Legal News

Ohio AG Hits Snag in Crusade Against Foreclosures

By Dan Slater

Given this morning’s discussion of the tough-guy tactics of some state enforcers, we thought we’d revisit Ohio, where that state’s attorney general, Marc Dann (pictured), recently suffered a setback in his crusade to cut down on Ohio’s daunting foreclosure rate.

Dann, who in this October WSJ profile called the subprime mortage mess “the largest financial scam in American history,” has sued scores of lenders and brokers for allegedly inflating home appraisals and engaging in other practices that misled troubled homeowners.

But on Monday, Magistrate Judge Michael Bachman rejected Dann’s argument that lenders can’t foreclose unless they can prove they own the mortgage they say is in default. The magistrate reportedly told Dann he was acting against the interests of his own clients — Ohio taxpayers — by moving to dismiss foreclosure cases in which the state has liens against the properites. Since it’s the AG’s duty to collect on those liens Dann has an “obvious conflict of interest,” said the magistrate. Here’s a news report on Judge Bachman’s rebuke.

Regarding the conflict-of-interest allegation, a spokesman for Dann said that he “strenuously rejects that implication.” The spokesman added: “The attorney general never said the state was not going to collect tax liens. To the contrary, we believe it will be easier to collect tax liens if we help homeowners stay in their homes rather than kick them out and sell the house for below market value.”

Full post as published by Law Blog - WSJ.com on February 06, 2008 (boomark / email).