IN THE COURT OF APPEALS OF THE STATE OF OREGON
REBECCA NIDAY,
fka Rebecca Lewis,
Plaintiff-Appellant,
v.
GMAC MORTGAGE, LLC, a foreign limited liability company; MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware corporation; and EXECUTIVE TRUSTEE SERVICES, INC., a California corporation,
Defendants-Respondents.
Clackamas County Circuit Court
CV10020001
A147430
Henry C. Breithaupt, Judge pro tempore.
Argued and submitted on January 17, 2012.
W. Jeffrey Barnes argued the cause for appellant. With him on the briefs were Elizabeth
Lemoine and Luby Law Firm.
Robert J. Pratte argued the cause for respondents. With him on the brief were William G.
Fig and Sussman Shank LLP.
David L. Koen and Legal Aid Services of Oregon filed the brief amicus curiae for
Oregon Trial Lawyers Association.
Before Schuman, Presiding Judge, and Wollheim, Judge, and Nakamoto, Judge.
NAKAMOTO, J.
NAKAMOTO, J.
This case, one of first impression in the Oregon appellate courts, involves
the intersection between Oregon’s nonjudicial foreclosure laws and a creature of more
modern vintage: Mortgage Electronic Registration Systems, Inc., also known as MERS.
Since 1959, the Oregon Trust Deed Act has authorized the use of trust deeds as security
for home loans and allowed foreclosure of a defaulting homeowner’s interest by means of
a privately-conducted, advertised trustee’s sale of the home rather than pursuant to a
court-ordered, judicial foreclosure–provided, however, that certain statutory
requirements are met. One of those requirements is 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 described in the deed is situated.” ORS 86.735(1).
MERS, meanwhile, was created by the mortgage industry in the early
1990s to make it easier to bundle and sell promissory notes and their related security
interests on the secondary market. MERS is not itself a lender. Rather, lenders, loan
servicers, investors, and other industry participants can become members of MERS.
When a MERS member originates a home loan, MERS–as opposed to the lender–is
named as the “beneficiary” of the trust deed that the home buyer provides as security for
the home loan. MERS then allows members to transfer and track their beneficial
interests in those promissory notes and associated trust deeds through a private, internal
database rather than by publicly recording each assignment in county mortgage records.
The question before us–and one that homeowners and MERS are litigating
under similar state laws1–is whether MERS and its members can
avail themselves of Oregon’s statutory, nonjudicial foreclosure process for trust deeds.
Plaintiff is a homeowner who, like many other borrowers, executed a trust deed that
named MERS as the “beneficiary.” After plaintiff defaulted on her loan repayment
obligation, she received a notice of trustee’s sale that identified MERS as the
“beneficiary” of the sale and that asserted a power of sale under the trust deed. Plaintiff
then filed this declaratory judgment and injunctive relief action to stop the trustee’s sale,
arguing that, notwithstanding the labels used in the trust deed, MERS is not the
“beneficiary” of the trust deed for purposes of Oregon’s nonjudicial foreclosure laws.
The trial court granted summary judgment in favor of MERS and the other
defendants (the loan servicer and the trustee), ruling that MERS was the designated
“beneficiary” of the trust deed and that each statutory requirement for nonjudicial
foreclosure had been met–including the requirement that any assignments of the trust
deed must be recorded in the county mortgage records, ORS 86.735(1). Plaintiff now
appeals, again arguing that the “Oregon legislature intended the ‘beneficiary’ to be the one
for whose benefit the [deed of trust] is given, which is the party who lent the money,”
rather than MERS. We agree and hold that the “beneficiary” of a trust deed under the
Oregon Trust Deed Act is the person designated in that trust deed as the person to whom
the underlying loan repayment obligation is owed. The trust deed in this case designates
the lender, GreenPoint Mortgage Funding, Inc., as the party to whom the secured
obligation is owed. And, 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.
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