We recently wrote a post describing a MERS defeat in Oregon Bankruptcy Court, and MERS (an acronym for Mortgage Electronic Services, Inc., an electronic registry) is in the news once again. This has not only been a hot topic in Oregon, but people around the nation have been attacking MERS as foreclosures mount and banks turn defaulting homeowners out into the streets. (more…)
Many home lenders use an entity called Mortgage Electronic Registration Systems, Inc., or “MERS” as a nominal party in loan transactions to facilitate an electronic central registry of note holders and servicers. On its website, MERS claims many benefits to use of their services. According to the website, MERS should be named in security instruments as a “nominee for the lender” in order to “eliminate the need for assignments and realize the greatest savings.” In an Oregon deed of trust instrument, MERS is often named as “Beneficiary” in its nominee capacity.
A recent decision in the Oregon Bankruptcy Court by Chief Judge, Frank R. Alley, III, complicates matters dramatically for institutional trust deed holders using the MERS system when they attempt to foreclose defaulted home loans. (more…)
A deficiency judgment is a judgment entered against a borrower after foreclosure of a secured debt when proceeds from sale of the collateral fail to fully satisfy the debt. A deficiency judgment against the borrower is prohibited by ORS 86.770(2) after non-judicial foreclosure of a trust deed on real property that is held as collateral security. This statute was changed in 2013; current statute is ORS 86-797. This non-judicial foreclosure process is referred to as “advertisement and sale” in Oregon. However, the antideficiency statute only applies after a foreclosure and does not apply when the note holder waives the security and sues directly on the note. This is made clear in Beckhuson v. Frank, 97 Or App 347, 775 P2d 923 (1989), see also the case of In Re Daraee 279 B.R. 853, a 2002 Oregon Bankruptcy Court opinion.
Deficiency judgments are uncommon for first priority home loans in Oregon. Lenders normally prefer to foreclose and sell the collateral in a nonjudicial proceeding to quickly recover as much as they can, without the expense and delay of a judicial proceeding. (more…)