The Oregon Supreme Court is reviewing two cases that involve the role Mortgage Electronic Registration Systems can play in the state’s foreclosure processes, the Statesman Journal reported Jan. 10.
In Niday v. GMAC Mortgage, Rebecca Niday filed suit against MERS seeking a declaratory judgment and an injunction to stop a trustee’s sale of her home on the basis of Oregon’s statutory, nonjudicial foreclosure process for trust deeds, the Statesman Journal reported.
The issue before the court is whether MERS can be considered a “beneficiary” under a 1959 law regulating real estate deeds in Oregon. The national database was launched in 1997 to track home mortgage loans bundled and sold as packages to investors but it does not actually lend or collect money.
In July 2012, the Oregon Court of Appeals ruled that individual lenders — not the national system — are required to file deed assignments with counties prior to commencing out-of-court foreclosures. The decision would obligate lenders to file each change of ownership of a loan, the Statesman Journal reported. Combined with new state legislation from the 2012 session, the ruling halted most out-of-court foreclosures.
Based on how the 1959 Oregon Trust Deed Act defines “beneficiary,” the database “cannot be a beneficiary under any circumstances,” argued Jeff Barnes, the attorney representing Niday, who has challenged a foreclosure action initiated by GMAC Mortgage, the Statesman Journal reported.
Only the lender or a successor can be a “beneficiary” under the law, Barnes said, the Statesman Journal reported. “What MERS does is provide a service,” he said, but it has limited legal authority.
“Everyone who was involved in a transaction knows where to go for information,” said Greg Chaimov, a Portland lawyer who represents GMAC Mortgage, the Statesman Journal reported.
As a stand-in possessing legal title to property, he said, “it allows MERS to exercise all the legal rights of lenders,” including rights to collect loan payments and to foreclose on borrowers who miss payments.
The second proceeding involves MERS cases where the United States District Court has filed an Order Certifying Questions to the Supreme Court of Oregon in the following actions: Brandrup v. Recontrust Company, NA, 311CV1390; Powell v. Recontrust Company, NA, 311CV1399HZ; Mayo v. Recontrust Company, NA, 311CVI533PK; and Mirararbshani v. Recontrust Company, NA, 312CVOOJOHA, the Statesman Journal reported.
The certified questions are: can an entity such as MERS, which isn’t a lender or a successor to a lender, be a “beneficiary” as that term is defined in the Act; can MERS be designated as beneficiary under the Act where the trust deed says that MERS “holds only the legal title to the interests granted by Borrower in the Security Instrument, but if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right: to exercise any or all of those interests”; does the transfer of a promissory note from the lender to a successor result in an automatic assignment of the securing trust deed that must be recorded prior to the commencement of nonjudicial foreclosure proceedings under the statute, ORS 86.735(1); and whether the Act permits MERS to retain and transfer legal title to a trust deed as nominee for the lender, after the note secured by the trust deed is transferred from the lender to a successor or series of successors.
The Oregon Supreme Court has no deadline to decide the cases, but justices typically issue a decision within nine months to one year following oral arguments, the Statesman Journal reported.