Oregon Judge Slams Brakes On F'closure Eviction; Failure To Record Mortgage Assignment Violates State Law, Allows Homeowner To Unpack Bags & Stay Put

In Columbia County, Oregon, The Oregonian reports:

• A Columbia County judge has blocked U.S. Bank from evicting a Vernonia woman whose home it purchased in foreclosure, concluding in a case with far-reaching implications that her lenders had not properly recorded mortgage documents.



• Last week's action appears to be the first in which an Oregon judge has halted an eviction and declared a foreclosure sale void after the fact. The ruling, if it stands, raises questions about the validity of other recent foreclosures in the state and could create serious problems for lenders and title companies, as well as for buyers of such properties.

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• Nearly all foreclosures in the state occur without a judge's involvement under so-called nonjudicial proceedings. But this ruling, legal observers say, could potentially divert more foreclosure actions into courtrooms, a more time-consuming and costly proposition that could exacerbate the state's housing slump. "This will certainly be problematic for lenders," said David Ambrose, a Portland real-estate attorney.



• It also casts doubt on the validity of already completed foreclosure sales in which lenders resold mortgages without recording the sales in county recorder offices. Many of those questionable transactions, [...] involve the Mortgage Electronic Recording System. MERS was created by the mortgage industry to rapidly securitize loans without recording them.



• Federal judges in Oregon have ruled that MERS-involved foreclosure actions violated state recording law. MERS also has been tied to so-called robo-signing scandals that prompted a 50-state investigation of the nation's largest loan servicers and banks.

For more, see Oregon judge voids foreclosure sale, casting doubt on others.

For the ruling, see U.S. Bank v. Flynn, Case No. 11-8011 (Columbia Cty. Cir. Ct. June 23, 2011).