Oregon Court of Appeals Rules Against MERS

In the case Niday v. GMAC Mortgage LLC, the Oregon Court of Appeals ruled in favor of the plaintiffs regarding ""MERS'"":http://www.mersinc.org/ right to proceed with a non-judicial foreclosure.

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The question the court answered ""is whether MERS and its members can avail themselves of Oregon's statutory, nonjudicial foreclosure process for trust deeds,"" wrote Judge Lynn Nakamoto in the court's decision.

In order to pursue a foreclosure outside of the courts in Oregon, four requirements in the Oregon Deed of Trust Act (ODTA) must be fulfilled. One requirement in particular states that ""any assignments of the trust deed by the trustee or the beneficiary"" must be ""recorded in the mortgage records in the counties in which the property is described in the deed is situated.""

The plaintiff had appealed an earlier trial court ruling that sided with MERS and argued that Oregon legislation intended the beneficiary to be the party who lent the money, which is GreenPoint Mortgage Funding. Since MERS acted as the beneficiary in this case but is not the lender, the Court of Appeals sided with the plaintiff's argument.

The decision stated that ""because there is evidence that GreenPoint assigned its beneficial interest in the trust deed but did not record that assignment, the trial court erred in granting summary judgment in favor of defendants.""

The trial court ruled MERS was the designated beneficiary of the trust deed and the requirements in the ODTA had been met.

In a statement, MERS said it will appeal the decision and believes ""the Circuit Court's November 2010 ruling in Niday was correct and is consistent with the majority of the Oregon federal and state court decisions that uphold MERS' role as beneficiary.""

""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. MERS validity as beneficiary has been affirmed in 48 prior Oregon rulings, including 30 since this case was filed. We also believe that today's contradictory ruling will cause confusion in the industry,"" MERS stated.

MERS is a national electronic database that tracks changes in servicing rights and beneficial ownership interest. MERS was created by the mortgage banking industry to streamline the record keeping process and make it easier to follow transactions in the secondary market.