Ohio Revised Code Section 1349.72, effective as of March 20, 2019, imposes a requirement that written notice be provided before a person “collects or attempts to collect” a debt secured by a second mortgage or “junior lien” on “residential real property.”
The statute does not define what constitutes an “attempt to collect,” a “junior lien,” or “residential real property” and, to date, no court opinions interpreting the statute have been published. Due to the current uncertainty as to the statute’s scope and application, we recommend that all debt holders, even those holding “first” priority mortgages and liens, send the notice as soon as possible after a default occurs, as the priority status of the mortgage or lien may not be definitively known at the time of default due to the possibility of intervening liens, such as liens for delinquent real estate taxes.
The notice must be sent in at least twelve-point font via U.S. mail to the residential address of the debtor and must contain:
- The name and contact information of the person collecting the debt;
- The amount of the debt;
- A statement that the debtor has a right to an attorney;
- A statement that the debtor may qualify for debt relief under Chapter 7 or 13 of the United States Bankruptcy Code, 11 U.S.C. Chapter 7 or 13; and
- A statement that a debtor that qualifies under Chapter 13 of the United States Bankruptcy Code may be able to protect their residential real property from foreclosure.
Further, the statute requires that upon receiving a debtor’s written request, a copy of the note and the loan history must be provided.
Failure to comply with the foregoing requirements may result in the debt holder being civilly liable for damages and required to pay “reasonable restitution” to the debtor.
While the legislature or courts may need to clarify the statute, in any event, financial institutions will need a form notice prepared to ensure compliance. If you have any questions about the legal requirements for the notice, or if you would like us to review and/or draft a legally compliant notice for your institution, please contact John O’Keefe, Nick Didomenico, Roger Poorman or Justin Tuskan.
This post was written by Nicholas Didomenico