A U.S. District Court judge in Oregon issued a pair of rulings in favor of Merscorp subsidiary Mortgage Electronic Registration Systems (MERS), but it remains unclear how those rulings will impact MERS' appeal of a third case where a second federal judge vacated an Oregon borrower's nonjudicial foreclosure.
Judge Michael Mosman's Aug. 1 decision in Beyer v. Bank of America et al. dismissed a couple's attempts to block the foreclosure of their home and ruled that MERS is a proper beneficiary of the trust deed and authorized to assign it out of the name of MERS and into the name of the servicer.
Mosman used the same legal grounds in his Aug. 8 decision in Neilson v. Wells Fargo Bank, NA, et al., where he struck down the borrower's similar claim that MERS was not a beneficiary capable of assigning the trust deed, and granted a motion for summary judgment to dismiss the borrower's suit.
"This is another federal court ruling in Oregon affirming MERS' business model and upholding MERS' rights as the beneficiary," Janis Smith, Merscorp vice president of corporate communications said in a press statement.
MERS will use those decisions in its U.S. Circuit Court appeal of federal Judge Owen Panner's May 25 ruling that Bank of America, MERS and Northwest Trustee Services violated the Oregon Trust Deed Act by failing to record all assignments of mortgage when the note changed hands.
“[W]e will argue for a similar interpretation of Oregon law as the Court's interpretation here in Neilson,” Smith said.
But in that case, Panner did not question MERS' ability to transfer the deed trust, but rather interpreted state law to require that assignments should have also been filed the three times that the note changed hands in order for Bank of America and Northwest Trustee to use the state's nonjudicial foreclosure process.
In rendering his decision, Panner ordered the defendants to submit a document, the “MIN Summary and Milestones,” which details the changes in note ownership that were tracked on the MERS System with the loan's MIN, or mortgage identification number.
In his review of the defendants' chain of title data, Panner noted a gap from when the loan was originated by a correspondent lender and registered on the MERS System. In addition, Northwest Trustee Services admitted that documents related to the trust and foreclosure were recorded out-of-order.
Panner called the defendants' document review rushed, adding, “The ‘out-of-order' recordings demonstrate problems, not atypical in my view, often caused by foreclosing parties rushing to expedite nonjudicial foreclosures.”
“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 foreclose,” Panner also wrote.
“The MERS system raises serious concerns regarding the appropriateness and validity of foreclosure by advertisement and sale outside of any judicial proceeding.”