Ron Zimmerly, Liberty National Bank president and CEO, recently testified in the Ohio House Financial Institutions, Housing, and Urban Development Committee in opposition to House Bill 67. 

This bill would only permit the use of cognovit notes for monetary default on commercial lending contracts, thus removing a safety net that allows lenders to mitigate some of the risk taken on these high-dollar loans.

Zimmerly’s testimony emphasized that the use of a cognovit note, or confession of judgment, is used only as a last resort option and must be valid, justifiable, and within legal reason for a judge to approve the request to call the loan. 

He also noted that because of the severity of a cognovit note, courts often err on the side of the borrower – even though they can always appeal by filing a motion for relief from a judgment under Civil Rule 60 (B). 

Lenders in Ohio exercise the authority granted under this provision very sparingly and only for extreme cases of delinquency or default, according to Zimmerly’s testimony.

As a result of his oral and written testimony and by other Ohio banking officials’ testimony, the committee moved to schedule the vote on the bill at later date.