Oregon court rules for owner in ‘robo’-like case

A U.S. District Court has vacated the nonjudicial foreclosure of an Oregon borrower in another dispute over the use of the Mortgage Electronic Registration Systems, a procedure related to “robo-signing.”
Robo-signing is a practice whereby banks approve foreclosures without proper reviews.

U.S. District Judge Owen Panner ruled that Bank of America, MERS Inc. and Northwest Trustee Services violated the Oregon Trust Deed Act by failing to record all assignments of mortgage when the note changed hands.

“That MERS was the agent or nominee of the beneficiary does not mean the non-judicial foreclosure proceedings necessarily violated Oregon law,” Panner’s decision read.

In a similar case in Michigan, MERS Inc. was the named party initiating the nonjudicial foreclosures. The ruling has led the Department of Housing and Urban Development to re-foreclose on all its REO properties in Michigan where the original nonjudicial foreclosure was conducted in the name of MERS.

But in the Oregon case, Bank of America filed an assignment of the mortgage out of the name of MERS before initiating the foreclosure.
Panner ruled that assignments should have also been filed the three times that the note changed hands in order for Bank of America and Northwest Trustee to use the state’s nonjudicial foreclosure process.

In his 16-page decision, the judge also denied the defendants’ motion to dismiss the case.