The Oregon Court of Appeals, on July 18, 2012, in Niday v.GMAC Mortgage, LLC et al, Court of Appeals Case No. A147430, held that MERS, as the nominal holder of the beneficial interest in a Trust Deed but without being the party to whom the debt is owed, may not foreclose the Trust Deed non-judicially, by trustee’s advertisement and sale. The key issue was the Court’s determination that the beneficiary of a Trust Deed is the person to whom the underlying, secured obligation is owed, rather than the party named as the Beneficiary in the Trust Deed. Since the debt was not owed to MERS, in order to be able to foreclose non-judicially, the assignments of the beneficial interest must be recorded, in order to satisfy ORS 86.735. Since MERS is intended to avoid the need for public recording by being a separate, self-contained tracking system, no such assignments are recorded in the public records. As a result, foreclosure cannot be by non-judicial means. However, Trust Deeds where MERS is the nominal beneficiary may still be subject to foreclosure in judicial proceedings, under the decision of the Court of Appeals. That issue was not addressed.
It is reasonable to expect this decision to be appealed and to expect the Oregon Supreme Court to accept the case for review. MERS will likely focus, as it did in the trial Court and at the Court of Appeals, on the designation of MERS as the “Beneficiary” in the Trust Deed, in accordance with the first part of the statutory definition of “Beneficiary” ORS 86.705(1). Plaintiff will rely, as the Court of Appeals did, on the latter portion of the statutory definition of “Beneficiary “ in ORS 86.705 (1) which looks at “… the person for whose benefit a trust deed is given…”.