PHH Mortgage Corp. v. Barker
Ohio Court of Appeals
940 N.E.2d 662 (2010)
After the Barkers (defendants) missed two mortgage payments, First Financial sent them conflicting communications -- directing them to a loss-mitigation office, sending a new coupon book suggesting reinstatement, then later letters and returned checks claiming the mortgage remained in default. The Barkers, believing their loan had been reinstated, resumed monthly payments using the new coupon book, and First Financial actually accepted those payments for nearly six months even after PHH Mortgage Corp. (plaintiff) filed a foreclosure complaint, until PHH ordered a stop; the trial court ultimately reinstated the Barkers' mortgage rather than granting foreclosure, and PHH appealed.
Whether, under Ohio law, foreclosure requires the trial court to first determine as a matter of law that a default occurred, and then separately weigh the equities to decide if foreclosure is the appropriate remedy.