Monday, August 19, 2019
Columbus Dispatch: Among the hard lessons of the Great Recession was that people lose their homes to foreclosure for a lot of reasons and many of them don’t have anything to do with being irresponsible.
Losing the stability and hope of wealth-building that home ownership represents is crushing enough. Learning that people in that situation have been tricked or outright robbed out of hard-won equity to which they were entitled — and which could have helped them get back on their feet — makes the blood boil.
Every Ohio county should be reviewing how it handles sheriff’s sales so that no one else falls prey to the ruthless and, in some cases, criminal schemes outlined in last weekend’s series in the Dispatch titled “Foreclosed and Fleeced.”
In Franklin County, that needs to start with a change in practice by Clerk of Courts Maryellen O’Shaughnessy’s office and more due diligence throughout the process of disbursing proceeds from foreclosures.
Following a tip, reporters John Futty and Jim Weiker and researcher Julie Fulton combed through records from central Ohio foreclosure cases and discovered a small industry based on misrepresentation, fraud and disgusting callousness.
Contrary to what many may think, foreclosure doesn’t always leave the former homeowner with nothing. After the house is sold and delinquent debts and mortgage balances are paid, there sometimes is money left over.
That money belongs to the person who made all those mortgage payments before falling into foreclosure, but sometimes the former homeowner doesn’t know it exists.
That allows a sharp operator with the conscience of a reptile to move in and take it.
Ohio law, Revised Code section 2329.44, is meant to reduce this, by requiring county clerks to notify former homeowners whenever a sheriff’s sale yields excess proceeds. But many clerks, including O’Shaughnessy, haven’t been making such notifications.
Clerks in Hamilton, Summit,Delaware and other counties have, and the practice saved Jeanne Shaw from being tricked out of nearly $37,000. One of those sharp operators, Powell real estate agent Robert P. Anderson, talked Shaw into signing away the rights to her foreclosed Delaware home in May 2018 for $2,000.
But before Anderson was able get the court to issue him a check, Shaw received the court’s notice that she had a balance due her from the sale of her home.
Surprised, she contacted the court clerk, which triggered a hearing at which a judge heard from Anderson and Shaw and rightly awarded all the money to Shaw.
LEGAL BUT UNETHICAL TACTICS
Anderson and others who might use similar tactics may not be breaking the law, but they are using misrepresentation to take other people’s money. They track down people going through foreclosure and make a pitch for the homeowners to sign over interest in their former properties.
The operators pay for those rights with a fraction of the money they know is due the former homeowner.
Once they have the homeowner’s signature giving them rights to the property, they take it to court and snap up the surplus.
In Juanita Mang’s case, Anderson walked away with $54,508 left from the payments she and her late husband had made over 40 years in their home. Because she didn’t know about the leftover money, she signed her rights over to Anderson for $2,000.
Even worse than Anderson’s scheme are outright frauds, who find a case with an unclaimed surplus and file for it, claiming to be the former homeowner.
O’Shaughnessy and Franklin County Common Pleas Court Administrative Judge Stephen L. McIntosh now say they are developing a process to notify foreclosed homeowners of surplus funds due them. Anyone requesting disbursement of surplus funds will have to attend a court hearing.
Not only is that common sense; notification has been the clerk’s responsibility under state law since 1986. But courts and, if necessary, state lawmakers still should do more to ensure that people who’ve lost their homes don’t also lose out on the equity they built.
Foreclosure predators should be put out of business for good.