Hucke v. Bac Home Loans Servicing, L.P.
272 Or. App. 94
| Or. Ct. App. | 2015Background
- Plaintiff borrowed in 2007; loan secured by a recorded trust deed naming MERS as beneficiary and GreenPoint as lender; note later endorsed in blank and delivered to Fannie Mae.
- GreenPoint’s sale of the note to Fannie Mae operated as an assignment of the trust deed by operation of law; MERS recorded an assignment to Fannie Mae in Jan 2011 and ReconTrust (successor trustee) conducted a nonjudicial foreclosure sale in July 2011; Fannie Mae purchased and a trustee’s deed was recorded.
- Plaintiff sued, claiming the foreclosure was invalid because (1) assignments of the trust deed resulting from transfer of the note were not recorded as required by former ORS 86.735(1), and (2) MERS was not a proper beneficiary to assign the deed.
- About a month before trial Fannie Mae recorded a correction-of-errors deed under ORS 86.722(1) purporting to set aside the trustee’s deed “as though the erroneous instrument had not been recorded.” Defendants moved to dismiss as moot.
- Trial court denied dismissal, held (relying on the court of appeals’ earlier Niday) that former ORS 86.735(1) required a recorded assignment of the trust deed before nonjudicial foreclosure, declared the sale void, reinstated the trust deed and note, and awarded fees.
- On appeal the court of appeals (this opinion) rejects mootness, but reverses on the merits because the Supreme Court later held in Niday and Brandrup that former ORS 86.735(1) does not require recording assignments that result by operation of law from a note transfer.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Mootness: Did Fannie Mae’s ORS 86.722 correction deed render the case moot? | The correction deed reinstated the trust deed/voided sale, so relief sought was already given. | Correction deed only set aside the recording of the trustee’s deed; it did not unilaterally void the sale or reinstate the trust deed, so dispute remained live. | Not moot: correction deed removes recording impediment but does not automatically unwind sale or reinstate trust deed; further action needed. |
| Effect of ORS 86.722 correction deed: Does setting aside a recorded trustee’s deed automatically void the foreclosure transfer and restore borrower’s title/obligations? | Correction deed should restore parties to pre-sale status and void sale. | Correction deed undoes recording only; the legal transfer occurred on execution/delivery and may require further steps to unwind. | Correction deed sets aside the recording, putting parties in the position as if trustee’s deed had not been recorded and enabling efforts to unwind the sale, but it does not automatically rescind the legal transfer or reinstate the trust deed. |
| Recording requirement under former ORS 86.735(1): Must assignments that result by transfer of the promissory note be recorded before nonjudicial foreclosure? | All assignments of the trust deed must be recorded before foreclosure; because assignment reflecting GreenPoint→Fannie Mae was not recorded, foreclosure was invalid. | Former ORS 86.735(1) refers only to written, recordable assignments; assignments that result by operation of law from note transfer need not be recorded. | Trial court erred: under Niday and Brandrup, former ORS 86.735(1) does not require recording assignments resulting by operation of law from note transfers; foreclosure was not invalid for that reason. |
| Alternative challenge (notice of sale identity of beneficiary under former ORS 86.745(1)): Can plaintiff raise this on appeal though not pleaded/tried? | The notice named MERS, not the true beneficiary, so sale defective. | Issue was not pleaded or litigated below; cannot be raised first on appeal. | Not considered: court refuses to affirm on a new theory raised for first time on appeal because pleadings were not sufficiently broad and issue was not presented to trial court. |
Key Cases Cited
- Niday v. GMAC Mortgage, LLC, 353 Or 648 (Or. 2013) (former ORS 86.735(1) does not require recording of assignments that arise by operation of law from transfer of the note)
- Brandrup v. ReconTrust Co., 353 Or 668 (Or. 2013) (same statutory analysis; OTDA distinguishes written recordable assignments from assignments by operation of law)
- Staffordshire Investments, Inc. v. Cal‑Western, 209 Or App 528 (Or. Ct. App. 2006) (suggests recording of trustee’s deed can give finality; significance of recording in unwinding sales)
- Brumnett v. PSRB, 315 Or 402 (Or. 1993) (mootness requires that judgment would have no practical effect on parties’ rights)
- Halleck v. Halleck, 216 Or 23 (Or. 1959) (delivery doctrine: executed and delivered deed transfers property interest)
- Lancaster v. May, 194 Or 647 (Or. 1951) (acceptance and delivery required for effective transfer)