By Adam A. Diaz, Esq.

Diaz │ Anselmo*

USFN Member (FL, IL, IN, KY, OH, WI)

As part of its ongoing Briefing Series, USFN hosted an informative virtual session on May 13, 2025, spotlighting the complexities of HECM (Home Equity Conversion Mortgage) loans—commonly known as reverse mortgages. The session, titled "Enforcement, Foreclosure, and Key Differences from Conventional Loans," provided a comprehensive overview of the unique characteristics of HECM loans and the legal challenges servicers and practitioners encounter when managing these products.

The panel featured seasoned professionals including Caren Castle (The Mortgage Law Firm), Eric Rudolphy (Celink), Adam Gross (Gross Polowy, LLC), and Eileen Papariella (Single Source Property Solutions). Each brought a wealth of experience and insight to the session, contributing to a robust discussion on the nuances of reverse mortgage enforcement and asset management.

The panel began by revisiting the fundamentals. A HECM is a federally insured reverse mortgage product available to homeowners aged 62 or older. It allows borrowers to access the equity in their homes without the burden of monthly mortgage payments. As the panel highlighted, this structure creates a unique servicing and enforcement environment due to the fact there are no installment payments. Key loan features include borrower age, repayment triggers (typically upon death or move-out), and restrictions surrounding occupancy and property condition.

One of the most nuanced areas covered was enforcement. Unlike traditional mortgages, HECMs are generally non-recourse and become due and payable upon specific "triggering events," such as the borrower’s death, the home no longer being the principal residence, or failure to pay taxes and insurance.  These trigger events are unique to HECM loans, and based on the loan documents, a notice of default is potentially not needed to begin the foreclosure process.

Since the majority of defaults should result from the death of the borrower, it is important to determine whether a probate is necessary to foreclose a HECM loan.  The answer, as explained, depends on the state. In some jurisdictions, like Wisconsin, a probate is required in order to obtain a party to serve.  However, in other states, such as Florida, a probate should never be filed in order to commence foreclosure.  This lack of uniformity underscores the importance of understanding state-specific probate rights and dower laws when enforcing these loans.  It is also important not to ignore a probate when it is filed.  For example, in Ohio, there are land sales through probate may be required, while others do not mandate probate proceedings.

The panel explored how HECM foreclosures diverge from traditional foreclosure processes. For instance, a demand letter may not be necessary in every HECM foreclosure, particularly when the loan has automatically matured. However, property status—whether vacant or occupied—affects how and when foreclosure proceedings can commence.

Also discussed were standing challenges, which are treated differently for HECMs compared to conventional loans. In many states, such as Florida and New York, HECM loans potentially are non-negotiable, this means the Courts may not be able to rely on the endorsement to prove standing.

Another legal wrinkle is the statute of limitations. The panel explained that HECMs often follow a distinct limitations timeline, particularly when successive foreclosure actions or res judicata come into play. Practitioners are advised to tread carefully, ensuring accurate date tracking and analysis of prior enforcement efforts, and to look at the facts for each case.  There is potential case law stemming from 28 U.S.C. § 2415(c), that may allow the enforcement of a loan that is passed the statute of limitations.

Rounding out the discussion, the panel turned its focus to REO asset management—a critical, often overlooked component of post-foreclosure HECM handling.

Several best practices emerged:

• Partner with vendors who understand HECM timelines and regulatory pitfalls.
• Obtain the most accurate initial valuation to reduce the risk of appraisal-based claims (commonly referred to as ABCs).
• Use appraisers trained specifically on reverse mortgage products.
• Ensure quality control reviewers are highly experienced and trained in HUD protocol.

Choosing REO agents and vendors who are well-versed in HECM-specific compliance and financial analysis is important, particularly when weighing Asset-Based Claims (ABC) versus Servicer-Based Claims (SBC). The goal: maximize investor recovery while adhering to HUD’s stringent guidelines.

This USFN Briefing reinforced that HECM loans are not simply conventional loans in reverse—they come with their own ecosystem of legal, financial, and servicing requirements. From probate complexities to appraisal practices, the stakes are high for servicers and legal professionals navigating these waters.

USFN continues to provide vital educational resources to help the industry meet these challenges. For more on upcoming briefings, compliance events, and digital tools—including the new USFN Source platform—visit usfnevents.org or explore the member directory to connect with experts in this niche space.

Copyright © USFN 2025

USFNews_July 23

*Denotes firm is a 2024 USFN Award of Excellence recipient.

USFN will be spotlighting our 2024 Award of Excellence recipients over the next several months. We are taking this opportunity to recognize these recipients for their commitment to excellence and to USFN. While all USFN Members must meet rigorous standards and selection criteria, USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients.

Doyle & Foutty, PC

1.      USFN member: 25+ years

2.      First AOE recognition: No

3.      How many AOE Awards has your firm won: 16

4.      Why is the AOE Award important to your firm?
It demonstrates our devotion to this industry, this organization, our clients and their education, as well as excellent service to all.

5.      Why is USFN Membership important to your firm?
USFN is the premiere organization in our default industry that is focused on education and advocacy. The amount of work represented by all its members is unparalleled. Additionally, the membership is always willing to work together for the good of everyone and that sense of community is not duplicated elsewhere.

USFNews - July 9, 2025

USFN will be spotlighting our 2024 Award of Excellence recipients over the next several months. We are taking this opportunity to recognize these recipients for their commitment to excellence and to USFN. While all USFN Members must meet rigorous standards and selection criteria, USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients.

BWW Law Group, LLC

1.      USFN member: 19 Years; 2006

2.      First AOE recognition: No

3.      How many AOE Awards has your firm won: 7 Awards; 2018 -2024

4.      Why is the AOE Award important to your firm?
The USFN is the premier trade organization in the mortgage industry. To receive the Award of Excellence is an honor and we appreciate the opportunity to contribute to such a renowned and prestigious organization.

5.      Why is USFN Membership important to your firm?
USFN provides an opportunity to congregate with the most talented and reputable attorneys and servicing professionals in the mortgage space. It is the epicenter for relevant educational content and its advocacy efforts help facilitate our shared desired objectives.

USFNews - July 9, 2025

By Eric Cook, Esq.

Wilford,Geske & Cook, P.A.

USFN Member (MN)

Minnesota passed foreclosure reform legislation in a combined omnibus bill on the last day of the 2025 legislative session, HF2432, Article 5. All 13 sections of the bill were signed into law and will become effective either on August 1, 2025 or January 1, 2026. Key provisions for the default servicing industry cover loss mitigation, postponements of judicial foreclosure sales, surplus funds, post-sale redemptions, and enhanced sheriff tools to thwart foreclosure speculators.

The timeline for handling loss mitigation applications under Minnesota law is now better (but not perfectly) aligned with federal law. In 2014, Minnesota enacted an ambiguous dual-tracking statute that conflicted with Regulation X procedures. The most problematic issue involved the addition of a single word “halt” to the state dual-tracking statute which in practice made it difficult for servicers to safely postpone a sheriff’s sale during loss mitigation.

It has long been permissible to postpone a foreclosure sale under RESPA while evaluating a loss mitigation application, provided the servicer does not “move for an order of foreclosure, seek a foreclosure judgment, or conduct a foreclosure sale… .” 12 C.F.R. §1024.41(g). Since 2014, the conservative response of some servicers in Minnesota entailed canceling scheduled foreclosure sales upon receipt of a partial application for fear of violating the state statute’s directive to “halt” the foreclosure proceedings. The term “halt” was left undefined and remains undefined by local courts. A Minnesota federal court commented with disapproval the fact that the servicer “continued to publish the notice of foreclosure sale after…” the homeowner submitted a loan modification application, stating that “halt” means “that all proceedings should be suspended or stopped pending an application review.” Hall v. The Bank of New York Mellon, et al, 2016 WL 2930917 (D.Minn. 2016).  As a result, publishing a postponement notice of a scheduled sheriff’s sale presented servicers with litigation risk and led to uneconomically canceling scheduled sales after incurring significant attorney fees and costs.

With the support of the Minnesota Legal Aid Society, which originally drafted Minnesota’s dual-tracking statute in the image of Regulation X in 2014, the term “halt” now explicitly allows a servicer to postpone or cancel a pending foreclosure proceeding while evaluating a loss mitigation application.  After August 1, 2025, servicers do not need to cancel and re-start pending foreclosures during loss mitigation, which made no economic sense for the servicer or borrower, and will no longer be faced with the dilemma of complying with state and federal dual-tracking statutes that conflict with one another. 

Some differences remain between Regulation X and Minnesota’s dual-tracking statute. For instance, a Minnesota homeowner retains the right to submit a loss mitigation application up until “midnight of the seventh business day before the foreclosure sale date” compared to the 37-day deadline under Regulation X. 12 C.F.R. §1024.41(g). However, now the servicer receiving an application at the eleventh hour may simply postpone the sheriff’s sale rather than cancel it and start over. 

The dual-tracking statute in Minnesota will now require a servicer to wait 60 days before conducting a sheriff’s sale after the occurrence of one of the following, whichever is applicable: (1) a loss mitigation denial letter, (2) the homeowner fails to timely accept a loss mitigation offer, or (3) the homeowner declines a loss mitigation offer in writing. As a practical matter, this eliminates the unseemly instance of removing a loss mitigation hold on a Monday and proceeding with a sheriff’s sale on Wednesday.

In a separate provision introduced by Legal Aid, judicial foreclosure sales may now be postponed at the request of the servicer for an unlimited number of times. Minn.Stat. § 580.07, subds. 1. In alignment with non-judicial foreclosures (the predominant method of foreclosure in Minnesota), the right to postpone a sheriff sale has been relied upon by servicers for many reasons including compliance, moratoriums, reviews, and to allow time for reinstatements and payoffs. Previously, no statutory basis existed in Minnesota to postpone a judicial sale, which led to re-doing all post judgment foreclosure activities if a judicial sale couldn’t move forward at the time of the scheduled sale. A homeowner’s one-time right to postpone a sheriff’s sale for five or 11 months, in exchange for reducing the homeowner’s redemption period to only five weeks, is also carried over to judicial foreclosures. Minn.Stat. § 580.07, subd. 2. The net effect on timelines of a “borrower postponement” is minimal in Minnesota and only extends the overall foreclosure timeline by one week.

The surplus statute, Minn.Stat. §580.10, is rewritten but retains most of the substantive rights. Consistent with case law, junior creditors hold priority ahead of owners to demand a surplus in the order of their recorded priority. Minn.Stat. §580.10, subd. 1.  Demands for a surplus by a junior lienholder must be in writing and now must be accompanied by an affidavit stating the amount unpaid and describing the lien interest creating a right to a surplus. A sheriff must now hold surplus funds for the entire redemption period, usually six or 12 months.  The sheriff must send a Notice of Surplus to the owner at the property address. An owner may request that the surplus be held and applied to a mortgagor redemption, which right is nontransferable from the mortgagor to a third party, such as a foreclosure speculator. A surplus of less than $100 can be automatically paid to the owner of the property. In the event of competing demands for a surplus, a sheriff may now apply to a court to resolve such claims.

Technical changes to the redemption statutes provide more transparency, accuracy, and time to complete redemptions. Junior creditor redemptions now take place during consecutive 14-day windows (instead of seven-day windows) following the mortgagor’s redemption period expiration date. Minn.Stat. § 580.24. The deadline for a junior creditor to record an Affidavit of Amount Due is now relaxed to “as soon as reasonably possible” instead of strictly within 24 hours. Minn.Stat. §580.25. Redemption affidavits must state the interest rate accruing on the lien and the date of payment of each cost incurred during the redemption period. A Certificate of Redemption must be issued in the name of the mortgagor if redemption occurs during mortgagor’s redemption period. Minn.Stat. §580.26.  The deadline to record a Certificate of Redemption is extended from four days to one week.  Minn.Stat. §580.26.

Sheriffs will have powers to thwart foreclosure speculators. For years, speculation has existed in Minnesota foreclosures and redemptions through schemes to artificially create redeemable interests in properties. Voluntarily paying property taxes for another, and thus having a lien for the taxes paid, was one example of creating a right of redemption in a foreclosure. The right to pay property taxes for another is limited to only those having a “legal or equitable” interest in the underlying property. Minn.Stat. § 272.45. Additional tactics such as forged deeds or fraudulent mechanics liens have been questioned by sheriffs in the past.  Now, sheriffs may commence an action to resolve a redemption dispute or question the validity of a redemption without issuing a Certificate of Redemption to a foreclosure speculator. Minn.Stat. § 580.24(d). The scope of legal challenges that may be raised under a statute intended to preserve redemption rights pending the legal challenge, is expanded to include surplus and redemption disputes. Minn.Stat. § 580.28.

In the end, the 2025 amendments will create more certainty, fairness, and predictability to the foreclosure, surplus, and redemption processes in Minnesota.

Copyright © USFN 2025

USFNews - July 9

By James AR Pocklington, Esq
McCalla Raymer Leibert Pierce, LLP*

USFN Member (AL, CA, CT, FL, GA, IL, KY, MS, NV, NJ, NY, OH, OR, PA, TX, WA)

In one of its first opinions discussing so-called Zombie Mortgages, Aspen Properties Group, LLC v. Roberts-Joachim, the Connecticut Appellate Court has ruled in favor of the foreclosing lender on a defense of abandonment brought by the borrower.

Plaintiff, Aspen, brought suit seeking foreclosure of a 2006 second mortgage stemming from a 2012 default, with the action not commenced until 2020. At the time, Connecticut did not have a Statute of Limitations for mortgage foreclosure actions[1]  and defendants in the state have attempted various defenses in efforts to prevent what they see to be inequitable or improper foreclosures.

In Roberts-Joachim, the borrower, through her counsel from the Connecticut Fair Housing Center, attempted to raise a defense of abandonment. She alleged that, as she had been the subject of a prior foreclosure action brought by her first mortgage holder, and as the second had not participated, it had abandoned its mortgage. That action, brought in 2013, went to judgment but was eventually resolved through a loan modification and the action was withdrawn. One of Aspen’s predecessors in interest was properly named in that action, but did not appear or participate.

Aspen eventually accelerated and brought its action, which proceeded to a trial on the sole contested issue of whether Aspen’s predecessor had abandoned the second mortgage by not participating in the first mortgage’s prior foreclosure. The trial court rendered judgment for the lender as it determined that simply not appearing did not evidence an intent to abandon the second mortgage as there was no equity at the time, and that the abandonment claim was not carried. No evidence was provided as to the predecessor lender at trial and the trial court declined to infer an intent to abandon.

Much of the following appeal turned on the specific facts as found by the trial court, with the appellate court finding no reason to disagree with any of the rulings of the trial court.  Most importantly, the appellate court adopted the trial court analysis of the distinction between the debt and the lien, which provides some insight as to available arguments in similar situations.

First, the court reasoned that the sporadic mailing of demand letters … did not necessarily constitute an intent to abandon the mortgage because PNC had decided to ‘‘charge off’’ the home equity line of credit on its books as an accounting measure. … Of course, PNC’s determination that the loan should be classified as a bad debt does not necessarily mean that it also abandoned the mortgage, which realistically was perhaps the only remaining means to recover the sums it had loaned to the defendant. In other words, the court concluded that there was a reasonable explanation for the dearth of demand letters other than an intent to abandon the mortgage altogether.

While certainly not controlling (abandonment being a very fact-based defense in Connecticut), the argument that acknowledging a bad debt does not necessarily mean abandoning a lien is a potentially compelling argument, and one that lenders encountering challenges to second mortgages may do well to heed. This is potentially useful in any judicial state where a foreclosing senior is required to name the junior, and the junior took no action because, at the time, there was no equity in the property to justify same.

While the appellate court did not create a blanket rule against abandonment defenses to zombie mortgage foreclosures, Aspen provides a solid roadmap for how to address such claims at the trial court level and have the decision survive appellate review. 

USFN will be spotlighting our 2024 Award of Excellence recipients over the next several months. We are taking this opportunity to recognize these recipients for their commitment to excellence and to USFN. While all USFN Members must meet rigorous standards and selection criteria, USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients.

Halliday, Watkins & Mann, P.C.

1.      USFN member: 25+

2.      First AOE recognition: No

3.      How many AOE Awards has your firm won: 25+ (including mergers, acquisitions, etc.)

4.      Why is the AOE Award important to your firm?
The USFN Award of Excellence is important to Halliday, Watkins & Mann, P.C. because it recognizes the best of the best law firms in the mortgage default industry. It is an honor to be listed among the premier firms in the mortgage banking and default services industry, each of whom are dedicated to first-rate legal work, advocacy, education, and giving back to our local communities. HWM is proud of its attorneys and staff who go the extra mile on a daily basis to provide the excellent service to its clients that is required to receive this recognition.

5.      Why is USFN Membership important to your firm?
USFN Membership is critical to our firm's efforts to unite with other esteemed firms to advocate for our industry and educate others with respect to the mortgage default industry. HWM is grateful for the camaraderie with other excellent firms and the many education, advocacy, and marketing opportunities available to the Firm through USFN. Having a place at the table with USFN means that HWM will continue to remain a leader in the mortgage default industry and an influential voice among such law firms for years to come.

USFNews - June 11, 2025

USFN will be spotlighting our 2024 Award of Excellence recipients over the next several months. We are taking this opportunity to recognize these recipients for their commitment to excellence and to USFN. While all USFN Members must meet rigorous standards and selection criteria, USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients.

Millsap & Singer, LLC

1.      USFN member: Over 25 Years!

2.      First AOE recognition: No

3.      How many AOE Awards has your firm won: 24

4.      Why is the AOE Award important to your firm?
It is important to our firm that we align with the high standards the USFN sets forth each year. This requires our firm to be present and active in the USFN and our industry as a whole. If we do not meet the standards of the AOE, the firm does not meet the standards of our clients.

5.      Why is USFN Membership important to your firm?
Being a member of USFN means we are among the top firms in our industry. Maintaining membership means being involved in this important organization and allows us to build on client connections throughout the year. This not only allows us to grow our business but build friendships in our industry.

USFNews - June 11, 2025

USFN will be spotlighting our 2024 Award of Excellence recipients over the next several months. We are taking this opportunity to recognize these recipients for their commitment to excellence and to USFN. While all USFN Members must meet rigorous standards and selection criteria, USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients.

Cohn, Goldberg & Deutsch, LLC

1.      USFN member: 31 years

2.      First AOE recognition: No

3.      AOE Awards: 31

4.      Why is the AOE Award important to your firm?
Recognition of our contribution to the industry and the quality of work we perform.

5.      Why is USFN Membership important to your firm?
Educational sessions are unmatched, and the relationships formed are unparalleled.

USFNews - May 7, 2025

USFN will be spotlighting our 2024 Award of Excellence recipients over the next several months. We are taking this opportunity to recognize these recipients for their commitment to excellence and to USFN. While all USFN Members must meet rigorous standards and selection criteria, USFN's Award of Excellence program began in 1993 to elevate firms that represent the highest realization of the ideals embodied by our organization, and they symbolize USFN's commitment to quality. Click here for a full list of USFN's 2024 recipients.

Hutchens Law Firm LLP

1.      USFN member: Since its inception in 1988 - 37 years

2.      First AOE recognition: No

3.      AOE Awards: 17

4.      Why is the AOE Award important to your firm?
The AOE award is representative of the hard work our firm does each and every day. And is a reflection of the great staff we have and the care and concern we put into our firm's reputation.

5.      Why is USFN Membership important to your firm?
The USFN is the premier educational and representational association in the default industry. It helps keep our clients and other firms up to date on the latest issues, court rulings, and how to continue to grow within the industry and resolve issues but also highlights the great things that are being done to assist homeowners in remaining in their homes. The networking opportunities that are offered to servicers and law firms, and the excellence in educational forums are recognized as the leading go-to association in creditors’ rights, foreclosure, and bankruptcy.

USFNews - May 7, 2025

Schneiderman and Sherman, PC (USFN Member – IN, KY, MI, MN, OH) announced its expansion into Ohio, Kentucky, and Indiana, bringing the total state operations to five, including Michigan and Minnesota. The expansion allows SSPC to provide default legal services in both non-judicial and judicial states and also supports its expanding collections practice. A new physical location for SSPC was established at 409 W 6th Street, Suite 311, Covington, KY, 41011.

In addition, SSPC welcomed Christopher (Cris) Phillips and Lindsay Niehaus Stuart, to its team of attorneys. Both will play pivotal roles in the firm’s newly established Judicial Division. Cris joins the firm as Senior Managing Attorney and Partner in the Judicial Division. Cris has been practicing law since 2001, after receiving his undergraduate degree in Political Science from the University of Toledo and his Juris Doctor from the Thomas Jefferson School of Law. Cris’ experience includes 20 years in mortgage default legal services and management including a diverse background in Litigation, Real Estate, Creditor’s Rights, and Bankruptcy. Lindsay joins the firm as the Foreclosure Managing Attorney and Partner in the Judicial Division. Lindsay is a graduate of Salmon P. Chase College of Law and holds an MBA from Northern Kentucky University. She is also a licensed Title Insurance Agent in Ohio and Indiana.

Melissa Prantzalos has also been appointed as the new Managing Attorney for SSPC’s Litigation and Asset Recovery departments. With 15 years of extensive experience in creditor’s rights, title and default servicing, foreclosures, asset recovery, and collections for both consumer and commercial cases, Prantzalos brings a wealth of expertise to Schneiderman and Sherman.

By Callie J. Channell, Esq.

Reimer Law Co.*

USFN Member (KY, OH, WV)

Ohio firms need to think twice before lumping all advances into one general request after a recent decision. In September 2024, the Ohio 8^th District Court of Appeals, in Lakeview Loan Servicing, LLC v. Soldat, 2024-Ohio-4676, clarified the process to recover reimbursement of condominium association dues advanced by a lender. By extension, the case would likely apply to recovery of homeowner association dues advances in Ohio. The case highlights the importance of specifically pleading the right to such reimbursements in foreclosure filings.

In Soldat, the mortgage included a condominium rider, which was incorporated into the mortgage and allowed for condominium dues and assessments to be paid by the lender, if not paid by the borrower. The rider called for such lender payments to become debt secured by the mortgage if a notice was sent to the borrower requesting payment and the borrower subsequently failed to make the payment.

Upon default under the terms of the loan, the loan servicer initiated a foreclosure action. The servicer successfully obtained a judgment and, having paid condominium dues and other advances, sought to be reimbursed by the sale proceeds for such advances. However, the servicer did not reference the condominium rider in the complaint, object to the magistrate’s decision, or appeal the final foreclosure decree, so none of these rulings specifically awarded reimbursement for the condominium dues advanced.

After the property sold, the servicer filed a motion to be reimbursed for all prior advances, including the condominium dues. It did so pursuant to the mortgage terms, which included the condominium rider, and R.C. 5301.233, which states:

In addition to any other debt or obligation, a mortgage may secure unpaid balances of advances made, with respect to the mortgaged premises, for the payment of taxes, assessments, insurance premiums, or costs incurred for the protection of the mortgaged premises, if such mortgage states that it shall secure such unpaid balances. A mortgage complying with this section is a lien on the premises described therein from the time such mortgage is delivered to the recorder for record for the full amount of the unpaid balances of such advances that are made under such mortgage, plus interest thereon, regardless of the time when such advances are made.

The trial court approved the servicer’s reimbursement for its other advances but denied the request for reimbursement of the payment of condominium association dues. The court’s order of confirmation followed, in which it reasoned in a footnote that neither the foreclosure decision in that case, nor Ohio law, provided for reimbursement of advances for condominium dues.

The Court of Appeals upheld the trial court’s decision, determining that reimbursement under Ohio law does not extend to condominium dues, citing R.C. 5311.18(B)(5), which only covers "common expenses" and not "dues."

The appellate court’s decision noted that the servicer failed to refer to the condominium rider in its complaint, and that the servicer should have objected to the magistrate’s recommendation or appealed the final judgment on the basis that neither ruling specifically called for the reimbursement of post-judgment association dues.

Applying the court’s reasoning to homeowner associations, it can be presumed that a court would rule the same way under similar facts, pursuant to R.C. 5312.12(C)(3), which also only covers an owner’s portion of the common expenses.

Therefore, for successful reimbursement of any condominium or homeowner association dues, language specifically including and pleading for such reimbursements must be included in Ohio foreclosure filings and corresponding judgments. Servicers and their counsel are cautioned against the one-lump-sum request for such advances. Instead, they must review legal documents, such as complaints, judgment motions, and proposed entries, to ensure compliance with this recent ruling. Firms are obtaining this information at referral, and servicers will freely provide more detailed information about their advances if needed, so partnering together to make this simple correction will be worthwhile.

There has been no subsequent appellate history.

USFN © 2025

USFNews - May 7,2025

* Denotes firm is a 2024 USFN Award of Excellence recipient.

By JaVonne Phillips, Esq.

McCarthy & Holthus, LLP*

USFN Member (AZ, AR, CA, CO, ID, NV, NM, OR, TX, WA)

The real estate industry will soon be hit with yet another new requirement that, at the moment, will require significant additional work for handling certain residential property transactions.

As discussed at the USFN Briefing held on March 25, 2025, regarding the new Financial Crimes Enforcement Network (FinCEN) rule, panelists from law firms and Auction.com provided insight regarding the key provisions of this rule.

The new FinCEN rule, which will go into effect on December 1, 2025, is aimed at enhancing transparency by requiring reporting of extensive information related to the sales of United States residential properties to domestic and foreign third-party entities or trusts. The goal is to attempt to prevent these types of transactions from being a haven for money laundering, terrorist funding, and other illicit activities.

The requisite reporting includes the nature of the funds provided to purchase the properties. Sales subject to this rule must involve cash-related considerations such as cashier’s checks and money orders. Financed real property transactions were excluded from the reporting requirement given the existing safeguards involved.

The applicable residential properties currently include, but are not limited to, single-family homes, condominiums, townhomes, and mixed-use buildings. The rule also applies to vacant or unimproved land upon which the transferee intends to build up to four residential structures.  Determining such intent may be only one of many possible challenges with attempting to comply with this rule.

The rule requires the gathering of information about the sellers as well as the individuals associated with buying the property for the entity or trust. Such information includes names, addresses, and copies of forms of identification such as driver’s licenses and passports. If multiple individual buyers are involved, then the ones with a 25% or more interest or with a substantial ownership interest must be reported. Note that if an entity purchasing the property is a shell company—100% owned by another entity, then research must be conducted until there is identification of the actual beneficial owner for owners for reporting. The time and expense associated with this task will undoubtedly be significant.

In order to satisfy the reporting requirements a form must be completed. In its current state it has been estimated that the proposed form has no less than 111 data fields with up to 70 of those fields involving information that is not typical of real estate transactions. The time and expense that will be associated with gathering the required information may be another concern regarding the rule. For instance, some of the required information is confidential. Additionally, buyers or potential buyers may not be willing to provide such information. Further, issues could arise if the buyers do not cooperate with providing any or all of the required information.

In any event, the reporting requirements must be satisfied by the last day of the month of the real estate transaction or 30 days after the real estate transaction takes place, whichever is later. The collected information must be securely stored for five years. The ability to timely gather and/or store the required information may present another challenge to those required to report.

There are exceptions and exemptions to the reporting requirements related to legal entity and trust purchasers to whom the FinCEN rule does not apply. The rule does not apply to low-risk transfers due to death, divorce, easement transfers, and transfers to a bankruptcy estate. Also, the rule will likely be inapplicable to judicial foreclosures which have court oversight. Trusts for estate planning purposes are also not subject to the rule. Transactions that occur pursuant to section 1031 of the Internal Revenue Code which regards using funds from a sale to buy another property are also exempt. At the moment, there are no blanket exceptions for attorneys despite the attorney-client privilege.

Considering the enhanced responsibilities described thus far, it may beg the question, “Who is responsible for the required reporting?” Those handling the closing and settlement services of the applicable real estate transactions appear to be undisputed primary reporters. However, in the default servicing world regarding sales pursuant to the non-judicial foreclosure process, the responsible parties seem to be less clear. In general, it may be the party responsible for recording the deed. Assessment in this regard will require a review of the applicable state’s cascade since not all states have the same process. The importance of communication between the relevant, involved parties cannot be stressed enough so that the reporting requirement does not fall through the cracks due to a lack of agreement and understanding regarding who will conduct the reporting. An option that might be helpful for those to whom this rule applies is that a reporter may be designated; however, it must be on a transaction-by-transaction basis. The ability to obtain a blanket designation is not currently permitted.

It will be important to educate and train relevant staff in order to ensure compliance with this FinCEN rule. A failure to comply may result in a $5,000 fine for each day of the violation, up to five years of imprisonment, and/or additional fines for willful violations or patterns of negligent activity. As part of an effort to avoid consequences it may be worthwhile to always exercise good faith, and diligent efforts toward obtaining the required information in the event that there are obstacles such as a lack of buyer cooperation. Other challenges with compliance may occur in jurisdictions where the winning bidder differs from the vesting party; therefore, compliance to the extent possible might be helpful in avoiding negative consequences.

This rule is subject to ongoing changes which may provide hope for less burdensome requirements. For example, days before the USFN Briefing on this topic FinCEN changed another recently implemented rule regarding Beneficial Ownership Information (BOI) reporting to create an exemption for domestic reporting companies and their beneficial owners. Therefore, a similar change could be enacted with respect to the FinCEN rule discussed in this article. A change such as this one would provide welcome relief for the foreclosure realm. Time will tell so this rule should be closely monitored through its December 1, 2025, effective date.

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USFNews - April 16, 2025

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