Oregon Supreme Court Paves Way for MERS to Foreclose Nonjudicially
The Oregon Supreme Court, in 2 cases (Brandrup v Recontrust, 353 Or___, and Niday v GMAC Mortgage, LLC, 353 Or ___[June 6, 2013]) has ruled that MERS (Mortgage Electronic Registration Systems) is not a Beneficiary of Trust Deeds and therefore cannot, in its own name, foreclose trust deeds by advertisement and Sale. However, the Court has also created a pathway for MERS to proceed with foreclosures by advertisement and sale in the future.
The Court ruled that assignments of the beneficial interest in the trust deed do not have to be recorded, to foreclose by advertisement and sale, if the assignment is by assignment of the Promissory Note that is secured by the trust deed. In addition, though MERS cannot act as a nominee for the lender once the lender has assigned the Note, it may have authority to act for the Lender and its successors, depending on the authority given to MERS in the first instance. Thus, if the documents between MERS, the lender and the lender’s successors give MERS the authority to act as the agent for the lender and its successors, even if that is not recorded in the real estate records, then MERS may proceed to foreclose by advertisement and sale. Depending on the nature of the documentation on the lender’s side of its relationship with MERS, MERS may be able to go back and proceed with foreclosure by advertisement and sale in the many cases which have been in a holding pattern since the Court of Appeals rulings in the cited cases. If the language is not adequate to provide the needed authority to act as an agent, it should be a relatively easy fix for MERS to create an appropriate authorization.