[This post is the second in a two-part discussion of the recent case of James vs. MERS, et. al. The full text of Judge Simon’s decision can be found here. The link to Part One of my analysis can be found here. Besides the sheer joy of (metaphorically) poking my finger in the eyes of the Big Banks, this case is a breath of fresh air for several important reasons: First, it is clearly the first in-depth analysis of the MERS issues unfolding in Oregon’s state and federal courts. This is not to say prior judicial opinions were inadequate in any way – rather, the James’ excellent legal briefing placed before the Court, well-reasoned and cogent arguments showing that the MERS model is a clear violation of Oregon trust deed foreclosure law on several levels. Second, to use a cliche’ – Judge Simon clearly “gets it.” Again, this is not to say others before him did not. In fact, perhaps that is what is remarkable in this decision over the earlier McCoy and Hooker cases – Judges Alley and Panner articulated their discomfort with the how poorly the MERS model served consumers. Judge Simon’s opinion did not reveal anything about his personal comfort or discomfort with the MERS model. Rather, it was a dispassionate, objective, and welcome, dismantling of a house of cards that has survived longer than one might imagine, given the fact that it was never adopted or approved by any local or state governments. The banks did it simply because “they could.” Of course, the reason for the MERS failure is that it was premised upon several reckless assumptions that: (a) It could woo 100% of the lending industry into it’s way of thinking; (b) That no one would notice it was depriving counties of millions of dollars of recording fees; (c) That bank securitizations would go on forever; (d) There could be no such things as a mortgage crisis, a credit crisis, or foreclosure crisis; and (e) That it could out-think, out-talk, and out-maneuver, anyone that got in its way.
So, now that I got that off my chest, let’s review the rest of Judge Simon’s opinion:
Finding: The “Law or Custom Clause” May Not Expand MERS’ Role to That of a Lender.
In the pro-MERS trust deed forms used by the lending industry, they inserted a sort of safety net provision; i.e. one essentially saying that if MERS’ model as a “nominee” or “agent” of the lender somehow fails to comply with local law, that:
“Borrower understands and agrees that MERS holds only legal title to the interests granted by Borrower in this Security Instrument, but, if necessary to comply with law or custom, MERS (as nominee for Lender and Lender’s successors and assigns) has the right to exercise any or all of those interests, including, but not limited to, the right to foreclose and sell the Property; and to take any action required of Lender including, but not limited to releasing and cancelling this Security Agreement” [Underscore mine. PCQ]
Judge Mosman in the Beyer decision relied upon this “law or custom” clause to bootstrap MERS into the role of the “lender,” thus giving it a “benefit” i.e. the receipt of borrower payments. Once it could be said that MERS receives a “benefit”, it was easy to conclude that MERS was a “beneficiary” under ORS 86.705(2). And once MERS was deemed to be a “beneficiary,” it then had the power reserved to beneficiaries under the OTDA to assign the trust deed to a lender in order to initiate the foreclosure. Surprisingly, Magistrate Stewart, in the James decision, came to the same conclusion. Continue reading “Another MERS Slapdown! The Recent James Case Analyzed (Part Two)”