Appeals Court Reverses Foreclosure Judgment, Scraps Suit By Lender Who Relied On Certified Mail Only To Send Default Notice To Delinquent Homeowner

A June, 2009 decision of an Ohio Court of Appeals ruled that a foreclosing lender's failure to either deliver a notice of default providing an opportunity to cure, as expressly required in the note and mortgage, to a delinquent homeowner, or send it to her by first class mail, was enough to reverse a summary judgment of foreclosure against the homeowner and dismiss the foreclosure action. In this case, the foreclosing lender sent the notice of default by certified mail only, which went unclaimed, and was subsequently returned to the lender as such. From the ruling (paragraphs 26, 28-29):

• The express language of the note and mortgage requires that notice be given by either first class mail or by delivery to the property address or other address provided by the mortgagee. National City did not send the notice of default via first class mail. Instead, it sent the written notice of default by certified mail to Richards at the property address. National City states that it utilized certified mail to ensure that Richards received the notice of default. However, National City subsequently received a certified-mail return receipt, stating that the certified mail had been unclaimed.

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• Here, had National City mailed its notice of default via ordinary, first class mail, it would not only have been entitled to a rebuttable presumption of delivery based on the mailbox rule, but would have satisfied the express requirements of the note and mortgage. By contrast to the facts in Doyle, however, National City mailed its notice of default to Richards only by certified mail, which was returned to National City unclaimed. National City did not mail a notice of default by ordinary mail, either contemporaneously with its certified-mail notice or after return of the certified-mail envelope. Accordingly, no presumption of delivery arose. Moreover, even if a rebuttable presumption had arisen upon National City's certified mailing, the presumption was decisively rebutted by the uncontradicted evidence that the certified mail was returned to National City unclaimed.

• In a final attempt to demonstrate compliance with the requirements of the note and mortgage, National City suggests that the postal service's unsuccessful attempts to deliver the certified mail to Richards's property address equate to delivery, as permitted in the note and mortgage as an alternative to first class mail. We disagree. "Delivery" presumes the giving or yielding of possession or control to another. See Black’s Law Dictionary (7th Ed.1999); Webster's Encyclopedic Unabridged Dictionary (Random House 1997). The postal service did not give or yield possession of the notice of default to Richards. To the contrary, each attempt by the postal service to transfer the notice to Richards failed, ultimately leading to the postal service's return of the notice to National City. Notification that certified mail is being held for a recipient is undeniably distinct from delivery of the certified-mail contents. Here, the postal service's return of the certified-mail envelope to National City eliminates any possible inference of delivery to Richards.

Representing the homeowner in this case was attorney Rachel K. Robinson of Equal Justice Foundation, Columbus, Ohio.(1)

For the ruling, see National City Mortgage Co. v. Richards, 182 Ohio App.3d 534, 2009-Ohio-2556, 913 N.E.2d 1007 (10th App. Dist.).

See also, Ohio Practical Business Law Blog: Yes, You Really Do Have to Follow the Notice and Cure Provisions in the Promissory Note.

(1) Equal Justice Foundation is a 501(c)(3) nonprofit organization providing legal representation to low income persons.