The following are some of the highlights of a recent court ruling from U.S. District Judge Owen M. Panner in Medford, Oregon (Hooker v. Northwest Trustee Services, Inc., et al., Case 1:10-cv-03111-PA (D. Or. May 25, 2011)), who slammed MERS for its role in another failed foreclosure attempt (bold text is my emphasis):
(1) Requirement That All Assignments Be Recorded Before Carrying Out Foreclosure:
- That MERS was the agent or nominee of the beneficiary does not mean the non-judicial foreclosure proceedings necessarily violated Oregon law. In re McCoy, 2011 WL 477820, at *4. As in other recent cases in this district, "The problem that defendants run into in this case is an apparent failure to record assignments necessary for the foreclosure." Burgett v. MERS, 2010 WL 4282105, at *3 (D. Or. Oct. 20); see also In re McCoy, 2011 WL 477820, at *4. In Oregon, a trustee may conduct a non-judicial foreclosure sale only if:
The trust deed, any assignments of the trust deed by the trustee or the beneficiary and any appointment of a successor trustee are recorded in the mortgage records in the counties in which the property described in the deed is situated.
ORS 86.735 (1) (emphasis added).
Should the beneficiary choose to itiate non-judicial foreclosure proceedings, the Act's recording requirements mandate the recording of any assignments of the beneficial interest the trust deed. Burgett, 2010 WL 4282105, at *2; In re McCoy, 2011 WL 477820, at *3. Defendants appear to argue that rather than requiring the recording of every assignment of the trust deed, the Act allows defendants to instead track every assignment of the trust deed within the MERS system, recording only the final assignment of the trust deed in the county land records. Because the Oregon Trust Deed Act requires the recording of all assignments by the beneficiary, defendants' argument fails. ORS 86.735(1); see In re McCoy, 2011 WL 477820, at *3 4.
(2) Relevance of Borrower's Default In Attempt To Foreclose Is Of No Consequence When Recording Rules Are Violated:
- While I recognize that plaintiffs have failed to make any payments on the note since September 2009, that failure does not permit defendants to violate Oregon law regulating non-judicial foreclosure. The Oregon Trust Deed Act "represents a well-coordinated statutory scheme to protect grantors from the unauthorized foreclosure and wrongful sale of property, while at the same time providing creditors with a quick and efficient remedy against a defaulting grantor." Staffordshire Investments, Inc. v. Cal-Western Reconveyance Corp., 209 Or. App. 528, 542, 149 P.3d 150, 157 (2006).
In part due to the legislature's desire "to protect the grantor against the unauthorized loss of its property," a party conducting a non-judicial foreclosure must demonstrate strict compliance with the Act. Id. As demonstrated above, the MIN Summary demonstrates defendants failed to comply with the Oregon Trust Deed Act.
(3) Judge Panner's Observation On the Banksters' Self-Created Mess & Concerms About Foreclosure Actions Without Judicial Oversight:
- Foreclosure by advertisement and sale, which is designed to take place outside of any judicial review, necessarily relies on the foreclosing party to accurately review and assess its own authority to foreclosure. Considering that the non-judicial foreclosure of one's home is a particularly harsh event, and given the numerous problems I see in nearly every non-judicial foreclosure case I preside over, a procedure relying on a bank or trustee to self-assess its own authority to foreclose is deeply troubling to me.
I recognize that MERS, and its registered bank users, created much of the confusion involved in the foreclosure process. By listing a nominal beneficiary that is clearly described in the trust deed as anything but the actual beneficiary, the MERS system creates confusion as to who has the authority to do what with the trust deed. The MERS system raises serious concerns regarding the appropriateness and validity of foreclosure by advertisement and sale outside of any judicial proceeding.
(4) The Value Of The Dissenting Opinion Of Minnesota Supreme Court Justice Alan C. Page [who, by the way, is a retired NFL defensive lineman and member of the Pro Football Hall Of Fame] In Jackson v. Mortgage Electronic Registration Systems, Inc..
In the following excerpts, Judge Panner in Oregon quotes from the dissenting opinion of an earlier Minnesota court decision ruling in favor of MERS:(1)
- As Justice Page of the Supreme Court of Minnesota summarized:
MERS claims to hold legal title, but only legal title to the mortgage being foreclosed. MERS also claims that in foreclosing mortgages it acts only as nominee for its members. But MERS can act as nominee for only the particular MERS member who holds the promissory note at any particular time and, when that promissory note is assigned between members, the member for which MERS acts as nominee, and on whose behalf MERS holds legal title, necessarily changes. In other words, the entity on whose behalf MERS holds legal title to the mortgage changes every time the promissory note is assigned.
Jackson v. Mortgage Electronic Registration Systems, Inc., 770 N.W.2d 487, 503-04 (Minn. 2009) (Page, J., dissenting). Although Justice Page wrote in dissent in a case involving a Minnesota statute, his concerns apply to numerous cases pending before me.
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- [I]t is apparent with the benefit of hindsight that the ability of lenders to freely and anonymously transfer notes among themselves facilitated, if not created, the financial banking crisis in which our country currently finds itself. It is not only borrowers but also other lenders who rightfully are interested in who has held a particular promissory note. For example, a lender who holds a promissory note that has become worthless may have an interest in knowing the hands through which that note passed.
Jackson, 770 N.W.2d at 504 (Page, J., dissenting). Justice Page wrote in dissent, but his views are persuasive.(2)
(1) In quoting from a dissenting opinion from an out-of-state court ruling that has no binding legal effect in Oregon, Judge Panner's action illustrates why appellate-level judges (ie. Justice Page) spend time writing dissenting opinions. The fact that none of Justice Page's colleagues on the Minnesota Supreme Court shared his view in the 6-1 ruling in Jackson didn't mean there wouldn't be other judges from around the country (ie. Judge Panner, among possibly many others) who would find his observations and concerns useful when considering subsequent cases.
(2) In his dissent in Jackson, Justice Page also made this prescient observation:
- As a result of our court's holding, namely, that the mortgage transfers between MERS members need not be recorded before a mortgage can be foreclosed by advertisement, neither borrowers nor lenders will ever be able to hold anyone in the chain of transfers accountable. That is not sound public policy.
