Oregon Supreme Court hears key foreclosure case
Jan 8, 2013
By JONATHAN J. COOPER
Of the Associated Press
SALEM — The Oregon Supreme Court is hearing arguments Tuesday about an electronic mortgage registry that's become central to the banking industry's lending and foreclosure practices.
Foreclosures have slowed significantly as the legal challenge moves through the judiciary. The Supreme Court decision is expected to resolve years of uncertainty around the role of Mortgage Electronic Registration Systems Inc., or MERS, which lenders use to avoid publicly recording the ownership history of a trust deed.
A state appeals court ruled in July that lenders using MERS must go through the courts to begin foreclosure proceedings. Since then, so-called nonjudicial foreclosures have all but stopped in Oregon as lenders have turned to the court system or waited out a definitive ruling on the status of MERS.
The Oregon Legislature authorized nonjudicial foreclosures in 1959, allowing lenders to sell a property in default under certain conditions. One condition was a requirement that changes in the “beneficiary” of the trust deed be publicly recorded with the county.
The mortgage industry created MERS in the 1990s to make it easier to bundle and sell home loans on the secondary market. MERS is listed in the deed as the beneficiary, and the service tracks the actual owner of the loan through an internal database.
The Supreme Court is hearing a case brought by a Clackamas County homeowner who challenged a trustee sale of her home scheduled in 2010. She argued that MERS never received any loan payments so it could not act as beneficiary of the trust deed. She also argues that a nonjudicial foreclosure would be illegal because the transfer of her loan to a secondary lender was not recorded with the county.
Only News-Register subscribers can access this premium content.
Already an online subscriber, please sign in:
• Amity teen killed in crash on Amity Road (13178)
• Country roads, take us home (2808)
• Don Iler - America takes aim, misses (2243)
• Country roads, take us home (1916)
• Women of the Yamhill Valley 2014 (1261)
• Honoring the man (1081)
• Honoring the man (1)