Countrywide, National City named as defendants in 2 class actions
By PAULA PARISOT
5/17/2005

Mortgage lenders in Ohio have lost a class action court battle and now face penalties for the late filing of lien releases during the past six years.

In a 4-3 decision recently, the Ohio Supreme Court ruled that homeowners now have six years to file suit against lending institutions who fail to remove satisfied mortgage liens within 90 days of the homeowner's last payment.

Two separate class-action suits were filed in 2002 on behalf of Cuyahoga County homeowners against National City Bank and Countrywide Home Loans, requesting that both lending institutions be required, under an Ohio statute, to pay damages of $250 to borrowers whose mortgage liens were not removed in a timely manner.

The Trial Court certified the class action but limited its order to only those borrowers whose loan was paid off within one year of filing the lawsuit.

Patrick Perotti, a Cleveland attorney for the plaintiffs, told MortgageDaily.com the Trial Court imposed the time limit "in response to the defendant lender's argument that the $250 was a penalty and therefore governed by a one year statute of limitations." The plaintiffs, however, asserted the $250 was damages, Perotti said, and was governed by a six-year statute of limitations.

The plaintiffs appeal came before the Ohio Supreme Court. The Supreme Court reversed and held that the six-year statute of limitations must apply.

Perotti said the total number of borrowers would not be known until both lenders supplied the pertinent information.

"Now that we have got the (Supreme Court) decision," he said. "We hope to get this resolved."

Perotti said in the case of both of his clients were inconvenienced by the satisfied lien that had remained on title and that it "impairs his clients' ability to take out a new loan." He also noted that the outstanding balance could remain on the credit report as unpaid, as well, effecting credit scores.

"When someone takes out a loan," Perotti remarked, "the lender makes sure his lien is on the property within 48 hours; the lender needs to be as diligent to get the lien off when they have been paid in full."

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