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Hucke v. BAC Home Loans Servicing, L.P.

Court of Appeals of Oregon

July 1, 2015

Scott M. HUCKE, Plaintiff-Respondent,
v.
BAC HOME LOANS SERVICING, L.P.; Recontrust Company, N.A.; and IBM Lender Business Process Services, Defendants, and FEDERAL NATIONAL MORTGAGE ASSOCIATION; and Mortgage Electronic Registration Systems, Inc., Defendants-Appellants

Argued and Submitted August 5, 2014

Page 155

Multnomah County Circuit Court 110709486. Leslie M. Roberts, Judge.

John M. Thomas argued the cause for appellants. With him on the briefs was RCO Legal, P.S.

Jeffrey A. Myers argued the cause and filed the brief for respondent.

Before Sercombe, Presiding Judge, and Hadlock, Judge, and Tookey, Judge.[*]

OPINION

Page 156

[272 Or.App. 96] SERCOMBE, P. J.

Plaintiff brought this action against defendants, Federal National Mortgage Association (Fannie Mae) and Mortgage Electronic Registration Systems, Inc. (MERS), alleging that they failed to comply with the Oregon Trust Deed Act (OTDA)[1] when they participated in the nonjudicial foreclosure of a trust deed through which plaintiff held an interest in property. Among other things, plaintiff claimed that, when the original trust deed beneficiary assigned its interest to Fannie Mae by delivering the underlying promissory note to Fannie Mae, Fannie Mae failed to satisfy a condition for nonjudicial foreclosure in former ORS 86.735(1) (2011), renumbered as ORS 86.752(1) (2013)--that " any assignments of the trust deed by the * * * beneficiary * * * [be] recorded." After a bench trial, the trial court agreed, relying on our decision in Niday v. GMAC Mortgage, LLC, 251 Or.App. 278, 284 P.3d 1157 (2012), and, accordingly, declared the nonjudicial foreclosure sale void, reinstated the trust deed and promissory note, restored the parties to the status quo ante that existed prior to the sale, and awarded plaintiff attorney fees and costs.

Defendants appeal and, along with several other assignments of error, initially argue that the trial court should have dismissed plaintiff's claims before trial because they became moot when Fannie Mae recorded a correction of errors deed under ORS 86.722(1), which, in defendants' view, had the effect of unwinding the foreclosure sale and restoring plaintiff's interest under the trust deed. Defendants further argue that the trial court's decision is wrong on the merits under the Supreme Court's recent decisions in Niday v. GMAC Mortgage, LLC, 353 Or. 648, 661, 302 P.3d 444 (2013), and Brandrup v. ReconTrust Co., 353 Or. 668, 699, 303 P.3d 301 (2013), which explained that former ORS 86.735(1) does not require that assignments resulting from the transfer of a promissory note be recorded before a nonjudicial foreclosure can proceed. As explained below, we reject defendants' arguments that plaintiff's claims should [272 Or.App. 97] have been dismissed as moot, but we agree with defendants that the trial court's ruling in plaintiff's favor was error under Niday and Brandrup and reverse and remand the trial court's judgment on that basis.

The facts are undisputed. In August 2007, plaintiff obtained a loan from GreenPoint Mortgage Funding, Inc. (GreenPoint), evidenced by a note. As security for repayment of the note, plaintiff pledged real property in Portland, Oregon. The trust deed securing the loan to the property named plaintiff as borrower, GreenPoint as lender, and Fidelity National Title Company (Fidelity) as trustee. MERS was identified as " a separate corporation that is acting solely as a nominee for Lender and Lender's successors and assigns" and as " the beneficiary under this Security Instrument." (Emphasis omitted.) The trust deed was recorded in the public records of Multnomah County.

GreenPoint later sold the loan to Fannie Mae (by endorsing the note in blank and delivering it to Fannie Mae), and Fannie Mae became the note holder.

In January 2011, MERS executed an assignment of the trust deed to Fannie Mae, which was recorded in Multnomah County, and Fannie Mae appointed ReconTrust as successor trustee by recorded document. That same month, ReconTrust recorded a notice of default and election to sell, stating that, in February 2010, plaintiff had stopped making monthly payments on the note, violating the terms of the trust deed.

In July 2011, ReconTrust recorded a trustee's notice of sale, along with other notices. The notice of sale referred to " that certain Trust Deed made by [plaintiff], as grantor[ ], to [Fidelity], as Trustee, in favor of [MERS], as Beneficiary," and listed details of the trust deed's recording. The notice explained that " the words 'Trustee' and 'Beneficiary' include

Page 157

their respective successors in interest, if any." Elsewhere in the notice of sale, ReconTrust is identified as the Trustee; the notice does not identify any beneficiary other than MERS.

In July 2011, ReconTrust sold the property at a nonjudicial foreclosure sale. The highest bidder at the auction was Fannie Mae, and ReconTrust executed a trustee's [272 Or.App. 98] deed to Fannie Mae that same day. The trustee's deed was recorded a few days later.

Plaintiff filed this action against defendants.[2] He sought a declaratory judgment that the completed foreclosure sale was invalid because (1) MERS was not a " beneficiary" under ORS 86.705,[3] and thus did not have the power to assign the deed of trust to Fannie Mae in the capacity of either a beneficiary or an agent for the beneficiary; and (2) all assignments of the deed of trust had not been recorded as required by former ORS 86.735.

In August 2012, about a month before trial, Fannie Mae recorded a correction of errors deed (the correction deed), which provided:

" CORRECTION OF ERROR(S)
" IN THE DEED AND MORTGAGE RECORDS
" RELATING TO A TRUST DEED
" (ORS 86.705 to 86.795)
" This instrument is recorded to provide notice of an error relating to:
" Original Deed of Trust
" County clerk instrument record #: 2007-154995
" Grantor: [plaintiff]
" Trustee: [Fidelity]
" Successor Trustee: [ReconTrust], [address], Instrument No. 2011-013283
" Beneficiary: [MERS], [address]
" Assignee: [Fannie Mae], [address], Instrument No. 2011-013282
[272 Or.App. 99] " The error to be corrected is (check one):
" ☐ Erroneous reconveyance of trust deed
" Date of recording:
" County clerk instrument record #:
" ☒ Erroneous recording of Trustee's Deed
" Date of recording: July 26, 2011
" County clerk instrument record #: ...

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