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Ocwen Loan Servicing, LLC v. Graf

Court of Appeals of Ohio, Tenth District

June 21, 2018

Ocwen Loan Servicing, LLC, Plaintiff-Appellee,
v.
David M. Graf et al., Defendants-Appellants.

          APPEAL from the Franklin County Court of Common Pleas C.P.C. No. 16CV-2542

         On brief:

          Blank Rome, LLP, Chrissy Dunn Dutton, and John R. Wirthlin, for appellee.

          Legal Aid Society of Columbus, and Leslie Varnado, Jr., for appellants David M. Graf and Michelle Graf Crawford.

         Argued:

          John R. Wirthlin.

          Leslie Varnado, Jr.

          DECISION

          SADLER, J.

         {¶ 1} Defendants-appellants, David M. Graf ("Graf) and Michelle Graf Crawford ("Crawford"), appeal from a judgment of the Franklin County Court of Common Pleas in favor of defendant-appellee, Ocwen Loan Servicing, LLC ("Ocwen"). For the reasons that follow, we affirm.

         I. FACTS AND PROCEDURAL HISTORY

         {¶ 2} On December 30, 2009, Graf and his late wife, Donna Graf (the "Grafs"), executed a note in favor of GMAC Mortgage ("GMAC") in the original amount of $120, 421 and a mortgage pledging the Grafs' new residence at 3590 Rolling Hills Lane, Grove City, Ohio 43123, as security for the note. The note was insured by the Federal Housing Authority ("FHA"). GMAC subsequently endorsed the note in blank.

         {¶ 3} On February 7, 2013, the Grafs were informed Ocwen had assumed the servicing responsibility for their FHA loan. On July 28, 2014, Ocwen sent a letter to the Grove City address notifying the Grafs of a default in payment and informing the Grafs Ocwen intended to accelerate the balance due on the note. There is no dispute in this case the Grafs defaulted on the note. An assignment of the mortgage to Ocwen was recorded on March 24, 2015.

         {¶ 4} When Donna Graf passed away, her interest in the property passed to her two children, Crawford and David S. Graf. David S. Graf has not appeared in this action.

         {¶ 5} Pursuant to applicable federal regulations, the note and corresponding mortgage places certain limitations on Ocwen's right to declare a default and commence foreclosure proceedings. More particularly, Section 9(d) of the note provides in relevant part: "This Security Instrument does not authorize acceleration or foreclosure if not permitted by regulations of the Secretary." (Ex. B, attached to Complaint.) The relevant regulations issued by the FHA Secretary appear at 24 C.F.R. 203 et seq. Of critical importance to this action is 24 C.F.R. 203.604, which provides, in relevant part, as follows:

(b) The mortgagee must have a face-to-face interview with the mortgagor, or make a reasonable effort to arrange such a meeting, before three full monthly installments due on the mortgage are unpaid. If default occurs in a repayment plan arranged other than during a personal interview, the mortgagee must have a face-to-face meeting with the mortgagor, or make a reasonable attempt to arrange such a meeting within 30 days after such default and at least 30 days before foreclosure is commenced, or at least 30 days before assignment is requested if the mortgage is insured on Hawaiian home land pursuant to section 247 or Indian land pursuant to section 248 or if assignment is requested under § 203.350(d) for mortgages authorized by section 203(q) of the National Housing Act.
(c)A face-to-face meeting is not required if:
(2) The mortgaged property is not within 200 miles of the mortgagee, its servicer, or a branch office of either.

(Emphasis added.)

         {¶ 6} On March 14, 2016, Ocwen commenced a foreclosure action in the Franklin County Court of Common Pleas against appellants and several other necessary parties. A copy of the note and mortgage were attached as exhibits to the complaint in support of Ocwen's allegation that it was both the holder of the note at the time it filed the complaint and, as assignee of the mortgage, the party entitled to initiate foreclosure.

         {¶ 7} On March 31, 2016, the Franklin County Treasurer filed an answer to the complaint, and on April 11, 2016, appellants filed their answer. Among the defenses asserted by appellants were the following: "[Ocwen] is required to provide him with notice of the interview and to actually conduct a face-to-face interview with him prior to filing the foreclosure complaint. These steps were not taken in this case. Further, there are no exceptions that waive the requirements of notice and conducting a face-to-face interview. Moreover, the plaintiff failed to issue the required notice informing David M. Graf of the opportunity of having a face-to-face interview. Both the failure to conduct the required interview and the failure to provide notice of the interview are violations of 24 C.F.R. §203.604(b)." (Apr. 11, 2016 Answer at ¶ 3.)

         {¶ 8} On January 17, 2017, Ocwen filed a motion for summary judgment on the complaint. In support of the motion, Ocwen submitted the affidavit of Jesse Rosenthal, Ocwen's contract management coordinator. Rosenthal's affidavit contains the following relevant averments:

1. * * * I am over the age of eighteen years, and I have personal knowledge of the facts and matters stated herein. The statements set forth in this Affidavit are true and correct, to the best of my knowledge and belief.
* * *
14. [P]ursuant to the regulations of the U.S. Department of Housing and Urban Development, no attempts to conduct a face-to-face meeting were necessary and required because the mortgaged property is not within 200 miles of the mortgagee, its servicer or a branch office of either.

(Rosenthal Aff. at 1, 4, attached to Pl.'s Mot. for Summ. Jgmt.)

         {¶ 9} On February 28, 2017, appellants filed a memorandum in opposition to Ocwen's motion for summary judgment and a cross-motion for summary judgment. Appellants submitted the affidavit of Graf both in opposition to Ocwen's motion for summary judgment and in support of appellants' cross-motion for summary judgment. In his affidavit, Graf avers as follows:

Having been duly cautioned, the affiant says the following statements are true:
* * *
4. The plaintiff, Ocwen Loan Servicing, has not pursued reasonable loss mitigation efforts. There should be no forfeiture of my right to own real ...

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