United States District Court, D. Oregon, Medford Division
IAN MCLEAN, as personal representative of the estate of CHARLES Y. MCLEAN, Plaintiff,
FEDERAL NATIONAL MORTGAGE ASSOCIATION, Defendant.
OPINION & ORDER
D. CLARKE UNITED STATES MAGISTRATE JUDGE.
the Court is Plaintiffs Motion for Partial Summary Judgment
(#39) and Defendant's Motion for Summary Judgment (#41).
For the reasons set forth below, Defendant's motion is
GRANTED and Plaintiffs motion is DENIED.
2008, Charles McLean borrowed approximately $260, 000 from
Financial Freedom Senior Funding Corporation ("Financial
Freedom") pursuant to a home equity conversion mortgage
loan (more commonly referred to as a reverse mortgage). The
loan was evidenced by a promissory note that Mr. McLean
signed in favor of Financial Freedom and the Note was secured
by a Deed of Trust against his home. The Note was indorsed in
blank by Financial Freedom and the Deed of Trust was recorded
in Jackson County. The Note provided that Financial Freedom
and its successors and assigns may require immediate payment
in full of the entire amount owing upon (a) Mr. McLean's
death; (b) Mr. McLean's sale of the property; or (c) Mr.
McLean's failure to perform a loan obligation. The
reverse mortgage did not require Mr. McLean to make monthly
interest or principal payments, but Mr. McLean was obligated
to pay property taxes and maintain hazard insurance. The loan
was insured and regulated by HUD, which gives lenders and
loan servicers clear mandates when borrowers default on their
reverse mortgage loans.
two weeks after the origination of Mr. McLean's loan,
Financial Freedom sold the loan to defendant, Federal
National Mortgage Association ("Fannie Mae"), but
Financial Freedom retained the servicing rights. The sale of
the loan to Fannie Mae was never recorded. When Fannie Mae
purchased the loan, the original Note and collateral file for
the loan was deposited with the document custodian Deutsche
Bank National Trust Company ("Deutsche Bank").
Deutsche Bank retained physical custody of the Note until
October 29, 2015.
September 25, 2009, Financial Freedom recorded a document
titled "Corporate Assignment of Deed of Trust" to
Mortgage Electronic Registration System, Inc.
("MERS") as "nominee" for Financial
Freedom Acquisition LLC (the legal entity that succeeded
Financial Freedom Senior Funding Corp.). In November 2015,
MERS executed and recorded a document also titled
"Assignment of Deed of Trust" to CIT Bank.
According to various declarations submitted by Defendant,
Financial Freedom was a division of CIT Bank that handled
reverse mortgage loans, and CIT Bank serviced loans for
Fannie-Mae. CIT Bank obtained physical custody of the Note
and the collateral file for the loan on October 30, 2015 and
maintained physical possession of these documents at all
relevant times during the foreclosure. Kala Deck ¶ 7,
Ex. G at FNMA001246; Larkins Decl. ¶ 3, Ex. B at
McLean paid his property taxes and insurance from the
origination of the loan in 2008 until 2010, when he applied
for and received the right to defer his taxes under
Oregon's property tax deferral program for low-income
seniors and disabled people. However, Mr. McLean did not
recertify his eligibility for the deferral program and his
property taxes went unpaid thereafter. Additionally, Mr.
McLean failed to timely renew his hazard insurance, requiring
the loan servicer to place insurance on the property, for
which it was never reimbursed. Fannie Mae's loan
servicers first notified Mr. McLean that his loan was in
jeopardy for failure to pay property charges in July 2015.
Approximately one month later, CIT Bank sent Mr. McLean a
letter informing him that his reverse mortgage was in default
and provided options to cure. In September 2015, CIT Bank
submitted a "Due and Payable" package to HUD, as
required by regulation, and HUD called the loan due and
payable. From October 2015 to February 2016, CIT Bank and Mr.
McLean spoke on at least six separate occasions regarding his
default and his options to avoid foreclosure.
January 29, 2016, CIT Bank appointed Mr. Smith as Successor
Trustee. In March, the Successor Trustee issued and recorded
the Trustee's Notice of Sale and Notice of Default and
Election to Sell. After the issuance of the Notice of Sale,
CIT Bank informed Mr. McLean that foreclosure would be
avoided if he paid $3, 194.34 before the public auction set
for July 22, 2016. Because Mr, McLean did not cure his
default, the property was sold at the trustee's sale to
Fannie Mae as the only bidder. The Successor Trustee issued a
trustee's deed in Fannie Mae's name and it was
recorded on October 14, 2016.
McLean remained in his home after the sale was completed. In
February 2017, Fannie Mae filed a Forcible Entry and Detainer
Complaint in Jackson County Circuit Court. Mr. McLean filed
the instant action in April 2017, challenging the validity of
the foreclosure sale, and Defendant removed the action to
this Court. The parties ultimately agreed to dismiss the
state court eviction action in favor of resolving their
disputes in the instant case. Mr. McLean retained possession
of the property and lived there until his death at age 93 in
January 2018. Mr. McLean's estate, which replaced him as
plaintiff after his passing, now moves this court for partial
summary judgment on the narrow issue of whether the
foreclosure process was in violation of the Oregon Trust Deed
Act. Fannie Mae moves for summary judgment on all claims.
judgment shall be granted when the record shows that there is
no genuine dispute as to any material of fact and that the
moving party is entitled to judgment as a matter of law.
Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247 (1986). The moving party has the initial
burden of showing that no genuine issue of material fact
exists. Celotex Corp. v. Catrett, 411 U.S.
317, 323 (1986); Devereaux v. Abbey, 263 F.3d 1070,
1076 (9th Cir. 2001) (en banc). The court cannot weigh the
evidence or determine the truth but may only determine
whether there is a genuine issue of fact. Playboy
Enters., Inc. v. Welles, 279 F.3d 796, 800 (9th Cir,
2002). An issue of fact is genuine "if the evidence is
such that a reasonable jury could return a verdict for the
nonmoving party." Anderson, 477 U.S. at 248.
properly supported motion for summary judgment is made, the
burden shifts to the opposing party to set forth specific
facts showing that there is a genuine issue for trial.
Id. at 250. Conclusory allegations, unsupported by
factual material, are insufficient to defeat a motion for
summary judgment. Taylor v. List, 880 F.2d 1040,
1045 (9th Cir. 1989). Instead, the opposing party must, by
affidavit or as otherwise provided by Rule 56, designate
specific facts which show there is a genuine issue for trial.
Devereaux, 263 F.3d at 1076. In assessing whether a
party has met its burden, the court views the evidence in the
light most favorable to the non-moving party. Allen v.
City of Los Angeles, 66 F.3d 1052, 1056 (9th Cir. 1995).
moves for partial summary judgment on the issue of whether
the foreclosure of Mr. McLean's property was conducted in
compliance with the Oregon Trust Deed Act ("OTDA").
On this issue, Plaintiff claims that the trustee's sale
and resulting deed are void because (1) there was an
unrecorded assignment of the Deed of Trust in violation of
the OTDA, ORS 86.752(1), specifically the assignment from
Financial Freedom to ...