Judge To Those Facing (Potentially Faulty) Non-Judicial Oregon Foreclosures: Avoid "Presumption Of Finality" - Don't Sit On Your Rights; Time For Properly-Noticed Homeowner To File Court Challenge Is Before The Sale, Not Afterward

In Portland, Oregon, LegalNewsline reports:

• A federal judge ruled last month that an Oregon homeowner could not sue following a completed trustee sale of his property.
  
  Though MERS, the national mortgage registry, was not a party to the action, the plaintiff in the case — Alan Chen — alleged that the foreclosure was wrongful based, in part, on MERS’ role in his deed of trust.
  
  The named defendants in the suit included: Bank of America N.A., ReconTrust Company N.A. and Federal National Mortgage Association, also known as Fannie Mae.
  
  In Chen v. Bank of America N.A., Judge Owen M. Panner for the U.S. District Court for the District of Oregon dismissed the complaint with prejudice. He found that, in accordance with the Oregon Trust Deed Act, Chen received proper notice of the sale, which barred his post-sale challenges to the foreclosure.
  
  “Although plaintiff here had sufficient time to raise any of the current challenges before the sale, he chose instead to raise such challenges after the trustee’s sale and recording of the trustee’s deed,” Panner wrote in his five-page order, filed July 25.
  
  The judge further held that “plaintiff’s challenges to the trustee’s sale are barred, as plaintiff’s interest in the property was ‘foreclosed and terminated.’”
  
  Chen asked the court’s permission to amend his complaint to align his allegations with the recent Brandrup v. Recontrust and Niday v. GMAC decisions from the Oregon Supreme Court.
  
  In both cases, the state’s high court ruled MERS did not meet the statutory definition of trust deed “beneficiary” under Oregon law.
  
  Panner denied the request, finding an amended complaint “would be futile” because Brandrup and Niday dealt with pre-sale challenges to non-judicial foreclosure sales as opposed to Chen’s post-sale challenges, which are barred under state law.(1)

For the story, see Federal judge dismisses wrongful foreclosure complaint involving mortgage registry.

For the court ruling, see Chen v. Bank of America, N.A., 3:12-cv-194-PA (July 25, 2013).

(1) Judge Panner's discussion on the applicable law follows:

• After briefings and arguments in this case, I issued an opinion in a case involving similar issues. See Mikityuk v. Northwest Tr. Servs., Inc., 2013 WL 3388536 (D. Or.). There, plaintiffs waited nineteen months after the sale before filing the complaint. Id. at *1. After examining both ORS 86.770(1), which states the trustee's sale "forecloses and terminates" one's property interest in certain scenarios, and the dual objectives of the Oregon Trust Deed Act, I concluded:
  
  "The legislature provided notice and reinstatement provisions to protect grantors against the threat of wrongful foreclosure. [Staffordshire Investments, Inc., v. Cal-Western Reconveyance Corp., 209 Or. App. 528, 542 (2006).] Voiding the sale here would encourage" grantors who receive notice of a sale to sit on their rights, rather than compelling grantors to bring pre-sale challenges to a trustee's sale. Grantors are wise to raise any challenges to non-judicial foreclosure proceedings, including challenges based on ORS 86.735, before the statutory presumption of finality contained in ORS 86.780. Post-sale challenges run the risk of being barred, as is the case here, because the grantors' interest in the property was "foreclosed and terminated" pursuant to ORS 86.770(1)."
  
  Mikityuk, 2013 WL 3388536 at *10.
  
  Like the plaintiffs in Mikityuk, plaintiff's challenges to the non-judicial foreclosure sale here are barred. As plaintiff received advance notice of the sale, his interest in the property was "foreclosed and terminated." ORS 86.770(1). Plaintiff's argument that notice here was ineffective because it was not signed and dated by a notorial officer is meritless. The time to make such a challenge is long passed. As discussed in Mikityuk, the notice provisions of the Oregon Trust Deed Act reflect the legislature's intent to provide those whose property interests could be affected by a trustee's sale sufficient time to act to protect those interests before the sale. 2013 WL 3388536 at *6 (citing Staffordshire Investments, Inc. V. Cal-Western Reconveyance Corp., 209 Or. App. 528, 542 (2006); NW Property Wholesalers, LLC v. Spitz, 252 Or. App. 29, 34 (2012)).
  
  Although plaintiff here had sufficient time to raise any of the current challenges before the sale, he chose instead to raise such challenges after the trustee's sale and recording of the trustee's deed. Plaintiff's challenges to the trustee's sale are barred, as plaintiff's interest in the property was "foreclosed and terminated." Mikityuk, 2013 WL 3388536 at *10; ORS 86.770(1). For the reasons discussed in Mikityuk, this action is dismissed, with prejudice.
  
  Additionally, plaintiff's request for leave to file an amended complaint [#46] is denied.. Plaintiff seeks to amend the complaint, purportedly to align with the recent Oregon Supreme Court opinions in Brandrup v. ReconTrust Co., 353 Or. 668 (June 6, 2013) and Niday v. GMAC Mortgage, LLC, 353 Or. 648 (June 6, 2013). Those opinions concerned MERS and the Oregon Trust Deed Act. An amended complaint, however, would be futile. Brandrup and Niday dealt with pre-sale challenges to non-judicial foreclosure sales. Neither case affects the outcome here, where plaintiff's claims are barred due to ORS 86.770(1). See Mikityuk, 2013 WL 3388536 at *1 n.2.