September 29, 2010

In an extremely significant decision, the U.S. Bankruptcy Court for the District of Oregon has issued an opinion dated August 24, 2010 in the matter of In Re Allman, 2010 WL 3366405 (Bkrtcy.D.Or.) which has adopted the anti-MERS decisions of the Supreme Courts of Kansas, Nebraska, and and Arkansas in holding that MERS is not “beneficiary” despite claiming to be so in Deeds of Trust. Although the case involved the issue of whether MERS was to entitled to receive, under Oregon statutes, a notice of intention to record a trust deed release which is required to be given to the “beneficiary of record” and “the party to whom the full satisfaction of payment was made”, the Court examined the role of MERS and concluded that it is not a beneficiary, and thus not entitled to such notice.

The Court highlighted the standard MERS language in the trust deed which listed MERS as the beneficiary “solely as nominee for the Lender and assigns” and that “MERS is a separate corporation that is acting as nominee for the Lender and Lender’s assigns”, and further that MERS holds only legal title. The first important conclusion reached by the Court was that under the statutory definition of “beneficiary” of the Oregon Trust Deed Act that the lender (and not MERS) is the “person for whose benefit” the deed of trust was given. This vitiates and should render null the recent arguments made by counsel for foreclosing parties that “because the Deed of Trust says MERS is the beneficiary that MERS is thus the beneficiary”. In other words, just because MERS says so does not mean it is so.

The Court then went on to cite the definition of a “nominee” as cited by the Arkansas Supreme Court in the MERS v. Southwest Homes of Arkansas, Inc. case, and what MERS is and does as found by the Nebraska Supreme Court in the MERS v. Nebraska Dept. of Banking case.

The Court concluded that the relationship of MERS to the lender was “more akin to a straw man than to a party possessing all the rights given to a buyer” , citing the quotation from the Landmark v. Kesler case from the Supreme Court of Kansas, and ultimately concluded that “It is apparent that the listing of MERS as a beneficiary in the deed of trust is merely to facilitate its ownership tracking function. It is not in any real sense of the word, particularly defined in ORS 86.705(1), the beneficiary of the trust deed.” 

As such, the Oregon Federal Court has joined the ever-growing ranks of those courts which have truly examined the inconsistent claims and self-appointed titles of MERS in Deeds of Trust and has concluded, as have the state courts of Kansas, Nebraksa, Arkansas and others and the Bankruptcy Court of Nevada, that MERS is not, never was, and cannot be a “beneficiary”. Thus, as MERS is not a “beneficiary” by statute, every purported assignment of a Deed of Trust or Substitution of Trustee in Oregon by MERS claiming to be the “nominee” or “beneficiary” is now suspect and should be challenged based on the holding of this extremely important and well-reasoned decision.

Jeff Barnes, Esq., www.ForeclosureDefenseNationwide.com