February 21, 2013
Ohio Court Holds that a Bank Cannot Cure Lack of Standing by a Subsequent Mortgage Assignment
In Wells Fargo Bank, Nat’l Assoc. et al. v. Byrd, 897 N.E.2d 722 (Ohio Ct. App. 2008), the Court of Appeals ruled that Wells Fargo (the “Bank”) lacked standing because it commenced a foreclosure action before executing a mortgage assignment.
Mortgagors executed a note and mortgage with WMC Mortgage Corporation (“WMC”). On January 23, 2007, the Bank filed a complaint for foreclosure against mortgagors. On March 2, 2007, WMC assigned the note and mortgage to the Bank. The magistrate entered summary judgment for the Bank. However, the trial court dismissed the case with prejudice. The Bank appealed.
The court held “that in a foreclosure action, a bank that was not the mortgagee when suit was filed cannot cure its lack of standing by subsequently obtaining an interest in the mortgage.” Civ. R. 17(A), which states “no 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,” is inapplicable in this case since the Bank did not join or substitute WMC in the case, nor did WMC ratify the Bank’s action. The court also ruled that this dismissal should be without prejudice, because it was not a dismissal on the merits.
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