The Oregon Supreme Court on Thursday cleared the way for banks to return to their preferred out-of-court method of foreclosure.
The high court found that Mortgage Electronic Registration Systems Inc., a lending industry cooperative for cataloging loan ownership, can’t foreclose on mortgages itself — as was common in the early years of the foreclosure crisis — because it’s not the beneficiary of a deed of trust.
The court did rule in favor of MERS and lenders, however, by ruling that not all transfers in ownership of a loan need to be recorded in county records before out-of-court foreclosures can proceed. With those ownership records now considered complete, foreclosures can proceed outside the court system at a lower cost to lenders.
The recording decision reverses part of a ruling by the Oregon Court of Appeals, a lower court, that had been the final word in state law until Thursday. After the appellate court issued its decision in July 2012, most lenders diverted their foreclosures into the court system to avoid possible legal challenges.