High court ruling favors lenders on attorney fees in foreclosures

COLUMBUS — Mortgage companies can require borrowers to pay attorney fees to reinstate loans subject to foreclosure actions, the state’s high court ruled Tuesday.

But the Ohio Supreme Court also ruled in favor of one of 11 plaintiffs in the Mahoning County case, who sued saying such attorney fees are unenforceable.

The plaintiffs filed suit in 2003 against various financial institutions after defaulting on their mortgages and facing foreclosure actions.

Most of the plaintiffs had reinstatement provisions included in their original loan agreements, permitting them to catch up on payments and stop the foreclosures — provided they pay the legal costs and attorney fees incurred by the lender.

But one of the group, Sharon Wilborn, did not have the reinstatement provision included in her home equity loan. Wilborn paid off the balance of the loan, including attorney fees incurred by the lender after it initiated the foreclosure, according to documents.

The plaintiffs subsequently filed suit, arguing that the lenders improperly forced them to pay attorney fees. The trail and appeals courts sided with the lenders.

The Supreme Court affirmed those judgments for 10 of the plaintiffs. According to the decision, “requiring a defaulting borrower to pay a lender’s reasonable attorney fees as a condition of terminating pending ... foreclosure proceedings on a defaulted loan and reinstating the loan” is legal.

But the court sided with Wilborn, reversing the earlier court decisions in her case. They ruled: “Once Wilborn paid off the entire debt, she had a right to dismissal, but instead she was required to pay the lender’s attorney fees.”