Distressed Housing FAQs

Question [Hardship Letters]. I am trying to do a short sale. The bank is asking me for a “hardship letter.” What is it they are looking for? Do I have to have some life changing event to qualify for help, such as divorce or some financial calamity?

Answer. I rarely, if ever, have seen a borrower’s “hardship” – or lack thereof – become an impediment to their securing a resolution of their distressed housing event through short sale or deed-in-lieu. I view the hardship letter as a sort of “price of admission” in order for the banks to “justify” their providing assistance. Despite what they might say to the contrary, many banks simply won’t help borrowers unless they are in some form of payment default. For those folks who may be making a respectable living, but are so strapped on a day-to-day basis because of a large mortgage payment, I believe this fact alone is a valid “hardship.” If this financial pressure is coupled with a desire or need to downsize, relocate, or other legitimate reasons, it should be included in the hardship letter. In most cases, folks who got their loans in 2005, 2006, or 2007, were in far stronger circumstance than they are today. That should be addressed. For example “When we first got our loan in 2005, we were both fully employed and our combined incomes could support the mortgage payments. That is not the case today.” Continue reading “Distressed Housing FAQs”

As a follow-up to my last post on difficult short sales (here), it occurs to me that I should mention the small, but persistent complaint of some seller-clients, who are under the mistaken belief that their Realtor® can and will handle the entire transaction for them. “Two liens? No problem! We’ll negotiate everything!” But in fact, if the property is encumbered by two liens with two separate lenders or servicers, it can be a big problem – and if it comes down to a seller/borrower paying a “contribution,” this is something the Realtor® cannot negotiate; it’s up to the seller/borrower to decide if they can afford a contribution, or if they are willing to go on the hook by signing a promissory note.

If the short sale transaction has gotten all the way to closing, and the seller/borrower is having their first discussion with their agent about this, something is wrong. At the first hint that a seller/borrower contribution may be demanded, the real estate agent should immediately discuss with their client what the options are – and they can be somewhat limited.

How is a short sale agent to know, in advance if there may be a problem? Answer: Do the numbers. Will there be enough money from the net sale proceeds to pay off the first lienholder? If not, this means that the first lender has complete control over how much it will contribute to the second. And the first lender will not permit the borrower/seller contribute anything to the second. In most cases, the first lienholder will allocate not more than $3,000 or $6,000 to the second, usually depending upon the net proceeds from the short sale.

The next question is “How much is owed to the second? If it is $100,000 or more, $3,000 or $6,000 may not be sufficient to satisfy the second lender. This means there could be a deadlock, unless the buyer is willing to bridge the gap by paying the shortfall to the second if the first lender will allow it. Will the Realtor® contribute? Remember, these payments must be disclosed on the HUD-1 settlement statement, and it is far better to address a “bridging the gap” solution on an Addendum to the Sale Agreement early on in the transaction. Unfortunately, some real estate agents focus on the obtaining the first lender’s consent before ever contacting the second.

Short sellers are fearful enough. They don’t like surprises. So for those real estate agents offering their services as “short sale experts,” they must first do the numbers, try to foresee the problems in advance, discuss them early on with the client – and never, never, never promise more than you can deliver!

Over the course of the past two and one-half years, I’ve met with hundreds of folks experiencing the trauma of dealing with huge negative equity in their homes. In lay terms, they’re “underwater” – meaning that the value of their home has dropped below what they paid, and frequently is now less than what they owe. This has become a common phenomenon over the past five years. But frequently, being underwater is not the only problem. If it were, many homeowners would likely remain where they are. However, an additional circumstance, such as one of the feared 3-Ds, Death, Divorce, and Debt, is frequently an accompanying factor that has brought homeowners to my office.

This post will focus on the Scylla and Charybdis of home ownership today: Distressed housing coupled with a distressed marriage. Here are some tips, traps, caveats, and general observations that I’ve gleaned from distressed housing clients contemplating divorce:

I. GENERAL THOUGHTS
• Don’t keep looking in the rear-view mirror – you’ll drive off the road! How and why you got here is a concern that runs a distant second to where you’re now going. In most cases, the clients I’ve met who were anticipating divorce avoided the blame-game, and wanted to make the best of a difficult situation. This is a good thing; a collaborative, realistic and rational approach to a solution is much better than an adversarial one.
• Good information can be liberating. Fear thrives best when allowed to feed on misinformation. Most people are inundated with opinions, rumors, and horror stories about the foreclosure crisis. They need to separate fact from fiction before they can make informed decisions about what to do in their own personal situation. Armed with good information, I’ve seen clients make far better choices for their mutual best interests – even when they are planning to divorce. Continue reading “Distressed Housing, Distressed Marriage”

“It’s one thing to be stubborn when relying on well-reasoned principle; it’s quite another to be stubborn relying on no principle.” Anonymous [Sort of.]

An interesting, though not surprising, article recently appeared in The Oregonian, titled: “Lenders not engaging in Oregon foreclosure mediation program.” Before discussing what’s behind the banks’ decision, it is necessary to understand that SB 1552, Oregon’s mandatory mediation law, is essentially focused on the following two groups:

Folks whose trust deed is being foreclosed non-judicially. That is, a Notice of Default has been recorded in the public records. This event triggers the mandatory mediation law, and requires lenders[1] to offer the borrower an opportunity to meet and mediate, to see if an agreement can be reached on a specific “foreclosure avoidance measure” [e.g. modification, deed-in-lieu, short sale, or any other such mechanism that avoids the foreclosure]. If the borrower timely responds, complies with other criteria, and pays a $200 filing fee, the foreclosing lender must participate. If the lender does not participate, or fails to do so in good faith,[2] it cannot receive the coveted “Certificate of Compliance” from the mediator. This Certificate must be recorded on the public record before the sale can occur. No Certificate, no foreclosure.[3]
Folks who are not in a formal non-judicial foreclosure, but due to their economic circumstances, are “at risk” of default under their note and trust deed. The law does not define at “at risk” borrower. Thus, it could be someone who is still current, but is on the cusp of defaulting due to the high cost of their mortgage payments; or it could be someone who hasn’t paid for a year, but the bank has not yet commenced any foreclosure. Thus, even if a bank routinely forecloses judicially, such as Wells Fargo, before the foreclosure is filed in court, an “at risk” borrower could request that Wells enter into mediation to see if the parties could agree on a foreclosure avoidance solution. But the sticking point in “at risk” mediations is that SB 1552 contains no sanction for lender non-compliance.[4]

The recent Oregonian article focused largely on folks in category No. 2, since clearly, banks that commence non-judicial foreclosures in Oregon must comply. So, with that preface, herewith are some snippets from the Oregonian article:

“The state’s contractor charged with running the mediation program told an advisory committee in Salem on Wednesday that 132 eligible homeowners applied for the program on the grounds that they are at risk of foreclosure. The law allows at-risk borrowers to request a meeting with their lender even before they’ve missed a payment. *** But none of the mortgage servicers responded to the requests within 15 days as required under the law that created the program.”
“When asked by The Oregonian for the reason, the answer was simple: ‘They just don’t want to play,” said Jonathan Conant, who is managing the state mediation program on behalf of the Florida-based Collins Center for Public Policy. He added that the five largest lenders operating in the state have indicated they won’t participate in the mediation process under any circumstances.’”
“Meanwhile, lenders have also stopped filing out-of-court foreclosures. More are proceeding with court-supervised foreclosures, avoiding the mediation program altogether through the traditionally slower and costlier judicial foreclosure process.”
According to the article, here’s what the Lender’s Lobby and Lackeys say:
- “There is just so much coming at these folks in terms of new requirements,” Markee[5] said. ‘Many of them are talking to their legal counsel and other learned people trying to make rational decisions about how to proceed with this issue.’” [Hmm. “Legal counsel and other learned people….” Now there’s a phrase that begs to be parsed. Hopefully, at least one such “learned” person will include someone schooled at the College of Common Sense. Just a small dose would hopefully convince the Big Banks that totally ignoring Oregonians’ pleas for help will backfire. More about this later. – PCQ]
- Markee and Kenneth Sherman Jr., general counsel for the Oregon Bankers Association, both told the advisory committee they couldn’t explain why mortgage servicers hadn’t responded to the requests for mediation. [Sorry guys – But as a fellow lawyer, I don’t believe that for a minute. First, you wouldn’t even talk to The Oregonian without your clients’ OK. Secondly, you wouldn’t be quoted saying anything without first having it vetted by your clients in advance. Third, to say you “don’t know,” really means that your Big Bank clients told you to say you “don’t know.” Fourth, you do know. The real reasons are pretty clear. But if struggling Oregon homeowners were told the real truth, they’d quickly decide that your industry should never be permitted to conduct business in this state again. More about this later. – PCQ]

Before moving on, let’s look at the actual text of the law. What follows is taken from Section 2(7)(a) of SB 1552, the “at risk” provisions. The references to “grantor” refer to the borrower; the “beneficiary” is the lender or servicer that is foreclosing; the “trustee” is the foreclosure trustee who actually conducts the non-judicial foreclosure process; and the “mediation service provider” is The Collins Center for Public Policy, which has been designated by the Oregon Attorney General to coordinate all mediations arising under SB 1552.

“A grantor that is at risk of default before the beneficiary or the trustee has filed a notice of default for recording under ORS 86.735 may notify the beneficiary or trustee in the trust deed or the beneficiary’s or trustee’s agent that the grantor wants to enter into mediation. Within 15 days after receiving the request, the beneficiary or trustee or the beneficiary’s or trustee’s agent shall respond to the grantor’s request and shall notify the Attorney General and the mediation service provider identified in subsection (2)(b) of this section. The response to the grantor must include contact information for the Attorney General and the mediation service provider.” [Emphasis mine.]
“A grantor that requests mediation *** may also notify the Attorney General and the mediation service provider of the request. The Attorney General shall post on the Department of Justice website contact information for the mediation service provider and an address or method by which the grantor may notify the Attorney General.”
“Within 10 days after receiving notice of the request *** the mediation service provider shall send a notice to the grantor and the beneficiary that, except with respect to the date by which the mediation service provider must send the notice, is otherwise in accordance with the provisions of subsection (3) of this section.”
“A beneficiary or beneficiary’s agent that receives a request under paragraph (a) of this subsection is subject to the same duties as are described in [the remaining applicable provisions of SB 1553].”

So when the 2012 Oregon Legislature said that when an “at risk” borrower requests mediation, “…the beneficiary or trustee or the beneficiary’s or trustee’s agent shall respond to the grantor’s request and shall notify the Attorney General and the mediation service provider….” [Emphasis mine.] – what did it mean?

As lawyers, we were taught that when certain legislative action is called for, it can be divided into those that are required versus those that are only permissive [or in legal parlance, those that are “precatory”]. For example, words like “shall” and “must” are mandatory. Compliance is compulsory. Words such as “may,” “should,” “can,” etc. are permissive. An example of a permissive statement in a will, might be: “I hope that my son and daughter will keep the house in the family.” It is purely a wish or desire; it is not a requirement. The will does not say that the son and daughter cannot sell the family home; to the contrary – they can do so without violating the terms of their inheritance.

However, as any sixth grader knows when his parents tell him that he “must do his homework before being allowed to play outside with his friends,” there is little room left for negotiation. So it is with the use of mandatory words such as “shall” in the “at risk” provisions of SB 1552. Had the Oregon Legislature intended for banks to have a choice in deciding whether or not to respond to an “at risk” borrower’s request to mediate, it could have easily said so by using permissive rather than mandatory words. By changing a single word, the mandate for how Big Banks are to deal with mediation requests from “at risk” Oregon homeowners would be entirely different. For instance, it could have said:

“Within 15 days after receiving the request, the beneficiary or trustee or the beneficiary’s or trustee’s agent may respond to the grantor’s request by notifying the Attorney General and the mediation service provider identified in subsection (2)(b) of this section.”

Clearly, such a simple change was within the power of the drafters of SB 1552. To put a finer point on all this, let’s look at other portions of the “at risk” provisions quoted above:

“A grantor that is at risk of default before the beneficiary or the trustee has filed a notice of default for recording under ORS 86.735 may notify the beneficiary or trustee in the trust deed or the beneficiary’s or trustee’s agent that the grantor wants to enter into mediation. [Emphasis mine.]
“A grantor that requests mediation *** may also notify the Attorney General and the mediation service provider of the request.” [Emphasis mine.]

Clearly, the use of the word “may” in these two instances, is because not all “at risk” borrowers” may want to mediate. And if they choose to mediate, they may not elect to notify the Attorney General. Those that do, can, and those that don’t, need not. These are voluntary choices; not mandatory imperatives.

Voilà! Now we know that the drafters of this legislation understood the difference between “shall” and “may”! They were used differently for a reason. Now was this all that difficult?

Remember, that both the lender and consumer lobbies were at the table when SB 1552 was negotiated. The Big Banks and their high paid lawyers could have pushed back on the choice of “shall” or “may” – but they didn’t. And so, when I hear lawyers, lobbyists and lender lackeys say that the Big Banks need to consult with “legal counsel and other learned people *** to make rational decisions about how to proceed…” I want to gag. Why the handwringing? “Shall” means “shall.” “May” means “may.” It’s not like we’re trying to interpret the First Amendment to the Constitution.

So when the mandatory mediation law says that banks “shall” respond, there is no room to rationally argue that they have a choice of not responding. Ignoring “at risk” Oregon homeowners who want to mediate a foreclosure avoidance solution clearly violates the spirit and intent of the law. And like so many other legal positions taken by Big Banks over the last five years, this too will come back to haunt them. [Continued in Part Two]

[1] This law does not apply to individuals, financial institutions, mortgage bankers, and consumer finance lenders that commenced 250 or fewer foreclosures in the preceding calendar year.

[2] In Big Bank lexicon, the term “good faith” is noticeably absent, so we can expect an argument from the lenders’ lobby and lackeys, as to exactly what that term requires of them.

[3] Note that 1552 only applies to non-judicial foreclosures. Thus, a lender could decide to avoid the mandatory mediation process altogether, and simply file the foreclosure in court, and proceed judicially.

[4] Lest someone say that this was a bonehead mistake, I think not. Legislative negotiations on such a volatile issue can result in an impasse, where the consumer lobby must say to itself, better to have the provision included, even without a built-in enforcement mechanism, than to have nothing at all. I agree. The fact that mandatory mediation is in the law at all, is a minor miracle. I’m comfortable with leaving it up to a judge to determine if it’s OK for the Big Banks to thumb their noses at Oregon’s distressed homeowners. So far, the courts have been lining up pretty consistently behind the Little Guy – Niday being the most recent example.

[5] Jim Markee, a lobbyist representing the Oregon Mortgage Lenders Association.

This is the second post of two, analyzing the recent Oregon Court of Appeals ruling on MERS. The first post can be found here. The Court’s written decision can be found here.

Issue Two

Can MERS act as a “Nominal Beneficiary” in the trust deed for purposes of avoiding the requirement under ORS 86.735(1) that to conduct a non-judicial foreclosure in Oregon, any successive assignments of the trust deed must be recorded?

Besides the epic battle between Good and Evil, Right and Wrong, Light and Darkness, reduced to its simplest form, the disagreement between Big Banks and Bantam Borrowers is this:

Borrowers maintain that ORS 86.735(1) means what it says, i.e. that before a non-judicial foreclosure may be lawfully commenced, any time the trust deed has been assigned, the event must be recorded in the county records.

Banks argue that since MERS is the “beneficiary” under the trust deed, the only assignment that is necessary to record is the one from MERS to the foreclosing bank. They say that all of the intermediary assignment that may or may not[1] have been electronically “registered” should not have to be recorded, since MERS is the nominal beneficiary for everyone, now and in the future. [This results in what I have referred to as the “Hail Mary Pass” in prior posts on the subject, here and here: When a borrower goes into default, MERS, as the “nominal beneficiary” for the original lender [and all successive transferees of the lender’s promissory note], makes a “single assignment” pass over the heads of the intermediate transferees, and the trust deed lands neatly in the waiting arms of another Big Bank to commence the foreclosure in its own name.] Continue reading “MERS Smackdown! Niday Analyzed – Part Two”

In the first Oregon appellate court ruling on the issue, the Court of Appeals, addressed, head on, whether MERS may be appointed as the “beneficiary” in an Oregon trust deed, for purposes of avoiding the law. The full opinion may be accessed here.

The decision, written by Justice Lynn R. Nakamoto’s was a “textbook” opinion; clear, concise and methodical, demonstrating a good grasp of the legal issues at play.

The Parties. The persons and entities discussed in the case included two banks. One was GreenPoint Mortgage Funding, Inc. (“GreenPoint”) the lender that originated, i.e. funded, the loan at the time of closing. The other bank was GMAC Mortgage, LLC (“GMAC”), the company that was servicing the loan. GMAC, the servicer, was named as a defendant. In a bit of cosmic comeuppance, in May 2012, GMAC filed for Chapter 11 bankruptcy protection. [Apparently, defaulting is OK if you’re a Big Bank, but not if you’re a Bantam Borrower. – PCQ] The plaintiff in the case was the borrower, Rebecca Niday. Mortgage Electronic Registration Systems, Inc. (“MERS”) was also named as a defendant, along with Executive Trustee Services.

The Attorneys. The lawyers on the side of the angels were W. Jeffrey Barnes, who argued the case for Rebecca Niday. With him on the briefs were Elizabeth Lemoine and the Luby Law Firm. David L. Koen and Legal Aid Services of Oregon filed the brief amicus curiae [“friend of the court”] for the Oregon Trial Lawyers Association. Congratulations all!

Factual Background. In August 2006, Ms. Niday obtained a home loan from GreenPoint. She signed a promissory note that obligated her to repay the $236,000 debt. She also signed a trust deed, which, as security for the note to GreenPoint, was recorded in Clackamas County, where her home was located. Continue reading “MERS Smackdown! Niday Analyzed – Part One”

“Wells Fargo’s conduct is clandestine. Rather than provide Jones with a complete history of his debt on an ongoing basis, Wells Fargo simply stopped communicating with Jones once it deemed him in default. At that point in time, fees and costs were assessed against his account and satisfied with postpetition payments intended for other debt without notice. Only through litigation was this practice discovered. Wells Fargo admitted to the same practices for all other loans in bankruptcy or default. As a result, it is unlikely that most debtors will be able to discern problems with their accounts without extensive discovery.”

Honorable Elizabeth W. Magner, U.S. Bankruptcy Judge, In Re: Jones v. Wells Fargo Home Mortgage, Inc.

Introduction. In understanding what happened in this case, it is important for the layman to understand the following: All bankruptcies in the U.S. are governed by federal law. The concept – though not necessarily the process – is simple: The moment one files for bankruptcy, an “automatic stay” is imposed. This means that immediately upon filing a petition in bankruptcy, no creditor may attempt to recover any monies or seek other relief against that person [called the “debtor”] without court approval. A trustee is appointed to administer the bankrupt’s estate. Creditors, such as Wells Fargo, must then file a “proof of claim” with the court, setting forth the amount the debtor owes them as of the date he or she filed their petition. A bankruptcy proceeding in which a “reorganization plan” or “plan” is filed with the court is known as a “Chapter 13” bankruptcy. If the plan is opposed by any creditors or the trustee, it must be worked out, or resolved by the Bankruptcy Judge. Once “confirmed” by the Court, the debtor and all creditors must adhere to it.

Typically, a reorganization plan will identify who, what, when and how, creditors are to be repaid by the debtor. Any variance from the plan has to first be approved by the bankruptcy court. Some actions and events in bankruptcy lingo are occasionally referred to “post-petition” in order to signify that they occurred after the debtor filed for bankruptcy. Events occurring before the debtor’s bankruptcy filing are referred to as “pre-petition.” The trustee is in charge of overseeing the operations of the final confirmed plan.

In the following case, Wells Fargo was one of the debtor’s creditors, and as such, had participated in, and was bound by, the confirmed plan. As demonstrated below, the courts jealously guard debtors who seek federal bankruptcy protection. Any deviation from a confirmed plan by the debtor’s creditors, especially intentional deviations, can result in severe sanctions.

Discussion. The Memorandum Opinion written by the Honorable Elizabeth W. Magner, U.S. Bankruptcy Judge, could have been completed in a few pages. Instead, she decided to take 21 pages, setting out in detail, the conduct of Wells Fargo, that you sensed was not going to end well for this Big Bank. Continue reading “Slapdown! – In Re: Jones v. Wells Fargo Home Mortgage, Inc.”

On March 5, 2012, the Oregon Legislature passed a sweeping series of changes to its trust deed foreclosure law, SB 1552. Once signed by the Governor it will become effective 91 days hence. What follows is a summary of (a) the new mandatory mediation law that, after the effective date, will apply to the non-judicial foreclosure of all residential trust deeds; and (b) some important changes to the existing laws governing judicial and non-judicial foreclosures. Between now and the effective date, the Oregon Attorney General’s office will promulgate rules to implement the mediation program. Until then, all we have for guidance is SB 1552 itself. This summary is for informational purposes only and should not be viewed as “legal advice”. Those interested in seeing if the new law may apply to their particular situation should consult with their own legal counsel. – PCQ

1. A New Term: “Foreclosure Avoidance Measures” The entire mediation process contemplated by SB 1552 is based upon the idea that prior to a non-judicial foreclosure, the borrower should have an opportunity to try to reach an agreement with the bank that avoids the foreclosure. To that end, SB 1552 lists the following events as “foreclosure avoidance measures.”

The bank defers or forbears from collecting one or more payments due on the obligation.
The bank modifies, temporarily or permanently, the payment terms or other terms of the obligation.
The bank accepts a deed in lieu of foreclosure from the borrower.
The borrower conducts a short sale.
The bank provides the borrower with other assistance that enables the borrower to avoid a foreclosure.

Unless an exclusion applies under Sec. 4, below, a bank that seeks to non-judicially foreclose a residential trust deed must now offer to mediate with the borrower “…for the purpose of negotiating a foreclosure avoidance measure….” Continue reading “Oregon’s SB 1552 Analyzed – Mandatory Mediation and More!”

[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)”

“In Roman mythology, the god Janus, for whom each year’s first month is named, was the deity of beginnings and endings. According to legend, the titan Saturn gave the two-faced god the power to see both the future and the past. Romans carved both of Janus’ two faces on gates and doorways to solemnize momentous transitions. Most notably, in the Roman Forum, the Senate erected the ritual gates called the Janus Geminus, which the Romans opened in times of conflict. At war’s outset, priests made sacrifices here to curry favor from the gods and forecast the prospects of success. No deity better symbolizes what financiers hoped to create when they founded the Mortgage Electronic Registration System (MERS). MERS sits as a dichotomous, enigmatic gatekeeper on the vestibule of our nation’s complex and turbulent mortgage finance industry. Financiers invoked MERS’s name at the beginning of millions of subprime and exotic mortgage loan transactions and again invoke its name as they attempt to terminate so many of these loans through foreclosure. Like Janus, MERS is two-faced: impenetrably claiming to both own mortgages and act as an agent for others who also claim ownership.” Professor Christopher Peterson, “Two Faces: Demystifying The Mortgage Electronic Registration System’s Land Title Theory”

In a stunning rejection of the earlier Beyer and James cases [severely criticized by yours truly here, here, here, here, here and [satirically] here – PCQ] holding that MERS and Big Banks may ignore the plain language of the mandatory recording law found at ORS 86.735(1), recently appointed U.S. Federal District Judge Michael H. Simon, issued a 41-page Opinion and Order [here] that should be required reading for all lawyers and laypersons interested in the current MERS issues bouncing around in Oregon’s state and federal courts. Quoting Lake Oswego attorney Kelly Harpster’s statement to the Oregonian, Judge Simon’s ruling is “the most thorough and thoughtful analysis of the MERS issue that has yet been published ….” Continue reading “Another MERS Slapdown! The Recent James Case Analyzed (Part One)”