In Ohio, thanks to federal law, a foreclosure generally can’t start until the borrower falls behind on the mortgage payments by more than 120 days. This waiting period gives the homeowner time to seek a foreclosure alternative—called a “loss mitigation” option—like a loan modification. Ohio law provides homeowners with certain foreclosure avoidance rights, as well.
In this article, you’ll learn about the foreclosure process in Ohio and get more information about significant protections for homeowners in foreclosure.
Before a foreclosure can start, in most cases, the loan servicer must comply with the federal 120-day rule. This rule prohibits the servicer from sending the first foreclosure notice or filing a foreclosure with the court unless the borrower’s mortgage payment is more than 120 days’ delinquent.
The 120-day period provides a loss mitigation period during which the borrower can apply for a foreclosure alternative. If the homeowner applies for relief during the 120-days, the servicer can’t initiate foreclosure unless:
If the borrower doesn’t apply during the 120 days, the servicer can begin the foreclosure process. But the borrower can still ask for a foreclosure alternative even after the foreclosure starts. As long as the borrower submits the complete application more than 37 days before the foreclosure sale, the servicer can’t ask for a judgment or order of sale, or conduct a foreclosure sale, unless the three requirements above have been satisfied. (12 C.F.R. § 1024.41).
Ohio foreclosures are judicial, which means they go through the state court system. To begin the process, the foreclosing bank files a lawsuit. You’ll get notice of the lawsuit when you’re served a summons and complaint. You get 28 days to file an answer with the court. Additionally, you can request foreclosure mediation, if available.
Many county courts offer foreclosure mediation. The mediator helps the homeowner and bank develop a plan that will allow the owner to avoid foreclosure. Potential options include implementing a loan modification, short sale, or deed in lieu of foreclosure.
If you fail to answer the suit (and assuming you don't work out a loss mitigation option), the bank can get a default judgment from the court, which means the bank automatically wins.
On the other hand, if you file an answer, the bank can’t get a default judgment. The foreclosure process generally takes much longer if you file a response to the suit.
After you file an answer, the bank will then probably file a motion for summary judgment. This motion asks that the court grant judgment in favor of the bank because there’s no dispute about the important aspects of the case. If the court denies summary judgment, then a trial may happen. If you lose at trial (or the court grants summary judgment), the court will enter a final judgment of foreclosure against you.
After the judgment, the property is appraised because, in Ohio, the home can’t be sold for less than two-thirds of its appraised value at the foreclosure sale. (Ohio Rev. Code §§ 2329.17, 2329.20). Notice of the date, time, and place of sale is published for three consecutive weeks in a newspaper of general circulation in the county where the property is located. (Ohio Rev. Code § § 2329.27).
Then, on the specified date, the property is put up for sale at auction. The bank will make a credit bid, which is often the highest and only bid on the home. (At a foreclosure sale, instead of paying cash at the sale, the bank makes a “credit bid.” Basically, the bank gets a credit at the sale in the amount the borrower owes.)
To stop foreclosure through reinstatement, the borrower must pay the bank all missed payments, plus fees and costs, at once. After doing so, the borrower continues making regular mortgage payments as usual.
While Ohio law doesn’t expressly provide a right to reinstate, many mortgages have a clause giving the borrower that right. Check your contract to see if you get the right to complete a reinstatement. If not, the bank might agree to let you reinstate the loan.
Some states allow the borrower to redeem the home within a specific period after a foreclosure. In Ohio, the borrower can redeem the home up until the court confirms the sale. (Ohio Rev. Code § 2329.33).
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a deficiency. Some states allow the bank to seek a personal judgment—called a deficiency judgment—against the borrower for this amount. Other states prohibit deficiency judgments with anti-deficiency laws.
In Ohio, the bank can obtain a deficiency judgment against the borrower for the remaining balance as part of the foreclosure lawsuit. But because the bank can’t sell the home for less than two-thirds of its appraised value, the potential deficiency amount is limited. (Ohio Rev. Code §§ 2329.20, 2329.17.)
In most cases, the bank has two years following the confirmation of the sale to collect the judgment. (Ohio Rev. Code § 2329.08).
Ohio’s foreclosure statutes are located in Title 23, Chapter 2323 (Section 2323.07) and Chapter 2329 of the Ohio Revised Code. Keep in mind that statutes change, so checking them is always a good idea. (If you need help finding the statutes, see Finding Your State’s Foreclosure Laws.)
How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting a lawyer if you’re facing a foreclosure. If you can’t afford a lawyer, you might be eligible to get free help from a legal aid attorney. It’s also a good idea to make an appointment to speak to a (free) HUD-approved housing counselor, especially if you want to learn about different loss mitigation options.