w Hooker v. Northwest Trstee, Bofa, Mers

8/6/2019 w Hooker v. Northwest Trstee, Bofa, Mers

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON

IVANHOOKER,HOOKER and KATHERINE

P l a i n t i f f s , Civ. No. 10-3111-PA

v. ORDER

NORTHWEST TRUSTEE SERVICES,INC.; BANK OF AMERICA, N.A.;MORTGAGE ELECTRONICREGISTRATION SYSTEMS, INC.,

Defendants.

PANNER, J.Before the cour t i s a mot to dismiss (#8) and reques t fo r

j u d i c i a l not i ce (#6) by Bank o f America, N.A. and MortgageElec t ronic Reg i s t ra t ion Systems, Inc. (MERS).: Defendants 'request for j ud i a l not ice i s GRANTED. Defendants ' motion todismiss i s DENIED. P la in t if ' reques t fo r a de r a to ry judgmenti s GRANTED.

Pl a i n t i dismissed t h e i r cla ims aga ins t Northwest Trus teeServ ices , Inc (Northwest) .

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BACKGROUND

where noted , th e fo l lowing background i sor j ud i c i a l l y not iceable mater ia l s .

On November 17, 2005, p l a i n t i f f s obta ined a loan from GNMortgage, LLC. A t r u s t deed secured the loan. The note and t r u s t

list GN as the l ender . The t r u s t deed l i s t s MERS as theMERS i s not l i s t ed on the note . The t r u s t deed l i s t s

Trus tee Services Corp. as t rus tee . On November 23, 2005,t r u s t was recorded in the Jackson County land records.

In r 2009, p l a i n t i f f s defaul ted . On May 3, 2010,MERS ass t r u s t deed to Bank of America. Also on May 3,MERS appoin ted Northwest successor t r u s t e e . That same day,Northwest executed a not ice of defau l t and e lec t ion to s e l l . OnMay 7, 2010, defendants recorded th e May 3 assignment of th et r u s t deed, appointment o f successor t rus tee , and not ice of

I t and e lec t ion to s e l l .On September 7, 2010, p l a i n t i f f s f i l e d the complaint in

s t a t e cour t . On September 13, 2010, Wells Fargo Bank, N.A., asa t to rney in fo r Bank of America, appoin ted Northwestsuccessor t r u s t e e . On September 16, 2010, Northwest executed ares ss ion of th e not ice of d e f au l t recorded on May 7, 2010. Alsoon r 16, 2010, Northwest executed a second not ice of

e ion to s e l l . On September 20, 2010, defendantsthe September 16, 2010 appointment , r esc i s s ion , and

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second not ice of d e f au l t .On October 7, 2010, defendants removed the case to t h i s

cour t . On January 19, 2011, pursuan t to my order , defendantssubmit ted a complete chain of title fo r the note and t r u s t deed.Defendants ' chain of title inc luded a copy of a January 3, 2011"MIN Summary and Miles tones . " (Jan. 31, 2011 McCarthy Decl . , Ex.1, 1-2. ) The MIN Summary i s how MERS members t r ack t r a n s fe r s ofse rvic ing and ownership r igh t s of loans within the MERS system.According to th e MIN Summary, on December 9, 2005, Guaranty Bank,FSB t rans fe r red the b en e f i c i a l i n t e r e s t in th e t r u s t deed toWells Fargo Home Mortgage. (Jan. 31, 2011 McCarthy Decl . , Ex . 1,1-2 . ) Although Guaranty Bank appears to have been th e or ig ina lse rv ice r of the loan, th e record i s s i l e n t as to how or whenGuaranty Bank obta ined the benef i c i a l i n t e r e s t in the t r u s t deed.

On December 14, 2005, Guaranty Bank t r ans fe r red th ese rvic ing r igh t s to Wells Fargo Home Mortgage. (Jan . 31, 2011McCarthy Decl . , Ex. 1, 2 .) On July 15, 2006, Wells Fargo HomeMortgage t rans fe r red the benef ic i n t e r e s t in th e t r u s t deed toBank of America. (Jan . 31, 2011 McCarthy Decl . , Ex . 1, 2 .)Defendants d id not record the t r a n s fe r of the benef i c i a l i n t e r e s tin th e t r u s t deed from Guaranty Bank to Wells Fargo or from WellsFargo to Bank of America in the Jackson County land records . Asnoted above, defendants did record a May 3, 2010 assignment ofth e t r u s t ed from MERS to Bank of America.


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STANDARDS

On a motion to smiss, the cour t reviews the s f ic iency ofthe comp into Scheuer V. Rhodes, 416 U.S. 232, 236 (1974). Thisreview i s gene ra l ly l imi t ed to the a l lega t ions in th e complaint ,exh ib i t s a t tached to th e complain t , and j ud i c i a l l y not iceablemater ia l s . Swartz V. KPMG LLP, 47 6 F.3d 756, 763 (9th Cir . 2007) .To survive a motion to smiss under Rule 12(b) (6) , a complaintmust con ta in s u f f i c i e n t c t s t h a t " s t a t e a c ia to r e i f t h a ti s plaus ib on s face ." Ashcro f t v. Iqba l , 129 S.Ct . 1937,1949 (2009) . This p la us ib i l y s tandard requ i re s the p leader topresent f ac t s t ha t demonstra te "more than a sheer p o ss i b i l i t y "t h a t defendant i s l i a b l e fo r th e a l leged misconduct . Id .

In consider ing a motion to dismiss , a cour t must d is t ingu ishbetween the f ac tua l a l l ega t ions and l ega l conclus ions asser ted inthe complain t . 1 a l l eg a t i o n s of mate r i a l f ac t a re taken ast rue and cons t rued in th e l i g h t most favorab le to th e nonmovingpa r ty . American Family Ass 'n , Inc . V. City & County of SanFrancisco , 277 F.3d 1114, 1120 (9th Cir . 2002) . At th e plead ingss tage , "a p l a i n t i f f ' s ob l iga t ion to provide the ' g rounds ' of h is' en t i t l e [men t ] to r e l i e f ' requi res more than l abe l s andconclus ions . " Bel l Atl . Corp. v. Twombly, 550 U.S. 544, 555(2007) . Therefo re , if th e wel l -p leaded f ac tua l a l l ega t ionsplaus ib ly give r i s e to th e r e l i e f sought, a cour t sh a l l deny themotion to dismiss . Iqba l , 129 S.Ct . a t 1950.


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DISCUSSION

I . Judic ia l Noticer a l Rule of Evidence 201 s t a t e s a cour t may take

j ud i c i a l not ice of a c t outs ide the ngs i f the i s"capable of accura te and ready determinat ion by reso r t to sourceswhose accuracy cannot reasonably be ques t ioned ." Lee v. City of

250 F.3d 668, 689 (9th Cir . 2001) , impl iedlyoverruled on othe r grounds as discussed in Gallardo v. Dicar lo ,203 F.Supp.2d 1160, 1162 n.2 (C.D. Cal . 2002). Defendants s tthe court take j ud i c i a l not ice of the fo l lowing documentsreco September 20, 2010: (1) r esc i s s ion of the May 3, 2010not ice of defau l t and e c t ion to s e l l ; (2) September 13, 2010appointment of successor t r u s t e e ; and (3) ember 16, 2010not ice of defau l t and e lec t ion to s e l l . document i s recordedin the Jackson County land records . De s ' reques t rj ud ic i not ice (#6) i s GRANTED.I I . Motion to Dismiss

Under the Oregon Trus t Deed Act, ~ ' B e n e f i c i a r y ' meansperson or otherwise igna ted in a t r u s t deed as theperson whose b en e f i t a t r u s t deed i s given, o r t he pe rson ' ssuccessor in i n t e re s t " ORS 86.705(1) . The t r u s t a ti s sue s t a t e s :

The f ic ia ry of t h i s Secur i ty Ins t rument i s MERS(so ly as nominee r Lender and r ' s successorsand assigns) and successors and ass igns of MERS.


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This secur i ty Ins t rument secures to Lender: (i) therepayment of the Loan, and a l l renewals , extensions andmodi f ica t ions o f the Note; and ( i i ) the per formance ofBorrower 's covenants and agreements under t h i s Secur i tyIns t rument and th e Note.

Borrower unders tands and agrees t h a t MERS holds onlyl ega l title to th e i n t e r e s t s granted by Borrower int h i s Secur i ty Ins t rument , but , i f necessary to complywith law or custom, MERS (as nominee fo r Lender andLender ' s successors and ass igns) has th e r igh t : toexerc ise any or a l l of those i n t e r e s t s , inc lud ing , butnot l imi t ed to , th e ght to fo rec lose and s 1 th eProper ty; and to take any ac t ion regu i red of Lenderincluding, but not l imi ted to , re l ea s ing and cance l l ingt h i s Secur i ty Ins t rument .

(Notice of Removal, Ex. 1, 8 (emphasis added) . )Although th e t r u s t deed l i s t s MERS as the nominal

bene c ia ry " so le ly as a nominee fo r Lender . . . ," (Notice ofRemoval, Ex. 1, 7) , th e deed makes c l e a r t h a t MERS i s not " theperson fo r whose b en e f i t a t r u s t deed i s given ," ORS 86.705(1) .Ins tead , th e t r u s t deed con rms t h a t GN holds th e b en e f i c i a li n t e re s t . The t r u s t deed l i s t s GN, not MERS, as "Lender ." (Noticeof Removal, Ex. 1, 6.) A ll payments on th e loan a re owed to GN,not MERS. (Not ice of Removal, Ex. 1, 8 .) GN, not MERS, "mayinvoke th e power of sa le and any othe r remedies permi t t ed byApplicable Law." (Not ice of Removal, Ex. 1, 18, 22.)

While th e t r u s t deed l i s t s MERS as the nominal bene f i c i a ry ,th e t r u s t deed does no t author ize MERS to t ake any ac t ions on i t sown beha l f . F i r s t , MERS holds only l eg a l t Ie to the t r u s t deed.(Notice of Removal, Ex. 1, 8 .) Second, MERS ac t s so le ly as

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nominee fo r GN. (Notice of Removal, Ex. I , 7-8 . ) Fina l ly , MERSmay a c t as GN's nominee only " i f necessary to comply with law orcustom[. ]" (Notice of Removal, Ex. I , 8 .) The t r u s t deedemphasizes t ha t MERS i s not the benef i c i a ry , but r a the r thenominee or agen t of the l ender . Because the t r u s t deed c lea r lydemonst ra tes GN, and not MERS, i s the person fo r whose b e n e f i tth e t r u s t deed was given, GN (or i t s successor in i n t e r e s t ) i sth e benef i c i a ry of the t r u s t deed. ORS 86 .705(1 ) ; see In reMcCoy, 2011 WL 477820, a t *3 (Bankr. D. Or. Feb. 7) .2

That MERS was th e agent o r nominee of the benef i ry doesnot mean the non- jud ic ia l foreclosure proceedings necessa r i lyv io la ted Oregon law. In re McCoy, 2011 WL 477820, a t *4. Asin o ther recent cases in t h i s d i s t r i c t , "The problem t h a tdefendants run in to in t h i s case i s an apparent f a i l u r e to recordassignments necessary r the fo rec losu re . " Burge t t v. MERS, 2010WL 4282105, a t *3 (D. Or. Oct . 20) ; see also In re McCoy, 2011 WL477820, a t *4. In Oregon, a t r u s t ee may conduct a non- jud ic i a lforeclosure sa le only i f :

The t r u s t deed, any assignments of the t r u s t deed bythe t r u s t ee o r th e benef ic ia ry and any appointment of asuccessor t r u s t e e are recorded in the mortgage records

2The note re inforces my conclus ion t ha t a i n t i f f s gran tedth e t r u s t deed for the b e n e f i t of GN , not MERS. The note s t a t e sth e t r u s t deed "p ro tec t s the Note Holder from poss ib l e l o s sest ha t might r e s u l t if I do not keep the promises t ha t I make int h i s Note ." (Not ice of Removal, Ex. 1, 28, 1 11.) GN , not MERS,i s the "Note Holder ." (Not ice o f Removal, Ex. 1, 26, 1 1 .) MERSi s not mentioned in the note .7 - ORDER www .S

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t coun t ies in which th e proper ty descr ibed in th edeed i s s i tua ted .ORS 86.735 (1) (emphasis added) .

Should th e bene f i c i a ry choose to i t i a t e non- jud ic i a lfo rec losure proceed ings , th e Act ' s record ing requirements mandatethe record ing of any assignments of th e b en e f i c i a l i n t e r e s tthe t r u s t deed . Burget t , 2010 WL 4282105, a t *2; In re McCoy,2011 WL 477820, a t *3. Defendants appear to argue t h a t r a th e rthan requ i r ing the record ing of every ass ignment of th e t r u s tdeed, the Act a l lows defendants t o ins t ead t rack every ass ignmentof the t r u s t deed within the MERS sys tem, record ing only thef i n a l assignment of the t r u s t deed in the county land records .Because th e Oregon Trus t Deed Act requ i re s the record ing of a l lassignments by the bene f i c i a ry , defendan t s ' argument f a i l s . ORS86.735(1); see In re McCoy, 2011 WL 477820, a t *3 4.

Oregon 's record ing requi rement i s cons i s t en t with th elongstanding ru l e t h a t the t r u s t deed or mortgage genera l lyfo l lows the no te . Carpenter v. Longan, 83 U.S. 271, 274 (1872);U.S. N a t ' l Bank of Port land v. Holton, 99 Or. 419, 427 9, 195 P.823, 826 (1921) (co l l ec t ing ca se s ) . As not by defendan ts , " theass ignment o f th e note au tom at ica l ly ass igns the under ly ingi n t e r e s t in the t r u s t deed because MERS i s nominee fo r whichevere n t i t y i s th e owner ( i f th e owner i s a MERS member)." (Defs . 'Reply, 10.) Defendants a lso s t a t e , " the con ten t o f the deed oft r u s t i t s e l f . . . es tab l i shed the p a r t i e s ' i n t e n t t h a t th e t r u s t8 - ORDER www .S

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deed , and MERS' agency r e l a t i o n s h ip , fol low th e no te . " (Id. a t11.) In f ac t , th e t r u s t deed express ly s t a t e s , "The Note or ap a r t i a l i n t e r e s t in the Note ( toge ther with t h i s Secur i tyInst rument) can be so ld one o r more t imes without p r i o r not ice toBorrower ." (Not ice of Removal, Ex. 1, 16, 'J[ 20 (emphasis added) . )I f t he re were t r a n s fe r s of the benef i a l i n t e r e s t in the t r u s tdeed, defendants were requ i red to record those t r a n s fe r s p r io r toi n i t i a t i n g a non- jud ic i a l fo rec l o su re in th e manner provided inORS 86.740 to 86.755. ORS 86.735(1) .

Consider ing what i s commonly known about the MERS system andthe secondary market in mortgage loans , p l a i n t i f f s a l l egesu f f i c i e n t f ac t s to make c l e a r t h a t defendants v io la ted theOregon T ru s t Deed Act by i l i ng to record a l l assignments of th et r u s t deed. 3 Therefore , defendan t s ' motion to dismiss i s DENIED.

The record demonst ra tes t h a t in addi t ion to requ i r ing thed en i a l of defendan t s ' motion to dismiss , p l a i n t i f f s a re e n t i t l e dto dec la ra to ry r e l i e f . Pursuant to my order , defendants submit tedthe MIN Summary and Miles tones fo r the loan a t i s sue . The MINSummary demonst ra tes t h a t on December 9, 2005, Guaranty Bank, FSBt r an s f e r r ed th e b en e f i c i a l i n t e r e s t in th e t r u s t deed to Wells

3For background in fo rmat ion on MERS, see genera l ly GeraldKorngold, Legal and Pol icy Choices in the Aftermath of theSubprime and Mortgage FiNancinc C r i s i s , 60 S.C. L. Rev. 727, 74142 (Spring 2009) and Chr i s topher L. Peterson , Forec losure ,Subprime Mortgage Lending, and th e Mortgage Elec t ronicRegis t ra t ion System, 78 U. Cin. L. Rev. 1359, 1368-1374 (Summer2010) .9 - ORDER www .S

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Fargo Home Mortgage. (Jan. 31, 2011 McCarthy Decl . , Ex . 1, 2.) Asnoted above, the record i s s i l e n t as to how or when Guaranty Bankacqu i red any i n t e r e s t in the loan . On Ju ly 15, 2006, Wells Fargot r ans fe r red the benef i 1 i n t e r e s t in th e t r u s t deed to Bank ofAmerica. (Jan. 31, 2011 McCarthy Decl . , Ex. 1, 2.) Defendants d idnot record Guaranty Bank's t r a ns f e r of th e b en e f i c i a l i n t e r e s t in

t r u s t deed to Wells Fargo. Defendants ' chain of titsubmission the re fo re demonstra tes t h a t defendants v io ed ORS86.735(1) by i n i t i a t i ng non- jud ic i a l forec losure proceedingsp r i o r to recording a l l assignments of the t r u s t deed in theJackson County land records .

While I recognize t h a t p l a i n t i f f s have fa i l ed to ma anypayments on the note s ince September 2009, t ha t f a i l u re does notpermit defendants to v io la t e Oregon law regu la t ing non- jud ic ia lforec losure . The Oregon Trust Deed Act " repre sen t s a wel l coord ina ted s t a tu to ry scheme to p r o t ec t grantors from theunauthorized forec losure and wrongful sa le of proper ty , whi a tth e same t ime prov id ing cred i to rs with a quick and e f f i c i e n tremedy aga ins t a defau l t ing g ran to r . " S ta f fo rdsh i re Inves tments ,Inc . v. Cal-Western Reconveyance Corp. , 209 Or.App. 528, 542, 149P.3d 150, 157 (2006). In p a r t due to th e l e g i s l a t u r e ' s des i re " topro tec t the gran to r aga ins t th e unau thor iz l o s s of i t sprope r ty , " a pa r ty conduct ing a non- jud ic ia l forec losure mustdemonst ra te s t r i c t compliance with th e Act. As demonstrated


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above, th e MIN Summary demonstra tes fendants led to complywith the Oregon Trust Deed Act.

Although not af fec t ing my conclus ion here, the MIN Summaryses an add i t iona l concern re l evan t to numerous cases pending

fore me. As noted above, GN i s l i s t ed as Lender on both th et r u s t deed and the no te . The MIN Summary, however, makes nomention of GN. In f ac t , MIN Summary i s s i l e n t as to how orwhen Guaranty Bank became an "Inves tor" ho ng th e f i c i a li n t e r e s t in th e t r u s t deed. (Jan. 31, 2011 McCarthy Decl . , Ex . 1,2 .) The MIN Summary ind ica tes only t h a t on December 1, 2005,Guaranty Bank reg i s t e red the in th e MERS system. Whatoccurred before r e g i s t r a t i on , and how or when Guaranty Bankobta ined any e re s t th e loan (from GN or another) i s notrevea led .

The apparent gap in chain of title i s not the only i s suet h a t causes me concern . On May 7 , 2010, defendants recorded: ( 1 )an assignment o f t r u s t deed from MERS to Bank of America; (2 )MERS's appointment of Northwest as successor t r u s t e e ; and (3) a

ce of f a u l t and e ion to s e l l . Regarding th e May 7recordings, defendants s t a t e , "Af te r rece ng p l a i n t i f f s 'complain t , Northwest Trus tee Serv ices , Inc . recognized t h a tce r t a in documents were recorded ou t -o f -o rder . " (Oct. 14, 2010Mem. Supp. Mot. Di ss , 4.) Upon recogniz ing th e problems a f t e r i n i t i a t i n g non-judi a l forec losure proceedings and only

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a f t e r rece iv ing p l a i n t i f f s ' complaint a l leg ing improperrecord ings - defendants rescinded the May 7, 2010 not ice ofdefau l t and e lec t ion to s e l l . The "ou t -o f -o rde r" record ingsdemonst ra te problems, not a ty p i ca l in my view, of t en caused byforec los ing p a r t i e s rushing to expedi te non j ud i c i a lforec losures .

On May 3, 2010, a "Vice Pres iden t" MERS assigned thet r u s t deed to Bank of America. (Notice of Removal, Ex. 1, 32.)That same day, ano ther "Vice President" of MERS appointedNorthwest successor t r u s t e e . (Notice of Removal, Ex. 1, 34.) Alsoon May 3, 2010, an "Ass i s t an t Vice Pres iden t" of Northwest signedthe not ice of de I t and e lec t ion to s e l l . (Notice of Removal,Ex. 1, 36-37.) The same notary publ apparen t ly witnessed a l lthree execut ives s ign the documents on the same day. Cons r ingde ndants re l i ed on the May 3, 2010 documents to j u s t i non-j u d i c i a l forec losure proceedings , defendan t s ' document reviewappears rushed. Considering th e t ime spen t reviewing th edocuments, ass ign ing the t r u s t deed, appoint ing a successort r u s t e e , and i s su ing a not ice o f d e f au l t and e l ec t i o n t o s e l l , Iam not su rp r i sed to l ea rn t h a t " [ a ] f t e r rece iv ing p l a i n t icomplaint , Northwest Trus tee Serv ices , Inc. recognized t h a tce r t a in documents were recorded ou t -o f -o rder . "

Notwithstanding th e above concerns, I note th e May 3, 2010ass ignment s t a t e s t h a t MERS ass igns "a l l b en e f i c i a l i n t e r e s t "

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the t r u s t deed to Bank of America. (Notice of Removal, Ex. 1,32.) As expla ined above, MERS never had any bene 1 i n t e re s tin the t r u s t ed. MERS held only l ega l title as an agent ornominee of GN (or GN's successors ) . I f MERS acted only as anagent or nominee, why i s the pr inc ipa l not i den t i f in t May3, 2010 assignment? confusion i s ightened as th e MINSummary demonstra tes a t l e a s t tw o unrecorded t r a n s fe r s of thebenef i a l i n t e r e s t in t r u s t deed occurred be re May 3,2010. As Jus t i ce Page of the Supreme Court of Minnesotasummariz

MERS cla ims to hold l ega l t i t l e , but only l ega l titto the mortgage ing forec losed. MERS a lso cla ims t h a tin los ing mortgages it ac t s only as nomineei t s members. But MERS can ac t as nominee fo r only thepa r t i c u l a r MERS member who holds the promissory note a tany p a r t i ar t ime and, when t ha t promissory note i sassigned between members, the member fo r which MERSac t s as nominee, and on whose beha l f MERS holds 1 1t i t l e , neces sa r i ly changes. In othe r wo ,the e n t i t yon whose beha l f MERS holds 1 1 title to the mortgagechanges every t ime the promissory note i s ass igned.

Jackson v. Mortgage Elec t ronic Regis t ra t ion Systems, Inc . , 770N.W.2d 487, 503-04 (Minn. 2009) (Page, J . , d i ssen t ing ) . AlthoughJus t i ce Page wrote in d i s sen t in a case involving a Minnesotas t a t u t e , h is concerns apply to numerous cases pending fore me.

Fo sure by adver t isement and sa le , which i s designed totake place outs of any jud i a l review, necessa ly r e l i e s onthe forec los ing par ty to accurate ly review and assess i t s ownau thor i ty to forec se . Considering t ha t non- jud ic ia l

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fo rec losure o f one ' s home i s a pa r t i c u l a r ly harsh even t , andgiven th e numerous problems I see in near ly every non- jud ic ia lfo rec losure case I pres ide over, a procedure re ly ing on a bank ort r u s t e e to se l f - a s se s s i t s own au thor i ty to fo rec lose i s deeplyt roubl ing to me.

I recognize t h a t MERS, and i t s r eg i s te red bank users ,c rea ted much of the confusion involved in th e forec losureprocess . By l i s t i ng a nominal benef ic ia ry t h a t i s c l e a r l ydescr ibed in th e t r u s t deed as anything but tactualbene f i c i a ry , the MERS system crea tes confusion as to who has tau thor i ty to do what with th e t r u s t deed. The MERS system ra i sesse r ious concerns regard ing the appropr ia teness and va l id i t y offo rec losure by adver t i sement and sa le outs ide of any j ud i a lproceeding.

Addi t iona l ly , th e MERS system allowed th e r i s e of th esecondary market and se c u r i t i z a t i o n of home loans . A lender

ending to immediat y s e l l a loan on th e secondary mar i snot concerned with th e sk involved in th e loan, but with th efees generated . I f a lender aims to quic y pass a loan o ff ontoan i nves to r , a s ta ted- income loan appears not as an unacceptabler i sk , but as an income st ream. MERS makes it much more d i f f i c u l tfo r a l l r t i e s to scover who "owns H the loan . When a borroweron th e verge of d e f au l t cannot f ind out who has th e au thor i ty tomodify the loan, a modi f ica t ion o r a r t s a l e , even if


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b en e f i c i a l to both the borrower and the bene f i c i a ry , cannotoccur .

When no borrowers defau l t , the problems inherent in th e MERSsystem may go unnot iced . Unfortunately fo r banks, borrowers ,inves to r s , and cour t s throughout th e country , many borrowers a renow defau l t ing . Count less grantors of t r u s t deeds now theharsh prospect of los ing a home outs ide of any j ud i c i a lproceeding . At the same t ime, th e MERS s tern g r ea t l y increasedth e number of i nves to rs s tuck holding worthless notes. A lendert h a t knows it wi l l immediately s e l l a loan on th e secondarymarket has no incent ive to ensure th e appra i sa l o f the secur i tyi s accura te . S imi la r ly , the l ender need not concern i t s e l f withthe verac i ty of any rep re sen ta t ions made to th e borrower . Inshor t , th e MERS system al lows the lender to sh i rk i t s t r a d i t i ona ldue di l igence d u t i e s . The requirement under Oregon law t h a t a l lassignments be recorded p r i o r to a non- jud ic ia l forec losure i ssound publ ic pol icy:

[ I ] t i s apparent with th e b en e f i t of hinds ight t h a t th ea b i l y of 1 r s to f ree ly and anonymously t r a n s fe rnotes among themselves fa 1 a ted , if not crea ted , thef i n an c i a l banking c r i s i s in which our country cur ren t lyf inds i t s e l f . I t i s not only borrowers bu t a l so o the rl enders who r i gh t fu l ly a re i n t e res t ed in who has held apa r t i c u l a r promissory note . For example, a lender whoholds a promissory note t ha t has become worthless mayhave an i n t e r e s t in knowing th e hands through whicht h a t note passed .

Jackson, 770 N.W.2d a t 504 (Page, J . , d is sen t ing) . Jus t i ce Pagewrote in d is sen t , bu t s views are persuas ive .15 - ORDER www .S

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Although t concerns r a i sed in t h i s 0 r appear in manyforeclosure cases before me, I reso the cur ren tcont roversy on narrow grounds . Fol lowing de s ' removal ofthe complaint , p la i still seek dec la ra to r e l i e f t ha tdefendants ' non- j a l foreclosure i s wrongful . I agree withJudge Alley t h a t "Oregon law permi ts fo rec losu re without th eb e n e f i t of a j ud i c i a l proceeding only when i n t e r e s t of thebenef i c i a ry i s c lea r ly documented in a pub l i c record ." In reMcCoy, 2011 WL 477820, a t *4. Because de n ts fa i l ed to recorda l l assignments o f t r u s t deed, th e non- jud ic ia l foreclosureproceedings 1 Oregon Trus t Act. Therefo re ,p la in t i f f s are en t led to dec la ra to ry r e l i e f on t ha t cla im.

CONCLUSION

Defendants ' t fo r j ud i c i a l not ice (#6) i s GRANTED.Defendants ' motion to dismiss (#8) i s DENIED. P l a i n t i f f s areen t i t l ed to a r a to ry judgment s t a t i fendants v io la tedORS 86.735(1) . This non- jud ic ia l foreclosure proceeding i sdismissed . Judgement and cos t s r p l a i n t i f f s .

IT IS SO ORDERED.

DATED t s ~ d a y of May, 2011.

OWEN M. PANNERU.S. DISTRICT JUDGE


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