The Oregon Court of Appeals decision to reverse the lower court’s order for summary judgment in favor of Merscorp, servicer GMAC Mortgage and trustee Executive Trustee Services opens the door for Rebecca Niday’s lawsuit contesting that MERS can serve as the beneficiary of a deed of trust securing a home loan.
Niday’s attorney, W. Jeffrey Barnes, told Mortgage Technology that the ruling is significant because it was the first MERS-related case the appellate court has heard and sets precedent in Oregon.
“It was a case of first impression and the court took it seriously enough to write a 27-page opinion and for now, this is the law in Oregon,” Barnes said.
The lawsuit challenges the nonjudicial foreclosure of Niday’s Clackamas County home on a variety of claims, but the appeals court ruling specifically addresses one issue: whether the deed of trust that initially names MERS as beneficiary entitled MERS members to use the state’s nonjudicial foreclosure process.
The court ruled that the initial beneficiary of a deed of trust is the original lender and because an assignment wasn’t filed from the lender to MERS when the mortgage was originated, the loan did not follow the Oregon Trust Deed Act’s prerequisites for initiating a nonjudicial foreclosure.
“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 court ruling reads.
The ruling applies only to nonjudicial foreclosures in Oregon. In a statement, Merscorp said it plans to appeal the ruling to the Oregon Supreme Court, though it acknowledges that its members will have to change their procedures until the case is resolved.
“The immediate impact of this decision is that MERS members will now likely have to proceed judicially with foreclosures, which will ultimately increase costs and be an added burden on the state’s court systems,” Merscorp spokesperson Janis Smith said.