Thanks to an obscure ruling from the Cuyahoga County Court of Common Pleas, mortgage lenders in the Cleveland, Ohio area trying to substitute new documents for ones found to be faulty will have 30 days to explain why the cases should not be summarily dismissed. In additions, the signer of any affidavits or documents seeking foreclosure will need the original promissory note in order to prove foreclosure.

Mortgage lenders have sought to merely replace “robo-signed” documents with new substitute documents, in order to keep the foreclosure train rolling. This ruling in Cuyahoga County would disallow that. Here’s what it says:

In prejudgment cases where a lender has requested a delay in the proceedings to examine evidence it has submitted or otherwise calls into question the validity of the evidence its has submitted, the Committee recommends the entry of an order requiring plaintiff within thirty days to show cause why the case should not be dismissed without prejudice.

In post judgment cases where the lender has requested a delay in the proceedings to examine evidence it has submitted in support of its judgment or otherwise calls into question the validity of the evidence its has submitted, the Committee recommends the entry of an order requiring plaintiff within thirty days to show cause why the case should not be dismissed and the judgment vacated.

In any case where the lender seeks to remove the case from the active docket to examine evidence it has submitted, the Committee recommends that the motion be denied as improper under the rules of Civil Procedure and Superintendence. Following denial of the motion, an order as described above should be entered.

In other words, a party seeking foreclosure would basically have to start the process all over again in Cuyahoga County, as opposed to the substitute process. This stretches out the time before a foreclosure becomes legal and imposes significant costs on the banks. It’s a win for outgoing Attorney General Richard Cordray, who will soon join the Consumer Financial Protection Bureau. He basically wants this to become the standard for all courts in Ohio.

In addition to this ruling, the guidance in Cuyahoga County follows some other rulings by state Supreme Courts in New York and New Jersey. It forces counsel for the foreclosing party to attest personally to reviewing the foreclosure file, and that the signer of the affidavit has as well. Failure to provide proper documentation and affidavits to this effect would result in the signer or an officer of the party seeking foreclosure having to come to court to testify about his or her personal knowledge. Sanctions for perjury or contempt of court could spring from that.

What’s more, if no affidavit is signed attesting to the validity of the documents, and a affiant or officer of the party foreclosing has to come to court, they have to walk in with the original note in their possession. The key piece:

The affiant or officer of the party seeking foreclosure who appears in court in lieu of the filing of a foreclosure counsel affidavit must appear with the original promissory note, including all endorsements and allonges and a current payment history for the mortgage loan at issue. The affiant or officer of the party seeking foreclosure must be prepared to testify that he or she has personally reviewed the documents, records or other data related to the case, has reviewed the pleadings and other court filings in the case and has confirmed both the factual accuracy of the filings and the accuracy of the notarizations contained in affidavits filed in the case, if any. The affiant or officer of the party seeking foreclosure must be prepared to respond to the questioning of the magistrate or judge presiding over the hearing and the questioning of any other party attending the hearing.

That’s pretty hardcore. Basically it makes it nearly impossible to do anything but use verifiable documents and signatures, without risking sanctions and the dismissal of the foreclosure case.

As 4closure fraud, which first noticed the affidavit policy of the court, said, “This is all we ever asked for, the rule of law, that is already in place, be followed.”

Courts are slowly but gradually codifying policies that put much greater burden on mortgage lenders and their counsels to actually follow the law. We’ve seen in recent years that the banks cannot be expected to do that. So something’s gotta give.