The Ohio Senate Committee on Insurance and Financial Institutions held a hearing last week on legislation aimed at streamlining the mortgage process and providing lenders in the state with clarity on the priority of liens.
The bill—Substitute H.B. 201, originally introduced last June by Republican State Rep. Jim Butler—was passed by the Ohio House of Representatives in February.
The legislation codifies Ohio’s common law approach to determining the priority of liens to provide lenders with predictability in the real property priority system, and imposes a harsher punishment on lenders that fail to record a mortgage has been completely paid in a timely manner.
If a lender failed to record complete payment within 90 days, a penalty starting at $100 per day—up to $5,000—would be imposed.
Additionally, the legislation would require the property owner to notify the lender if it fails to report the complete repayment of a mortgage, after which time owners may be able to collect damages.
“Ensuring that lenders, mortgagees, mortgagors, title agencies, attorneys, and everyone involved with transactions involving real property understand how the processes are supposed to work, and that there are potential penalties if the processes are not followed correctly is critically important,” Butler said after the Ohio House passed the measure. “Increasing efficiency and expediting real estate transactions will have a positive economic impact in communities throughout Ohio.”