Brandrup v. Recontrust Co., N.A.
303 P.3d 301
| Or. | 2013Background
- Oregon OTDA governs nonjudicial foreclosure of trust deeds; MERS serves as nominee for lender and its successors.
- Four Oregon homeowners challenged foreclosures where trusts deed beneficiaries were designated as MERS.
- OTDA requires recording of assignments by the beneficiary to proceed nonjudicially (ORS 86.735(1)).
- Plaintiffs alleged MERS lacked the beneficial interest and that assignments were ineffective; lenders transferred notes but not recorded trust-deed assignments.
- The Supreme Court certified four questions to resolve whether MERS can be a OTDA beneficiary and how agency/recording interact with foreclosures.
- Majority held: (1) beneficiary is lender or lender’s successor; MERS cannot be beneficiary; (2) MERS not eligible under the trust deed where it holds only legal title but may foreclose only if it is the beneficiary; (3) ORS 86.735(1) does not require recording of assignments by operation of law; (4) (a) MERS cannot hold or transfer legal title; (b) authority of MERS as agent depends on evidence of actual agency between lender and successors, not determined on record.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Who may be the OTDA beneficiary? | MERS should qualify as beneficiary as nominee/agent for lender and successors. | Beneficiary must be lender or its successor; MERS cannot. | No; beneficiary is lender or successor. |
| Is MERS eligible as OTDA beneficiary when deed says MERS holds title as nominee but may exercise rights for lender? | Agency/nominee designation should permit MERS to act as beneficiary. | OTDA defines beneficiary by right to repayment; MERS lacks that right. | No. |
| Does ORS 86.735(1) require recording of assignments that occur by operation of law when a note is transferred? | Transfers by operation of law should require recording to foreclose. | Only formal written assignments trigger recording; note transfers need not. | No; ORS 86.735(1) does not require recording of assignments by operation of law. |
| Does OTDA allow MERS to hold/transfer trust-deed title as nominee after note transfer, and does MERS have agency to act for lender/successors? | MERS cannot hold title; agency cannot expand beneficiary rights beyond repayment. | MERS can hold title as nominee and act as agent for lender/successors to facilitate foreclosure. | (4)(a) No; (4)(b) Agency authority undetermined on record. |
Key Cases Cited
- Barringer v. Loder, 47 Or 223 (1905) (mortgage follows the note; recordation of assignments via writing governs recording)
- Holton, United States Nat. Bank v. Holton, 99 Or 419 (1921) (assignment of note carries the mortgage; foreclose on note)
- Willamette Col. & Credit Serv. v. Gray, 157 Or 77 (1937) (recording of assignments protects an assignee against good-faith purchasers)
- 353 Or 676, 353 Or 676 (2012) (OTDA interpretation of beneficiary and authority; context for MERS issue)
- Morse et al. v. Paulson et al., 182 Or 111 (1947) (trust deed concepts and beneficiary/equitable title discussed)