In the Niday v. GMAC case, the Oregon court of appeals ruled against MERS when it overturned the lower court’s ruling.
The court’s reversal of a lower judge’s decision negatively effects MERS role as the foreclosing party in the Niday v. GMAC Mortgage case. However, MERS claims the decision will not impact judicial foreclosures or the “validity of mortgages or deeds of trust recorded in MERS name in Oregon.”
But the court found that the Oregon Trust Deed Act requires the party that receives loan payments to publicly record all changes in mortgage ownership before starting a so-called nonjudicial foreclosure.
MERS does not take loan payments and does not qualify as a “beneficiary” of a trust deed, so the digital registry cannot be used to avoid the recording requirement, the court ruled.
“A beneficiary that uses MERS to avoid publicly recording assignments of a trust deed cannot avail itself of a nonjudicial foreclosure process that requires that very thing–publicly recorded assignments,” the court ruled. Judge Lynn Nakamoto wrote the decision.
“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,” said Janis Smith, vice president of communications for MERS.
MERS validity as beneficiary has been affirmed in 48 prior Oregon rulings, however not in Oregon.
With this decision, the court essentially threw out MERS suggestion that while working in the non-judicial foreclosure state, the registry can serve as the beneficiary of the trust deed, meeting all of the statutory requirements to foreclose on the property.
The homeowner in the case argued on appeal that a beneficiary under the Oregon Trust Deed Act is a party that is actually owed a debt. The appellate court agreed, saying the real beneficiary in this case is GreenPoint Mortgage Funding Inc., the actual lender. The decision essentially shot down MERS claim that it can effectively be classified as a beneficiary in the state, giving the registry true foreclosing power.
MERS intends to file an appeal with the Oregon Supreme Court.