A contentious legal battle over foreclosure sale proceeds has unfolded in Mahoning County, Ohio, with a significant ruling from the Court of Appeals. On December 17, 2025, PennyMac Loan Services, LLC filed an appeal against Karen E. Nespeca and others in the Mahoning County Common Pleas Court. The case revolves around the distribution of excess proceeds following a foreclosure sale where PennyMac argues that their rights as senior lienholders were unjustly limited by the trial court’s decision.
The dispute began when PennyMac Loan Services, LLC initiated a foreclosure action against Karen Nespeca and her late husband Rodney Nespeca on August 18, 2022. The couple defaulted on a mortgage note recorded in June 2012, owing $88,818.67 plus interest and other fees. A junior lienholder, The Huntington National Bank, also sought to enforce its claim due to a default on a separate mortgage from July 2016. Despite several sale cancellations due to procedural errors in advertisements, Italiano Holdings LLC eventually purchased the property at a sheriff’s sale for $164,800 on January 9, 2024.
Following the sale confirmation on April 15, 2024, excess proceeds amounting to $94,555.65 were held by the clerk pending further court orders. However, complications arose when debtor Karen Nespeca sought these funds under R.C. 2329.44(B)(1), claiming entitlement as the judgment debtor. PennyMac contested this move, arguing that their senior mortgage rights should prevail over any claims by the debtor or junior lienholders.
The trial court initially granted Karen Nespeca’s motion but later vacated this order upon PennyMac’s request citing Civ.R. 60(B). Subsequently, Jonathan Italiano of Italiano Holdings intervened in support of distributing the excess proceeds to PennyMac to offset their outstanding mortgage balance on the property they had purchased subject to said mortgage.
Despite prior court orders protecting PennyMac’s senior lien under R.C. 2329.20 and confirming that the property was sold subject to their mortgage rights intact, the trial court issued an order limiting PennyMac’s recovery solely to the principal amount without interest or costs from Italiano Holdings—a decision challenged by PennyMac as exceeding judicial authority.
PennyMac appealed this decision asserting it violated statutory protections and prior unappealed orders affirming their right to full recovery including accrued interest and costs—rights which were not appealed by any party involved at earlier stages of litigation.
Ultimately reversing and remanding with instructions for proper disbursement according to established priorities among creditors as per statutory guidelines—the appellate court sided with PennyMac—mandating release of escrowed funds towards satisfying its mortgage while maintaining first lien position until fully paid off including all accruable interests therein; thus reinforcing principles governing equitable distribution within foreclosure contexts.
Representing parties involved are Atty. William L. Purtell from Reisenfeld & Associates LLC for Plaintiff-Appellant (PennyMac) alongside Atty. Matthew C Giannini & Jennifer Beck advocating for Appellee/Third-Party Defendant (Italiano Holdings). Judges presiding over appellate proceedings include Carol Ann Robb alongside Mark A Hanni & Katelyn Dickey collectively adjudicating under Case No:25 MA0007 throughout these complex legal deliberations.
Source: 2025Ohio5622_Pennymac_Loan_Services_LLC_v_Nespeca_Opinion_Ohio_Court_of_Appeals.pdf