FINANCE, INSOLVENCY & RESTRUCTURING

November 2007

Mortgage Assignment Required Prior to Filing

Foreclosure Complaint
The United States District Court for the Northern District of Ohio recently dismissed 14
foreclosure actions filed by Plaintiff, Deutsche Bank National Trust Company, as Trustee for certain
asset-backed pooled mortgage facilities because the Plaintiff failed to establish diversity jurisdiction
1
and standing (i.e. that the Plaintiff “suffered some actual injury”). With respect to diversity
jurisdiction, the threshold question of who the proper plaintiff is must be answered before the
establishment of diversity jurisdiction. The Court’s Opinion and Order provides that the Court’s
holding does not have retroactive effect.
Prior to dismissing the foreclosure actions, the Court issued an Order requiring the Plaintiff to
prove that it was the holder and owner of the underlying notes and mortgages that were the basis for
each of the foreclosure actions. More specifically, the Court ordered the Plaintiff to “file a copy of the
executed Assignment demonstrating Plaintiff was the holder and owner of the Note and Mortgage as
of the date the Complaint was filed[.]”2 The Court was concerned because the underlying notes and
mortgages identified the original lending institution as the promisee and mortgagee and not the
Plaintiff. The Court also noted that the Preliminary Judicial Report attached to each complaint
describing the property did not mention the Plaintiff in the recorded chain of title/interest. The Court
stated that real estate matters require greater scrutiny because the contractual relationship must be
memorialized in writing and, under Ohio law, assignments of mortgages are subject to recording
requirements. Therefore, in addition to execution of a mortgage assignment, recording may also be
required to establish standing.
In response, the Plaintiff produced Mortgage Assignments dated after the date of the original
foreclosure complaint. These Mortgage Assignments were attached to pleadings in support of the
Plaintiff’s position that such Mortgage Assignments were sufficient to establish the Plaintiff’s standing
to prosecute the foreclosure actions, even though such Mortgage Assignments were entered into after
the commencement of the foreclosure actions. The Court did not agree with the Plaintiff’s position.
Therefore, since the Plaintiff failed to produce any Assignments as of the date the complaints were

1
See In re Foreclosure Complaints, Case Nos. 07CV2282, 07CV2532, 07CV2560, 07CV2602, 07CV2631, 07CV2638,
07CV2681, 07CV2695, 07CV2920, 07CV2930, 07CV2949, 07CV2950, 07CV3000 and 07CV3029 (N.D. Ohio, Oct. 31,
2007).
2
See id. (emphasis in original).
Chicago Indiana Michigan Washington, D.C.
filed, the Court dismissed all 14 foreclosure actions. The dismissals were without prejudice to re-file
at a later date.
In its Order, the Court stated that it has an obligation to preserve the integrity of the judicial
process as well as the jurisdiction of the federal courts; therefore, the unchallenged practice of
foreclosing without establishing diversity jurisdiction and standing should not be allowed to continue.
The Court stated in a footnote that “financial institutions have traditionally controlled, and still control,
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the foreclosure process.” This same footnote went on to outline the disparate positions of the parties
in the foreclosure process.
Based upon the amount of attention this case has already received in a very short time, we can
expect that diversity jurisdiction and standing will be challenged in virtually every foreclosure action
in which the Plaintiff is not the original lender. Therefore, it is critical to attach a copy of the
assignment, note, mortgage and other supporting documents to the foreclosure complaint. Further,
state recording requirements should be followed to establish the Plaintiff as part of the chain of
title/interest.
For additional information, please contact the following attorneys in the firm’s seven offices:
Chicago – Deborah Thorne, Kevin Driscoll (312-357-1313); Elkhart – Geoff Church, Chris Riley
(574-293-0681); Fort Wayne – Steve Fink, Matt Hohman (260-423-9440); Grand Rapids – Patrick
Mears, John Gregg (616-742-3930); Indianapolis – Alan Mills, Michael McCrory, Wendy Brewer,
Edward Keirn, Melissa De Groff, Mark Owens, Gary Hoke (317-236-1313); South Bend – Mike
Watkins, Mike Hardy, Mark Adey (574-233-1171); and Washington, D.C. – Richard Streeter (202-
289-1313).
This Barnes & Thornburg LLP publication should not be construed as legal advice or legal opinion on any
specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to
consult your own lawyer on any specific legal questions you may have concerning your situation.
Please send address changes or requests to opt in or out of these alerts to jodie.daugherty@btlaw.com.

3
See id.
Chicago Indiana Michigan Washington, D.C.