April 11, 2013
District Court of Oregon Holds that Assignment is Proper
In Stewart v. MERS, No. CV-09-687-PK, 2010 WL 1055131 (D. Or. Feb. 9, 2010), the court granted MERS’ motion to dismiss and found that U.S. Bank was a real party in interest because the assignment from MERS to U.S. Bank was proper under Oregon law. The loan documents indicate that the homeowner executed a Deed of Trust encumbering the Property, delivered to and for the benefit of MERS, as nominee for BNC Mortgage Inc. The Deed of Trus was recorded. The homeowner later defaulted under the terms of the Deed of Trust. The Deed of Trust was subsequently assigned to U.S. Bank as Trustee for Structured Asset Securities Corporation Mortgage Pass-Through Certificates. The assignment was recorded and U.S. Bank appointed NWTS as the successor and foreclosing trustee. The homeowner filed a complaint alleging that US Bank was not a “real party in interest” and therefore did not have “standing to bring this Trustee’s Sale,” and sought an injunction to halt the foreclosure proceedings. The court upheld the lower court’s conclusion that production of the original Note and Deed of Trust satisfied the demand for “proof” that they had a right to proceed with the foreclosure. Moreover, the Oregon Trust Deed Act does not require presentment of the Note or any other proof of “real party in interest” or “standing,” other than the Deed of Trust. Assignment and appointment of a successor trustee must be recorded in the real property records, and in this case the statutory requirements were met because assignment and appointment of a successor trustee were recorded.
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The Stewart case is fairly out of date.
The Oregon Court of Appeals on July 18, 2012, issued an opinion in Niday v GMAC Mortgage. As with many states, Oregon requires that all assignments of the beneficiary’s interest in the trust deed be recorded in order to utilize the remedy of non-judicial foreclosure. In Niday, MERS had executed the assignment, and there was no recorded assignment by the designated lender – Greenpoint Mortgage Funding, Inc. The Oregon Court of Appeals squarely addressed the issue of whether MERS was the beneficiary under the trust deed, and held that it was not, finding that under the law, the beneficiary under a trust deed is the “person named or otherwise designated in the trust deed as the person to whom the secured obligation is owed – in this case, the original lender.”
Niday dealt with an action which was brought to stop a non-judicial foreclosure sale. The import of Niday is much more significant. Under Oregon law, the claim of wrongful foreclosure is recognized – post-foreclosure. Further, if it is determined that there was a material breach of any provisions of the Oregon Trust Deed Act (such as the failure to properly record all assignments of the beneficiary’s interest), then the sale is not just voidable, but void. As such, arguably the bona fide purchaser defense would not apply, and a homeowner who could successfully establish that a nonjudicial foreclosure sale was void (essentially any non-judicial foreclosure sale involving MERS as the nominee on the trust deed), could re-acquire ownership of the property, and oust any third party who had purchased the property from the lender.
Finally, the last sentence of the Niday opinion is worth quoting in its entirety: “And the import of our holding is this: A beneficiary that uses MERS to avoid publicly recording assignments of a trust deed cannot avail itself of a nonjudicial foreclosure process that requires that very thing – publicly recorded assignments.”
The Oregon Supreme Court is now addressing the issues addressed in Niday through an acceptance of certified questions from the US District Court for Oregon.