BAC Home Loans Servicing, LP v. Taylor

• Decision Date: 06 February 2013
• Docket Number: No. 26423.,26423.
• Citation: 986 N.E.2d 1028
• Parties: BAC HOME LOANS SERVICING, LP fka Countrywide Home Loans Servicing, LP, Appellee v. Vickie V. TAYLOR, et al., Appellants.
• Court: Ohio Court of Appeals

986 N.E.2d 1028

BAC HOME LOANS SERVICING, LP fka Countrywide Home Loans Servicing, LP, Appellee

v.Vickie V. TAYLOR, et al., Appellants.

No. 26423.

Court of Appeals of Ohio, Ninth District, Summit County.

Feb. 6, 2013.

Julius P. Amourgis, Akron, and Margaret A. McDevitt, Attorneys at Law, for Appellants.

Matthew T. Anderson and Gregory H. Melick, Attorneys at Law, Columbus, for Appellee.

BROGAN, Judge.

INTRODUCTION

{¶ 1} Shawn and Vickie Taylor have appealed the Summit County Common Pleas Court's grant of summary judgment in favor of BAC Home Loans Servicing, LP, fka Countrywide Home Loans Servicing, LP in this foreclosure action. This Court reverses because there is a genuine issue of material fact regarding whether BAC Home Loans satisfied the face-to-face meeting requirement of Section 203.604 of Title 24 of the Code of Federal Regulations.

BACKGROUND

{¶ 2} In October 2009, the Taylors signed a promissory note for $309,270 plus 5.000% interest in favor of Union National Mortgage Company. The note was secured by a mortgage on real property located on Fairington Avenue in Copley, Ohio. In February 2011, BAC Home Loans Servicing, LP fka Countrywide Home Loans Servicing, LP filed a complaint in foreclosure against the Taylors. BAC Home Loans alleged that it was owed $307,396.43 plus interest on the note as a result of the Taylors' default. BAC Home Loans attached copies of the note and mortgage to its complaint along with a copy of an assignment of the mortgage from Union National Mortgage Company to BAC Home Loans.

{¶ 3} BAC Home Loans moved for summary judgment and attached the affidavit of Audrea M. King. By affidavit, Ms. King testified that she is an officer of Bank of America N.A. “as successor by merger to BAC Home Loans Servicing, LP.” She testified that Bank of America “maintains records for the [Taylors'] Loan in its capacity as ... servicer [of the loan]” and that it has possession of the note through its position as “successor by merger” to BAC Home Loans. She further wrote that she had attached to her affidavit true and accurate copies of business records showing that the Taylors had failed to make payments on their loan after May 1, 2010, leaving a principal balance of $307,396.43 plus interest from April 1, 2010. The Taylors opposed the motion for summary judgment, and BAC Home Loans replied. The trial court granted the motion, and the Taylors timely appealed.

REAL PARTY IN INTEREST

{¶ 4} The Taylors' second assignment of error is that “the trial court erred when it granted summary judgment to BAC Home Loans Servicing LP [because] BAC Home Loans ... failed to produce admissible evidence under Civ. R. 56(C) that it had standing in this case.” In support of this assignment of error, the Taylors have argued that there is a genuineissue of material fact regarding BAC Home Loans' standing because the evidence it offered in support of its summary judgment motion tended to show that Bank of America rather than BAC Home Loans held the promissory note. Therefore, according to the argument, BAC Home Loans was not the real party in interest when judgment was rendered.

{¶ 5} In its complaint, BAC Home Loans alleged that it was the holder of the promissory note and attached a copy of the note, the mortgage, and an assignment of the mortgage issued to it from the lender. BAC Home Loans had standing to invoke the jurisdiction of the trial court because, on the day it filed this foreclosure action, it presented an assignment of the mortgage in its favor from the lender. See Fed. Home Loan Mortg. Corp. v. Schwartzwald, 134 Ohio St.3d 13, 2012-Ohio-5017, 979 N.E.2d 1214, ¶ 24. The Taylors have argued, however, that BAC Home Loans was no longer the real party in interest by the time it moved for summary judgment.

{¶ 6} Bank of America is first mentioned in the record in the affidavit in support of BAC Home Loans' motion for summary judgment. The Taylors acknowledge that, via affidavit, Ms. King testified that Bank of America is the successor to BAC Home Loans via merger, but argued that Ms. King “provided no factual basis for her statement regarding the merger and provided no description of her position or job duties that would provide her qualification to make such a factual assertion.”

{¶ 7} Under Rule 56(E) of the Ohio Rules of Civil Procedure, “affidavits shall be made on personal knowledge, shall set forth such facts as would be admissible in evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated in the affidavit.... When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegation or denials of the party's pleadings, but the party's response, by affidavit or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial.”

{¶ 8} Ms. King testified by affidavit that she is an Assistant Vice President of Bank of America and that, in her capacity as an officer, she was “authorized to sign th[e] affidavit on behalf of ... Bank of America, N.A., as successor by merger to BAC Home Loans Servicing, LP[.]” She also testified that, due to her job responsibilities, she had personal knowledge of the business records attached to the affidavit that showed the Taylors had defaulted on the loan. The Taylors have not cited any authority for the proposition that the sworn testimony of a vice president of a bank regarding the bank's merger with another entity is incompetent evidence under Civil Rule 56. They also have not explained why they believe that Ms. King's testimony about the merger required some additional “factual basis” or supporting documentation of the merger. Ms. King testified that Bank of America is a successor by merger to the plaintiff in this case and the Taylors failed to counter that evidence with admissible evidence setting forth specific facts showing that there is a genuine issue for trial. SeeCiv.R. 56(E).

{¶ 9} The Taylors have also argued that Bank of America rather than BAC Home Loans was the real party in interest at the time of the summary judgment motion so that Bank of America should have been joined or substituted as the party plaintiff. Civil Rule 17(A) requires that “[e]very action shall be prosecuted in the name of the real party in interest[,]” but also provides that “[n]o action shall be dismissed on the ground that it is not prosecuted in the name of the real party in interest until a reasonable time has been allowed after objection for ratification of commencement of the action by, or joinder or substitution of, the real party in interest.” Civil Rule 25, which addresses the substitution of parties, provides that, “[i]n case of any transfer of interest, the action may be continued by or against the original party, unless the court upon motion directs the person to whom the interest is transferred to be substituted in the action or joined with the original party.” Civ.R. 25(C). The Rules of Civil Procedure did not require a substitution of parties when Bank of America merged with the plaintiff in this action and the failure to substitute parties did not render the judgment voidable. See GMAC Mortgage LLC v. Herring, 189 Ohio App.3d 200, 2010-Ohio-3650, 937 N.E.2d 1077, ¶ 44 (2d Dist.). The Taylors' second assignment of error is overruled.

DEFENSIVE USE OF HUD VIOLATION

{¶ 10} The Taylors' first assignment of error is that the trial court incorrectly granted summary judgment to BAC Home Loans in the absence of evidence that it had complied with federal regulations issued by the Secretary of Housing and Urban Development (HUD) requiring a mortgagee to make a reasonable effort to arrange a face-to-face meeting with the mortgagor before filing a foreclosure action. They have specifically argued that the promissory note and mortgage limit the lender's rights according to HUD regulations regarding default.

{¶ 11} “This Court reviews an award of summary judgment de novo.” Wells Fargo v. Burrows, 9th Dist. No. 26326, 2012-Ohio-5995, 2012 WL 6628870, ¶ 8. Under Civil Rule 56(C), summary judgment is proper if: “(1) [n]o genuine issue as to any material fact remains to be litigated; (2) the moving party is entitled to judgment as a matter of law; and (3) it appears from the evidence that reasonable minds can come to but one conclusion, and viewing such evidence most strongly in favor of the party against whom the motion for summary judgment is made, that conclusion is adverse to that party.” LaSalle Bank, N.A. v. Kelly, 9th Dist. No. 09CA0067–M, 2010-Ohio-2668, 2010 WL 2347077, ¶ 6, quoting Temple v. Wean United, Inc., 50 Ohio St.2d 317, 327, 364 N.E.2d 267 (1977).

{¶ 12} Under Section 203.606(a) of Title 24 of the Code of Federal Regulations, “[b]efore initiating foreclosure, the mortgagee must ensure that all servicing requirements of this subpart have been met.” The servicing requirements of subpart C include Section 203.604(b), which provides that “[t]he 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.” Although there are exceptions to the face-to-face meeting requirement, none apply in this case. In support of the Taylors' brief in opposition to summary judgment, they testified by affidavit that they “did not receive a notice of default regarding this debt from Plaintiff or any other company which notified me of a right to meet face to face to discuss my situation regarding the Note and Mortgage before I was sued for foreclosure. The Plaintiff did not provide an affidavit attesting to the authenticity of or mailing of any such notice of default to me prior to foreclosure.” The Taylors also testified that they continue to reside at the subject property and that BAC Home Loans had local offices within 75 miles at which a face-to-face meeting could have been held.

{¶ 13}...