Big Banks are Trying to Buy Off Politicians after Mers Ruling by the O.C.C.

Bankers Trying To Buy Oregon Politicians After Judge Rules Against MERS
May 29, 2011 // by Steve Dibert // Mortgage News // No Comments
Brent Hunsberger, The Oregonian

The foreclosure fight in Oregon jumped to a new level this week after a federal judge in Medford rebuked the industry’s sloppy practices in blocking the seizure of a Jacksonville home, and mortgage issuers turned to the Legislature to find a quick fix to the legal quagmire.

U.S. District Judge Owen Panner questioned whether big banks should be allowed to foreclose without court supervision — as required in 23 states but not Oregon, where one in every 500 homes is in foreclosure, according to Realty Trac Inc. That’s compared with one out of 600 nationwide.

Panner specifically warned of problems in cases involving the Mortgage Electronic Registration System. MERS was set up by the banking industry to rapidly package and sell mortgages as securities without recording each sale in county recorder offices.

The “MERS system raises serious concerns regarding the appropriateness and validity of foreclosure by advertisement and sale outside of any judicial proceeding,” he said Wednesday in a 16-page ruling.

“Given the numerous problems I see in nearly every non-judicial foreclosure case I preside over, a procedure relying on a bank or trustee to self-assess its own authority to foreclose is deeply troubling to me,” he wrote.

Since October, federal judges in six separate Oregon cases have halted foreclosures involving MERS, saying its participation caused lenders to violate the state’s recording law. At least one federal judge has ruled in favor of MERS, industry lobbyists said.

Today, the mortgage and banking industry turned to the Oregon Legislature for help. The House Judiciary Committee entertained a last-minute amendment to an affordable housing bill that would rid the recording requirements holding up MERS foreclosures. Lobbyists for banks, credit unions and title companies said the amendments were needed to lift a cloud over thousands of Oregon homes.

“It’s created a significant issue for the title industry, certainly, and, among others, the people who own these homes,” said Alan Brickley, an attorney for First American Title Insurance Co. in Portland. The Northwest Credit Union Association and Oregon Financial Services Associationalso testified in favor of the amendment.

The amendment was proposed to Senate Bill 519, which is designed to protect affordable housing financing in foreclosures. Its introduction sent the bill’s co-sponsor, Sen. Suzanne Bonamici, D-Beaverton, and a deputy of Oregon Attorney General John Kroger scrambling to defend the state’s existing recording law.

Committee co-chair Wayne Krieger, R-Gold Beach, postponed action on the amendment until Tuesday.

“It’s a gut and stuff and will emasculate the recording requirements,” said Phil Querin, a real-estate attorney in Portland. “It should be strongly opposed.”