February 6, 2013
Oregon District Court Holds MERS Lacks Standing Because Not All Mortgage Assignments were Recorded
In Burgett v. Mortgage Elec. Registration Sys., Inc., 09-6244-HO, 2010 WL 4282105 (D. Or. Oct. 20, 2010), the Oregon District Court granted MERS’s motion for summary judgment in regards to Burgett’s Real Estate Settlement Procedures Act (RESPA) claim, and denied MERS motion in regards to Burgett’s claim for declaratory relief and breach of contract.
Burgett brought action against MERS and Aurora Loan Services, LLC alleging predatory lending with respect to the refinancing of Burgett’s home mortgage. Burgett entered into a loan agreement in March 2007, to refinance his home mortgage. MERS was listed on the Deed of Trust as the beneficiary. In April 2009, MERS executed an instrument entitled Substitution of Trustee under which Defendant Cal Western Reconveyance Corporation was appointed trustee under the deed of trust. Cal Western Reconveyance recorded on April 29, 2009. On April 28, 2009, Cal Western Reconveyance executed a notice of default and election to sell, and trustee’s notice of sale for September 3, 2009. Burgett brought this action on September 9, 2009, before a foreclosure sale could occur.
Burgett claimed MERS violated: 1) the Truth in Lending Act (TILA), 2) RESPA, 3) the Oregon Mortgage Broker Act, and claimed breach of contract. MERS motioned for summary judgment. At the outset, Burgett withdrew his TILA claim. Accordingly the Court dismissed Burgett’s TILA claim.
Next, Burgett claimed that MERS violated RESPA because it failed to properly respond to his written inquiries regarding his loan. At oral arguments, Burgett conceded that there were no pecuniary damages incurred as a result of the violation and that he only sought statutory damages. The Court stated that Burgett had to allege a breach of RESPA duties and that the breach resulted in actual damages, in order to survive summary judgment. Since Burgett failed to do so, the Court granted MERS summary judgment on this claim.
Burgett further contended that under the Oregon Trust Deed Act, MERS and Cal Western could not foreclose on his property because MERS was not a “beneficiary” under the Act. Under Oregon law, a beneficiary means “the person named or otherwise designated in a trust deed as the person for whose benefit a trust deed is given . . . .” Here, the trust deed specifically designated MERS as the beneficiary.
The Court noted, however, that MERS failed to record assignments necessary for foreclosure. Under Oregon Law, if foreclosure by sale is pursued, all prior unrecorded assignments must be filed in connection with the foreclosure. Here the record did not demonstrate that all the transfers had been recorded. As a result, the Court denied MERS’s motion for summary judgment with respect to Burgett’s claims for declaratory relief and breach of contract.
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