Contempt Charges, Loss Of Lien Status Among Proposed Penalties For Foreclosing Lenders Leaving Ohio Homes In Legal Limbo

In Cleveland, Ohio, an editorial in The Cleveland Plain Dealer comments on the practice known as the "bank walkaway," wherein a lender, after getting a foreclosure decree in court, decides against actually having a foreclosure sale and avoids taking title to the home, leaving it in legal limbo (and technically, still in the financially strapped homeowner's name):(1)

• No one knows precisely how many properties "bank walkaway" lenders have left hanging, but worrisome signs suggest that a problem that has festered too long may be growing. Fortunately, the skullduggery has caught the attention of a[n] [Ohio] state legislator and a local judge.

• Rep. Dennis Murray, a Sandusky Democrat, is working on legislation that would require banks to take foreclosed properties to sheriff's sale quickly or lose their mortgage liens. Closer to home, Cuyahoga County Common Pleas Judge Nancy Margaret Russo is requiring that banks granted foreclosure decrees in her courtroom file the paperwork for sheriff's sale in about 30 days or face a contempt charge.

For the editorial, see Shorten the leash that ties lenders to foreclosed properties.

(1) "Bank walkaways" typically occur when the fixed-up value of a foreclosed (usually vacant and abandoned) property is less than what it would cost to fix up; or, in the case of a home that has to be demolished, the cost of demolition exceeds the current value of the property.