(S060281) Brandrup v. ReconTrust Co. | Oregon Supreme Court Decision 6/6/2013 - an entity like MERS, which is not a lender, may not be a trust deed's "beneficiary"

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(S060281) Brandrup v. ReconTrust Co. | Oregon Supreme Court Decision 6/6/2013 – an entity like MERS, which is not a lender, may not be a trust deed’s “beneficiary”

(S060281) Brandrup v. ReconTrust Co. |  Oregon Supreme Court Decision 6/6/2013 – an entity like MERS, which is not a lender, may not be a trust deed’s “beneficiary”

Filed: June 6, 2013

IN THE SUPREME COURT OF THE STATE OF OREGON

BART G. BRANDRUP and JESSICA D. BRANDRUP,
husband and wife,
Plaintiffs,

v.

RECONTRUST COMPANY, N.A.; BANK OF AMERICA, N.A.,
successor by merger with BAC Home Loans Servicing, LP;
THE BANK OF NEW YORK MELLON, fka The Bank of New York,
as Trustee for The Certificate Holders Cwalt, Inc.,
Alternative Loan Trust 2006-2CB, Mortgage Pass-through Certificates; and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS,INC.,
Defendants.
United States District Court 311CV1390HZ
________________________________________________________________
RUSSELL R. POWELL and DIANE L. POWELL,
husband and wife,
Plaintiffs,

v.

RECONTRUST COMPANY, N.A.; BANK OF AMERICA, N.A.,
successor by merger with BAC Home Loans Servicing, LP;
THE BANK OF NEW YORK MELLON,
fka The Bank of New York, as Trustee for The Certificate Holders Cwalt, Inc., Alternative Loan Trust 2007-OH3,
Mortgage Pass-through Certificates, series 2007-OH3;
and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS,INC.,
Defendants.

United States District Court 311CV1399HZ
_______________________________________________________________

DEANIRA MAYO and REYNALDA PAEZ PLANCARTE,
Plaintiffs,

v.

RECONTRUST COMPANY, N.A.; BANK OF AMERICA, N.A.,
successor by merger with Bac Home Loans Servicing, LP;
DEUTSCHE BANK NATIONAL TRUST COMPANY,
as Trustee for the Certificate Holders of the Morgan Stanley ABS Capital I, Inc., Trust 2005-HE2, Mortgage Pass-through Certificates, Series 2005-HE2;
and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS,INC.,
Defendants.

United States District Court 311CV1533SI
_______________________________________________________________
OMID MIRARABSHAHI,
Plaintiff,

v.

RECONTRUST COMPANY, N.A.; BANK OF AMERICA, N.A.,
successor by merger with Bac Home Loans Servicing, LP;
THE BANK OF NEW YORK MELLON, fka The Bank of New York, as Trustee for The Certificate Holders of CWMBS, INC., CHL Mortgage Pass-Through Trust 2007-4, Mortgage Pass-through Certificates, Series 2007-4;
and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS,INC.,
Defendants.
United States District Court 312CV0010HA
(SC S060281)

En Banc
On certified questions from the United States District Court; certification order dated April 2, 2012, certification accepted July 19, 2012, argued and submitted January 8, 2013.
3
Jeffrey A. Myers, Bowles Fernández Law LLC, Lake Oswego, argued the cause for plaintiffs. With him on the briefs were Jeffrey A. Myers, John Bowles, and Rick Fernández.
Gregory A. Chaimov, Davis Wright Tremaine LLP, Portland argued the cause for defendant Mortgage Electronic Registration Systems, Inc. With him on the brief were Kevin H. Kono, Frederick B. Burnside, and P. Andrew McStay, Jr., Davis Wright Tremaine LLP, Portland.

Thomas M. Hefferon, Goodwin Proctor LLP, Washington DC, argued the cause for defendants ReconTrust Company, N.A.; Bank of America, N.A.; The Bank of New York Mellon; and Deutsche Bank National Trust Company. With him on the brief were Steven A. Ellis, Washington DC, and Thomas W. Sondag, Pilar C. French, and Peter D. Hawkes, Lane Powell PC, Portland.

Rolf C. Moan, Assistant Attorney General, Ellen F. Rosenblum, Attorney General, and Anna M. Joyce, Solicitor General, filed a brief on behalf of amicus curiae State of Oregon.

Nanina D. Takla, Law Office of Phil Goldsmith, Portland, filed a brief on behalf of amicus curiae Oregon Trial Lawyers Association.
Sara Kobak, W. Michael Gillette, and Jordan Silk, Schwabe, Williamson & Wyatt, PC, Portland, filed a brief on behalf of amicus curiae Oregon Land Title Association.
Thomas W. Brown, Thomas M. Christ, and Robert E. Sabido, Cosgrave Vergeer Kester LLP, Portland, filed a brief on behalf of amici curiae Mortgate Bankers Association, Oregon Bankers Association, and Independent Community Banks of Oregon.

EXCERPT:

4 We accepted the district court’s certification and allowed the parties in the federal cases to present their views. We answer those questions — in two instances as reframed — as 5 follows: 6

(1) “No.” For purposes of ORS 86.735(1), the “beneficiary” is the lender 7 to whom the obligation that the trust deed secures is owed or the 8 lender’s successor in interest. Thus, an entity like MERS, which is not 9 a lender, may not be a trust deed’s “beneficiary,” unless it is a lender’s 10 successor in interest. 11

(2) We reframe the second question as follows: 12

Is MERS eligible to serve as beneficiary under the Oregon Trust Deed 13 Act where the trust deed provides that MERS “holds only legal title to 14 the interests granted by Borrower in this Security Instrument, but, if 15 necessary to comply with law or custom, MERS as nominee for 16 Lender and Lender’s successors and assigns) has the right: to exercise 17 any or all of those interests”? 18

Answer: “No.” A “beneficiary” for purposes of the OTDA is the 19 person to whom the obligation that the trust deed secures is owed. At 20 the time of origination, that person is the lender. The trust deeds in 21 these cases designate the lender as the beneficiary, when they provide: 22 “This Security Instrument secures to Lender: (i) the repayment of the 23 loan, and all renewals, extensions and modifications of the note; and 24 (ii) the performance of borrower’s covenants and agreements under 25 this security instrument and the note.” Because the provision that 26 MERS “holds only legal title to the interests granted by Borrower in 27 this Security Instrument, but, if necessary to comply with law or 28 custom, MERS * * * has the right to exercise any or all of those 29 interests,” does not convey to MERS the beneficial right to repayment, 30 the inclusion of that provision does not alter the trust deed’s 31 designation of the lender as the “beneficiary” or make MERS eligible 32 to serve in that capacity.

[…]

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