Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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JL
I filed a motion to dismiss, which was denied. I'm in Ohio and I'm wondering if anyone knows if I waived my rights to affirmative defenses?
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Lucky
I am not quite sure what you are asking. You didn't provide enough details.

Did you file an answer to the complaint? Did you raise any affirmative defenses in your answer?

The Motion to Dismiss should not affect your defenses.
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JL
No answer was filed, just a motion to dismiss.
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Lloyd
Filing a motion to dismiss in most states waives nothing except for those issues for which there are specific pleading requirements. See Ohio Rules 12(B) and 12(H)(1).

"(B) How presented. Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the responsive pleading thereto if one is required, except that the following defenses may at the option of the pleader be made by motion: (1) lack of jurisdiction over the subject matter, (2) lack of jurisdiction over the person, (3) improper venue, (4) insufficiency of process, (5) insufficiency of service of process, (6) failure to state a claim upon which relief can be granted, (7) failure to join a party under Rule 19 or Rule 19.1. A motion making any of these defenses shall be made before pleading if a further pleading is permitted. No defense or objection is waived by being joined with one or more other defenses or objections in a responsive pleading or motion. If a pleading sets forth a claim for relief to which the adverse party is not required to serve a responsive pleading, he may assert at the trial any defense in law or fact to that claim for relief. When a motion to dismiss for failure to state a claim upon which relief can be granted presents matters outside the pleading and such matters are not excluded by the court, the motion shall be treated as a motion for summary judgment and disposed of as provided in Rule 56. Provided however, that the court shall consider only such matters outside the pleadings as are specifically enumerated in Rule 56. All parties shall be given reasonable opportunity to present all materials made pertinent to such a motion by Rule 56."

"(1) A defense of lack of jurisdiction over the person, improper venue, insufficiency of process, or insufficiency of service of process is waived (a) if omitted from a motion in the circumstances described in subdivision (G), or (b) if it is neither made by motion under this rule nor included in a responsive pleading or an amendment thereof permitted by Rule 15(A) to be made as a matter of course."

Do not confuse pleas regarding personal jurisdiction, which can be waived if not timely asserted as shown in Rule 12(H)(1), with subject matter jurisdiction, which can be raised at any time. See Ohio Rule 12(H)(3):

"(3) Whenever it appears by suggestion of the parties or otherwise that the court lacks jurisdiction on the subject matter, the court shall dismiss the action."

Also, it is very, very important that you do not confuse defenses with affirmative defenses. Most of the routine defenses in a foreclosure action are regular defenses: standing, capacity, conditions precedent, denial of particular allegations, etc. The plaintiff has the burden of proof as to each of these matters and they should never be denominated as affirmative defenses. (This was subject of another recent thread.)

Affirmative defenses are those defenses that would usually excuse a defendant from responsibility for the claims even if the plaintiff established the essential elements of a plaintiff's cause of action and for which a defendant bears the burden of proof. See Ohio Rule 8(C).

There are only very rarely valid affirmative defenses in a suit on a note with a foreclosure count. The two most mainstream affirmative defenses, though only rarely properly plead by most defendants are the equitable defense of laches and the equitable defense of unclean hands.

Other possible affirmative defenses in a foreclosure action would usually be: accord and satisfaction (that the defendant had negotiated a settlement to less than all of the amount owed to which the plaintiff had agreed in writing), discharge in bankruptcy (as to the amount owed on the note [this would not release the lien]), want of consideration for a negotiable instrument (the borrower signed the instrument, but the loan was never funded), fraud, payment (the loan was paid in full), release (the amount owed was forgiven in writing), and statute of limitations (if the loan was accelerated and the suit was brought after the expiration of the limitations period).

Want of consideration for a negotiable instrument deserves special elaboration. There are a number of scam artists and swindlers who have a variant on their debt elimination scam that asserts that if a loan was "table funded" by an entity other than the Lender named on the instrument that note is void and uncollectible. This is sheer nonsense for which there exists no valid legal authority whatsoever. It merely serves as a pretext to defraud gullible borrowers who buy into the debt elimination scam fantasy. It has no place whatsoever in a valid foreclosure defense.

Fraud is exceptionally difficult to prove. If you believe that you have a fraud affirmative defense, make sure that you take care to understand precisely what the elements of a valid fraud defense would be and set out those elements specifically in your answer. It is not usually enough to simply allege fraud. You need to show HOW you were defrauded. (You do NOT have to PROVE this in your answer, you need to allege the fraud with enough specificity so that it can be understood by the plaintiff and the court.) See Ohio Rule 9(B).

BEWARE of those who suggest that you should plead standing or conditions precedent as an affirmative defense. Pleading these defenses as affirmative defenses is always legally incorrect in every state and invites the trial court to impose the burden of proof upon the defendant. Since the burden of proof remains on the plaintiff as to each essential element of its cause of action, standing and conditions precedent are never affirmative defenses.

Be sure to carefully read and understand ALL of Ohio's Rule 9 as to pleading special matters, particularly as to capacity and/or conditions precedent.

Even though the plaintiff bears the burden of proof as to capacity, Rule 9(A) makes pleading of the plaintiff's capacity unnecessary:

"(A) Capacity. It is not necessary to aver the capacity of a party to sue or be sued or the authority of a party to sue or be sued in a representative capacity or the legal existence of an organized association of persons that is made a party. When a party desires to raise an issue as to the legal existence of any party or the capacity of any party to sue or be sued or the authority of a party to sue or be sued in a representative capacity, he shall do so by specific negative averment, which shall include such supporting particulars as are peculiarly within the pleader's knowledge."

This shifts only the burden of pleading, not the burden of proof. The plaintiff is implicitly alleging its own capacity by filing its complaint. If the defendant wants to deny the plaintiff's capacity, this must be done with a specific negative averment (but not an affirmative defense).

For example, if A sues B and B realizes that A is not of legal age, B could answer DENYING A's capacity to file suit because A is a minor. B doesn't have to prove that A is a minor. Upon the denial of A's capacity, A must prove that A is of legal age.

More topically, if MERS was to sue B in a state in which MERS was not properly registered as a foreign corporation, B could validly DENY MERS' capacity to file suit in state court due to the failure to properly register. This capacity defense can sometimes be interposed in respect of mortgage trusts where a state has express registration requirements for trusts. It is usually not legally effective when the plaintiff is a nationally chartered bank, since such banks can legally operate in all states of the United States.

Something along these lines is probably sufficient:

"B admits that Mortgage Electronic Registration Systems ("MERS") is a corporation domiciled in Delaware with headquareters in Virginia, however, B expressly DENIES that MERS is validly registered as a foreign corporation in this state entitled to seek affirmative relief in this state's courts."

(This presupposes that MERS is the plaintiff OR that the plaintiff obtained its interest in the note from MERS after default and MERS is not properly registered in that state. It also presupposes that the state's business corporation act denies access to the courts to improperly registered entities. This post is about rules and pleading, not about the specific requirements of the law.)

In respect of conditions precedent, you are going to need to deny satisfaction of conditions precedent with particularity to comply with Ohio Rule 9(C):

"(C) Conditions precedent. In pleading the performance or occurrence of conditions precedent, it is sufficient to aver generally that all conditions precedent have been performed or have occurred. A denial of performance or occurrence shall be made specifically and with particularity."

Under Rule 9(C), it is not enough to merely say "B DENIES that A has satisfied conditions precedent."

You are going to need to be a little more explicit identifying the condition which is required by the instrument, usually a notice of default, notice of grievance, notice of intent to accelerate, and/or notice of acceleration. You do not need to go into great detail. It is usually sufficient to simply identify a condition and WHERE the condition is required in the instruments (or in the state's law) and to DENY that the plaintiff complied with this condition. It is the plaintiff's burden to prove compliance and this is an essential element of the plaintiff's cause of action, thus it is NEVER an affirmative defense.

If there is more than one condition that has not been complied with, then these might be set forth in separately numbered paragraphs in the answer.

Look at some of the pleadings being filed by attorneys in Ohio cases, however if these make the mistake of erroneously denominating standing, capacity or conditions precedent as affirmative defenses do NOT make this mistake!!

Be sure to carefully check your state's laws as to any unique statutory notices that are required to commence a foreclosure action. Some states have some very specific requirements about notices or mediation that need to be adhered to in a foreclosure case. These statutory conditions precedent usually need to be expressly pleaded, too, or else these arguments are waived.

Hope this helps!
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JL
That's helpful.

Where you say waived of those specifically needed to be pleaded, would that be rule 8 in Ohio? Have I waived those defenses? They've filed against me twice now, I'm afraid I've lost the estoppel argument.
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$&?!
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Where you say waived of those specifically needed to be pleaded, would that be rule 8 in Ohio? Have I waived those defenses? They've filed against me twice now, I'm afraid I've lost the estoppel argument.


The facts of your situation are a little cloudy from your posts.

Generally, if a case is dismissed for lack of standing (subject matter jurisdiction), upon re-filing, the new cases is treated as a totally new case.  Failure to plead various defenses in the original case OR to plead various counterclaims is not a waiver as to pleading these in the new case as the original case is treated as if it never happened.

Similarly, when a plaintiff voluntarily dismisses a case under the state equivalent of Federal Rule 41(a), upon any re-filing the case is also treated as a new case.  See:


No defenses or counterclaims are waived by the failure to make the argument in the original case.  Arguments that were made can sometimes constitute quasi admissions as noted in another recent thread.

It should be noted though that limitations continue to run on any counterclaims.  For example, suppose that a defendant wanted to counterclaim as to origination fraud.  Generally, limitations would begin to run with the accrual of the cause of action (subject sometimes to exception under the "discovery rule"), usually the loan closing.  Thus a counterclaim for fraud might be and probably is subject to a different limitation period and start date than limitations of the plaintiff's claim for default.

Also note that accrual of a cause of action for origination fraud may be very different than a counterclaim for servicing fraud.  Also fraud may be a counterclaim, an affirmative defense to the plaintiff's claim under the note and/or possibly even an element of a separate equitable affirmative defense as unclean hands.

One other point is also in order.  If in doubt, plead the defense.  It is incumbent on the plaintiff to set forth the theory under which a defendant has waived a defense.  If you do not plead the defense, you are almost certainly waiving it.  If you do plead a defense, the plaintiff might somehow move to have the defense stricken.  This would rarely arise from a dismissal due to lack of standing or from a coluntary dismissal, but could possibly arise in respect of judicial admissions, estoppel or even judicial estoppel.

The latter is something that hasn't been discussed at the Forum for some time, but Mr. Roper posted about this many years ago.

Bottom line is if you have a defense, be sure to plead it.  Plead it with the requisite particularity under the rules, but as generally as you otherwise possibly can.  Finding the  correct balance can sometimes be challenging.
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Zeke
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There are only very rarely valid affirmative defenses in a suit on a note with a foreclosure count. The two most mainstream affirmative defenses, though only rarely properly plead by most defendants are the equitable defense of laches and the equitable defense of unclean hands.


While what Lloyd said about laches being an affirmative defense is true, it is very, very difficult to prove laches in Florida.

"Laches is an affirmative defense. As such, the burden of proving it is on those who assert it, and it must be proved by very clear and positive evidence."
[i]Van Meter v. Kelsey, 91 So. 2d 327 (Fla. 1956)[/b]
http://scholar.google.com/scholar_case?case=10665518688502516672

Take note that this decision also explains the elements that must be shown to sustain a laches affirmative defense in Florida.

This is going to prove to be a bridge too far in Florida for most litigants. Laches may be a more robust defense elsewhere.
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JL
While I appreciate the responses, I don't think you understand my question. I did not file an answer, but a motion to dismiss which was denied. Under rule 8 you have to pleas affirmative defenses, have I waived the opportunity?
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Lucky
JL wrote:
While I appreciate the responses, I don't think you understand my question. I did not file an answer, but a motion to dismiss which was denied. Under rule 8 you have to pleas affirmative defenses, have I waived the opportunity?


The Motion to Dismiss was denied. Move on. File an answer and properly raise your defenses in the answer.

I can't speak for Ohio procedures, but here in Florida it is common to file a MTD in response to a complaint. Once denied the defendant can then file a complete answer. Read the rules. It doesn't appear as if you have done much reading. The information is only as good as your reading, comprehension and application of that information.

If you sit around mourning your MTD and fail to answer, then you will waive your defenses.

Even if you are late according to the rules, file an answer, it may well be accepted by the court. I know of a case in which in which the owner hadn't answered. A summary judgment hearing was scheduled and the woman felt a need to write a letter to the judge explaining why she could no longer pay the mortgage. The court accepted her hardship letter as an answer to the complaint even though it was a more than a year after the complaint was filed.








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Brent
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While I appreciate the responses, I don't think you understand my question. I did not file an answer, but a motion to dismiss which was denied. Under rule 8 you have to pleas affirmative defenses, have I waived the opportunity?


It seems to me that your question has been very clearly and thoroughly answered. That you persist in posting suggests some basic misunderstanding of the rules.

Mr. Roper's suggestion was: "Read the Rules! Read the Cases on the Rules! Read the Rules Again". More recently he has been very adament about the importance of going to a law library to read Miller & Wright and Moore's treatises on the rules.

A motion to dismiss is NOT a pleading. Motions are not pleadings.

In many places, filing a Rule 12 motion to dismiss defers the deadline to file the answer. The answer IS a pleading.

Carefully read Ohio Rule 12(H). This identifies the defenses that are waived if not interposed by motion. Basically, if you thought you were going to deny personal jurisdiction (asserting that you had not been served or had been improperly served), you probably waived that defense by making a motion to dismiss and failing to raise that defense in the motion. Similarly, if you had some valid defense as to venue (that the suit had been brought in the wrong place) you may have also waived the venue issue.

In Ohio, a defense relating to subject matter jurisdiction can be raised at any time. See Ohio Rule 12(H)(3).

You might want to give some serious consideration to asking for an enlargement of time as suggested in another thread.

Also carefully read Ohio Rule 15(A) about amended pleadings. If you make counterclaims, you can amend your pleading up until the plaintiff has answered your counterclaims (which the plaintiff must do within the time allowed). If you do not make counterclaims, then you can amend for twenty eight days UNLESS the matter has been placed on the trial calendar. Consult the local rules and the dockets of your County Court of Common Pleas as to the standard practice in your county.

If you county does NOT routinely place foreclosure cases on the trial calendar upon answer and you had in mind to file some counterclaims, you might want to consider withholding your counterclaims when you file your answer and then waiting twenty five to twenty eight days and then amending your answer to include these counterclaims. This would give you a bit of additional time to refine your response. If you file an answer with counterclaims, you can only amend through the date the plaintiff responds to your counterclaims, which is beyond your control.

See Rule 13 about counterclaims. Counterclaims will NOT stop a foreclosure and are usually ineffective at anything except adding complexity and confusing the plaintiff. It is imperative that you not allow yourself to be confused by counterclaims.

TALK TO A LICENSED OHIO ATTORNEY. THIS IS NOT LEGAL ADVICE!
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