Cuyahoga County's New Requirement Regarding Escrow Advances
The Cuyahoga County, Ohio, Court of Common Pleas has announced a change in the court's foreclosure procedures pertaining to a mortgage holder's unreimbursed escrow advances. Typically, the amount of unreimbursed escrow advances for the payment of real estate taxes, hazard insurance premiums, or for protection of the property become significant in the following two situations:
- The proceeds of the sheriff's sale are in excess of the amount necessary to pay the mortgage holder's principal and interest; or
- There are no excess proceeds but the mortgage holder is entitled to a deficiency judgment and desires to include its unreimbursed escrow advances in the calculation of the deficiency judgment. Of course, the calculation of a deficiency will usually be moot if no money judgment is awarded, or the borrower has filed bankruptcy.
Cuyahoga County's new directive imposes a short time frame to assert a claim for escrow advances. If a property is successfully sold at a sheriff's sale, the mortgage holder must file a motion within 21 days from the date of the sale if it desires to have excess proceeds of the sale disbursed or to include its escrow advances in the calculation of an enforceable deficiency judgment. If the motion is not filed within that 21-day period, the mortgage holder will be deemed to have waived any entitlement with regard to the amount of its escrow advances.
Therefore, when providing us with your bidding instructions for a Cuyahoga County sheriff's sale, it is imperative that you also provide an itemization of the dates, amounts, and purposes of each unreimbursed escrow advance. If the property is successfully sold at the sheriff's sale, we can then promptly prepare the necessary affidavit for your execution and return, in order to be able to file the required motion prior to the deadline.