Oregon Federal Judge Orders F'closure Controversy Referral To State High Court For Final Resolution, Despite Objections From Obviously-Frightened MERS

In Portland, Oregon, The Oregonian reports:

• With Oregon's state and federal courts singing a variety of different tunes on the mortgage industry's controversial nationwide document-registration system, someone will finally ask the state Supreme Court to step in. If the high court gives the system a thumbs down, it could throw a wrench into thousands of pending foreclosures in Oregon and potentially upend thousands more already completed.



• An order filed this week in the U.S. District Court in Portland said that court's chief judge will certify questions for the Supreme Court. The Supreme Court has to formally accept the questions, and it has the latitude to reject or even reword them. If the seven justices do take on the issue, their decision could bring an end to a series of differing rulings on whether the industry's Mortgage Electronic Registration Systems, or MERS, meets the requirements of state law when it comes to property documentation.



• That conflicting legal history makes it likely to get the Supreme Court go-ahead, said Willamette University law professor Jeff Dobbins. "It's such a significant issue," he said. "Unless they see something in the case that makes them think it's not right, I think the betting is probably reasonable that they'll go ahead and consider the question."

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• Some courts in Oregon have upheld MERS, while others have blocked the foreclosure proceedings. The conflicting rulings have resulted in a race to the Supreme Court for a definite ruling, or a fix from the legislature.



• In the five cases the District Court has flagged for high court consideration -- like many others involving MERS -- borrowers argued that a lender can't foreclose out of court unless every change in control of the loan was recorded. The court will have to determine whether MERS qualifies as a loan beneficiary under state law and whether it has met state recording standards.



• "It has undermined the whole basis of law that our country was founded on, in establishing a chain of title," said John Bowles, a partner at the Bowles Fernandez law firm in Lake Oswego. "MERS is a privately owned mechanism, owned by the principal industry players, that have chosen to subvert the whole system of recording."



• MERS said Thursday it was still waiting to hear details of the court's order. "We do not have the specifics yet from the court, but we look forward to the opportunity to present the seven honorable justices of the Oregon Supreme Court with the ample evidence of the benefits and legality of the MERS model," spokeswoman Janis Smith said in a statement.



• Often, when a federal court decides to send questions to the state's high court, it has the agreement of both sides. In these five cases, the court moved forward with certification over the objections of MERS' representatives.



• Kelly L. Harpster, a Lake Oswego attorney who represents homeowners in other MERS cases, said it's important for the justices to let everyone know where things stand so they can move forward. "Until there is a decision from the Supreme Court, we're going to get these conflicting results," she said. If the court rules against MERS, lenders could still pursue foreclosure through the courts. But that procedure is more costly and takes longer.



• It's not clear how a ruling against MERS could affect the thousands of foreclosures that have already been completed. According to the data firm CoreLogic, some 10,000 foreclosures have been completed in Oregon in a 12-month period though last month.

Source: MERS foreclosure issue headed to Oregon Supreme Court.