Last week, the Oregon Supreme Court heard oral arguments on a pair of cases involving the Mortgage Electronic Registration Systems (MERS), an obscure organization created by lenders to streamline the bundling, buying and selling of mortgages. At issue is whether MERS can stand in for its member lenders on real estate deeds under Oregon law — and in effect trigger out-of-court foreclosures.
The central legal question in both cases is whether MERS can be considered a “beneficiary” under a 1959 law governing real estate deeds in Oregon. MERS was conceived in 1997 to track home mortgage loans and bypass local recording fees at the county level.
The Oregon Court of Appeals previously ruled on July 18 in Rebecca Niday v. GMAC Mortgage LLC that the beneficiary of a trust deed is the person to whom the debt is owed, which is not MERS. The court further ruled that lenders who use MERS to circumvent public recording can’t foreclose outside of the state court system.
If the high court rules against MERS, lenders would have to catch up on recording loan ownership in county records before pursuing a non-judicial foreclosure on any of those properties. Alternatively, they may choose to foreclose in court, as many lenders are doing already.
The Oregon Supreme Court has no deadline to decide Niday v. GMAC Mortgage, but justices usually issue a decision within nine months to one year after hearing oral arguments. The court could take months to decide on the cases, though it may choose to rule more quickly given the pressing nature of the foreclosure crisis.
Additionally, Oregon lawmakers could change the 1959 law in question; the 2013 session opened January 14, and lawmakers could get down to business starting February 4.
The future of thousands of foreclosure cases in Oregon are now in the hands of the state’s highest court.