “Mortgage Brokers, Loan Officers.”

Also, Revised Code Section 1349.72,governing Consumer Protection was added and requires a person before attempting to collect a debt secured by residential real property to send written notice via US Mail to the residential address of the debtor if the debt is: 1) a second mortgage or junior lien on the debtor’s residential real property; and, 2) the debt is in default.

Written notice must be in 12-point font and must include:

  • The name and contact information of the person collecting the debt;
  •  The amount of the debt;
  • A statement that the debtor has a right to an attorney;
  • A statement that the debtor may qualify for relief under Chapter 7 or 13;
  • A statement that a debtor maybe able to protect his residence from foreclosure through the Chapter 13 process; and
  • If requested in writing by the debtor, the “owner” of the debt shall provide a copy of the note and loan history to the debtor.

Failure to comply authorizes civil liability, but also provides a bona fide error defense. The notice requirements set forth by this House Bill are strikingly similar to those imposed upon debt collectors under the Fair Debt Collection Practices Act, but extend these requirements to “persons” rather than debt collectors and pertain only to junior mortgages.

(Editor’s note: For more on Ohio Revised Code Sections 1322 and 1349.72, please see the article by Rick D. De Blasis and Charles E. Rust here).

House Bill 480
The next Bill to affect the lending industry is House Bill 480, which establishes requirements for multi-parcel auctions, which are not currently addressed in the Ohio Revised Code, and gives the Ohio Department of Agriculture the power to regulate the auctions.

House Bill 480 amends Ohio Revised Code sections 2329 (Execution against real property) and 4707(Auctioneers). The Bill defines a multi-parcel auction as one involving real or personal property in which multiple parcels or lots are offered for sale in whole or part. The Bill further establishes advertising requirements placed upon auctioneers, including the mandate that all advertisements short of road signs must state that the auction will be offered in various amalgamations, whether individual parcels, combinations or all parcels as a whole.

The Bill goes on to clarify that online auctions are to be held for seven calendar days (previously simply seven days), excluding the day the auction opens for bidding.

Senate Bill 263
Finally, Senate Bill 263, titled in short, the “Enact Notary Public Modernization Act,” increases requirements for commission of a notary and enacts requirements or notarization of electronic documents. Notably, to obtain a notary commission, one will now have to submit to a criminal records check completed within the preceding six months (R.C. 147.022). Already commissioned attorneys will be exempt from this requirement. Although the new requirement is not retroactive, notaries seeking to renew their commission will have to comply.

The bulk of the Bill is dedicated to online notarizations. The Bill permits a commissioned notary to apply to perform online notarizations via live video, electronic signatures and electronic notary seals. Online notary commissions expire after five years – including those issued to attorneys.

Those seeking online commission must participate in an educational course; non-attorney applicants must also pass a test. Bill 263 passes oversight of the appointment and revocation of notary commissions from the Court of Common Pleas to the Secretary of State. Lastly, in short, the Bill deems an online notarized document to be an “original document.”

While these changes do not have any effect on our current notary procedures, current non-attorney notaries in Ohio will have additional hoops through which to jump upon renewal of their current licenses.

State Supreme Court Rules in Bank of N.Y. Mellon v. Rhiel
Finally, closing with a case law update, the Supreme Court of Ohio sided with lenders when it issued its opinion in Bank of N.Y. Mellon v. Rhiel on December 20, 2018, when it held that:

 1. “In response to certified questions by the bankruptcy appellate panel, it was determined that the failure to identify a signatory by name in the body of a mortgage agreement did not render the agreement unenforceable as a matter of law against that signatory;” and


2. “It was possible for a person who was not identified in the body of a mortgage, but who signed and initialed the mortgage, to be a mortgagor of his or her interest.” Bank of N.Y. Mellon v. Rhiel, 2018-Ohio-5087, 2018 Ohio LEXIS 3007.


Both Marcy and Vodrick Perry initialed and signed a mortgage, however, the definition of “borrower “within the mortgage only included Vodrick’s name. The bankruptcy trustee determined that the mortgage did not encumber Marcy’s interest in the real property.

The bankruptcy court disagreed and allowed extrinsic evidence to make its determination that Marcy intended to encumber her interest. The Bankruptcy Appellate Panel for the US 6th Circuit Court of Appeals asked the Ohio Supreme Court to clarify, after noting the conflicting decisions of prior bankruptcy cases and controlling decisions issued by Ohio courts of appeals. The Ohio Supreme Court held that signing a mortgage may be enough to bind the signatory despite not being named in the body of the mortgage itself.

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