Federal Issues
CFPB Seeks Comment on Rules It Will Enforce. The Consumer Financial Protection Bureau published a list of the regulations that it will enforce when it assumes enforcement authority under the Dodd-Frank Act on July 21. The CFPB notes that its enforcement authority is defined by Dodd-Frank and other applicable law and, accordingly, the list will not have any substantive effect but "will merely provide a convenient reference source." It also notes that neither the transferor agencies nor the CFPB have identified any orders for inclusion in the list. Comments on the list are due by June 30, 2011, and the CFPB expects to publish a final list no later than the designated transfer date of July 21. The CFPB’s Federal Register notice is available at http://www.gpo.gov/fdsys/pkg/FR-2011-05-31/pdf/2011-13256.pdf.
Federal Reserve Issues Correction to Regulation Z Final Rule Issued on April 25, 2011. On May 31, the Federal Reserve issued a correction to the final rule published in the Federal Register of April 25, 2011. The final rule amends Regulation Z, which implements the Truth in Lending Act, in order to clarify certain aspects of the rules that implement the Credit Card Accountability Responsibility and Disclosure Act of 2009. The correction clarifies that the requirement that a cosigner, guarantor, or joint accountholder must agree to assume liability for a credit line increase on an account involving individuals younger than 21 years old does not apply when the individual initiating the request for the increase is the cosigner, guarantor, or joint accountholder who is at least 21 years old. Additionally, the correction clarifies the procedures related to decreasing rates, fees and charges pursuant to the Servicemember Civil Relief Act. Click here for a copy of the Federal Register containing the correction.
SEC Adopts Final Whistleblower Compensation Rules. On May 25, the Securities and Exchange Commission (SEC) adopted final rules to implement Section 922 of the Dodd-Frank Act, which created an expanded whistleblower program for individuals who alert the SEC to violations of the securities laws. The final rules provide for an award to a whistleblower of 10-30% of the value of settlements or judgments obtained by the SEC that result in total monetary sanctions of over $1 million. Eligible individuals must voluntarily provide original information to the SEC leading to a successful SEC enforcement action. Whistleblowers may also receive a percentage of settlements or judgments obtained by other agencies in certain circumstances. With limited exceptions, individuals such as internal corporate compliance and audit officials, attorneys, and individuals who directed, planned, or initiated the violations, are prohibited from receiving whistleblower awards. Responding to numerous comments submitted regarding the proposed rules, the SEC strengthened the incentives for employees to report violations through internal compliance programs, but refused to require that violations first be reported internally before reporting to the SEC. Prior to the Dodd-Frank Act, SEC whistleblower awards were capped at 10% and limited to insider trading cases. The rules become effective 60 days after publication in the Federal Register or submission to Congress. Click here for a copy of the SEC’s press release and fact sheet; click here for a copy of the final rule.
FDIC Encourages Electronic Filing. On May 31, the FDIC released a Financial Institution Letter (FIL-40-2011), which encourages FDIC-supervised banks and associated parties to use an electronic filing system for Securities Exchange Act filings and submit periodic reports, proxy materials, other securities disclosure documents, and related correspondence to the FDIC. The Letter notes that publicly-available securities disclosure documents filed electronically will generally be immediately accessible on the FDIC’s Web site. The Letter also notes that use of the electronic filing system is currently voluntary and that the transition period allows publicly-owned FDIC-supervised banks to familiarize themselves with the system and offer comments on it before the FDIC requires electronic filing for all securities disclosure filings, which will not occur before 2012. According to the FDIC, electronic filing will provide banks with more time to prepare reports that have short deadlines for receipt by the FDIC and it will enhance public access to Exchange Act disclosures submitted to the FDIC. A copy of FIL-40-2011 is available at http://www.fdic.gov/news/news/financial/2011/fil11040.pdf.
Freddie Mac Extends Relief to Storm Victims. On May 31, Freddie Mac announced a menu of relief policies in response to the recent outbreak of violent storms in the Midwest. Freddie Mac gave its loan servicers discretion to suspend mortgage payments, foreclosure proceedings, or eviction proceedings for up to twelve months, waive late fees or other penalties, and not report forbearance or delinquencies. Borrowers in homes owned or guaranteed by Freddie Mac that are located in counties that have been declared Major Disaster Areas are eligible for relief under the plan. For a copy of the announcement, please see http://freddiemac.mediaroom.com/index.php?s=12329&item=40467.
State Issues
State Regulators Reach Multistate Agreement with Mortgage Banking Firm. On June 1, the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) announced a 10-state settlement regarding certain alleged loan originator licensing practices of Mortgage Access Corporation (MAC), dba Weichert Financial Services, a mortgage banking company affiliated with Weichert Realtors. MAC denied any wrongdoing, but voluntarily agreed to a $3 settlement. The settlement follows an examination conducted under the protocols of the Multi-State Mortgage Committee. The states that participated in the examination and consent order are Connecticut, Kentucky, Louisiana, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont and Virginia. For a copy of the announcement, final consent agreement and order, please click here.
Florida Creates Separate Licensing for In-House Loan Processors in lieu of Licensing as Mortgage Loan Originators. On May 31, the Florida governor signed into law a bill that amends provisions of Florida’s mortgage licensing law to provide for and require the separate licensing of in-house mortgage loan processors and to revise other control person requirements and reporting requirements for mortgage lenders. Effective July 1, 2011, any individual who is an employee of a mortgage broker or a mortgage lender and who either receives, collects, distributes, and analyzes information for processing a mortgage loan or communicates with consumers to obtain information necessary to process a mortgage loan (not including offering or negotiating or counseling consumers about mortgage loan rates or terms), must be licensed as a mortgage loan processor, not as a mortgage loan originator. The amendments specify that an individual may not act as an in-house mortgage loan processor unless such individual is employed exclusively by a single mortgage broker or mortgage lender and further provides that the associated mortgage broker or mortgage lender is subject to disciplinary acts for violations of its in-house loan processors. The bill additionally requires mortgage lenders to submit reports of the condition to the NMLS registry and to authorize the NMLS registry to obtain a credit report for each of the mortgage lender’s control persons in order to renew a mortgage lender license. For a copy of the enrolled amendments, please see http://www.flsenate.gov/Session/Bill/2011/1316/BillText/er/PDF.
Tennessee Adds Exemptions to Licensing Requirement for Mortgage Lenders, Brokers, and Servicers. Effective May 20, Tennessee added additional exemptions to the requirement that any person acting as a mortgage lender, mortgage loan broker, or mortgage loan servicer in Tennessee must first obtain a license under the Tennessee Residential Lending, Brokerage and Servicing Act. Act of May 2, 2011, Tenn. Pub. Ch. No. 228 (amending Tenn. Code Ann. § 45-13-201). The new exemptions include any person who, (i) as a seller, receives or makes five or fewer residential mortgage loans in any consecutive twelve-month period, (ii) engages solely in commercial real estate lending, (iii) makes a mortgage loan to an employee as an employment benefit, incentive, or relocation package, (iv) performs an act related to a mortgage loan pursuant to court order, (v) performs only real estate brokerage activities and is licensed pursuant to the Tennessee Real Estate Broker License Act of 1972, or (vi) performs land title insurance services related to a closing of a sale transaction. The exemptions do not apply to a person acting as a mortgage loan originator if the United States Department of Housing and Urban Development has determined that licensure as a mortgage loan originator is required under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), 12 U.S.C. § 5101, et seq. For a copy of the Tennessee law, please see http://state.tn.us/sos/acts/107/pub/pc0228.pdf.
Vermont Adds Individual Licensing Requirement for Loan Modification Activities. The Vermont Legislature recently amended the Vermont Licensed Lender Act, Vt. Stat. Ann. tit. 8, § 2201, to require loan modification employees of mortgage loan servicing companies to obtain individual mortgage loan originator licenses to continue their loan modification efforts for loans serviced by the loan servicing company. The statute defines "loan modification" as an adjustment or compromise of an existing residential mortgage loan and excludes a refinancing transaction. This provision takes effect on July 1, 2011. For a copy of the legislation, please see http://www.leg.state.vt.us/docs/2012/Acts/ACT021.pdf.
Maine Amends Mortgage Release Statutes, Requires Delivery of Original Release to Mortgagor. On May 16, the governor of Maine signed House Bill 748, which amended Maine’s statutes regarding the release of a mortgage. The legislation added a provision requiring that, within 30 days after receiving the recorded release of the mortgage from the registry of deeds, the mortgagee must send the release by first class mail to the mortgagor. The legislation also provides that, if the release is not sent by first class mail to the mortgagor within 30 days, the mortgagee will be liable to an aggrieved party for damages equal to exemplary damages of $500. In addition to recording fees, the mortgagee may charge the mortgagor for any postage fees incurred in sending the release to the mortgagor. The legislation will be effective 90 days after the adjournment of the legislature, which is scheduled for June 15. For a copy of the legislation, see http://www.mainelegislature.org/legis/bills/bills_125th/chappdfs/PUBLIC146.pdf.
Texas Adds Statutes Regarding Scope and Validity of Corrected Instruments. On May 28, the governor of Texas signed Senate Bill 1496, which added new sections regarding instruments that correct recorded original instruments to the Texas statutes. These new provisions provide that a correction instrument may correct an ambiguity or error in a recorded original instrument of conveyance to transfer real property or an interest in real property, including an ambiguity or error that relates to the description of or extent of the interest conveyed. The legislation states that a correction instrument may make nonmaterial corrections, such as corrections to legal descriptions, names, dates, or facts relating to the acknowledgment or authentication, but the person executing the document must disclose in the instrument the basis for the person’s personal knowledge of the facts relevant to the correction of the recorded original instrument of conveyance. A correction instrument may also make material corrections, such as adding a buyer’s disclaimer, a mortgagee’s consent or subordination, or additional land; removing land from a conveyance; or accurately identifying a lot or unit number that was inaccurately identified in the recorded original instrument of conveyance. While this legislation is slated to be effective September 1, 2011, a correction instrument that substantially complies with the statutory provisions recorded before that date will be given effect. For a copy of the legislation, see http://bit.ly/n0TYQw.
Courts
U.S. District Court Rules Non-Judicial Foreclosure of MERS Mortgage Violated Oregon Trust Deed Act. Judge Panner, ruling for the U.S. District Court for the District of Oregon, granted the plaintiff’s request for a declaratory judgment that the defendants violated the Oregon Trust Deed Act, ORS 86.735(1), in pursuing non-judicial foreclosure of their loan without recording all assignments of the trust deed. Hooker v. Northwest Trustee Services, Inc., Civ. No. 10-3111-PA (D. Or. May 25, 2011). In this case, the plaintiffs had obtained a loan from GN Mortgage, LLC in 2005. At that time, a trust deed was recorded naming the Mortgage Electronic Registration Systems, Inc. (MERS) as the beneficiary, "solely as nominee for Lender and Lender’s successors and assigns." The note was subsequently assigned several times, and MERS tracked the new lenders in its system. No assignments of the deed of trust were recorded. When the plaintiffs defaulted on their loan in 2009, MERS assigned the deed of trust to Bank of America and appointed Northwest Trustee Services as successor trustee, and Northwest executed a notice of default and election to sell. The assignment of the trust deed, appointment of successor trustee, and notice default were then recorded. After the plaintiffs filed suit, the defendants attempted to correct the documents by having the current lender appoint the trustee, and new documents were recorded. However, the court ordered the defendants to submit a complete chain of title. The MERS records submitted by the defendants indicated a chain of title beginning with Guaranty Bank, with no indication of how Guaranty Bank obtained the loan from GN Mortgage. The court noted that under Oregon law, only the beneficiary of the deed of trust may invoke the power of sale, not merely a nominee for the lender. GN Mortgage (or its successor in interest), as the lender of record, was the beneficiary of the trust deed. The court then noted that under Oregon law, a trustee could invoke the power of sale only if "any assignments of the trust deed by the trustee or the beneficiary ... are recorded in the mortgage records." The court held that tracking the successive assignments of the deed of trust by MERS was insufficient to protect the interests of the homeowner and violates the Oregon Trust Deed Act, because the assignments of the trust deed were not recorded as required by law. Click here for a copy of the opinion.
Firm News
James Parkinson will be speaking on the Foreign Corrupt Practices Act at two International Bar Association training sessions as part of the IBA’s "Anti-Corruption Strategy for the Legal Profession." The first will be in Seoul, Korea on June 3, and the second in Tokyo, Japan, on June 6.
Kirk Jensen will be the featured speaker on SCRA Developments at the Women in Housing and Finance luncheon on June 8.
Andrew Sandler will be speaking at the ABA Regulatory Compliance Conference on Sunday, June 12and Monday, June 13, in Washington, DC. Mr. Sandler’s panels will focus on Fair Lending Hot Topics.
Andrew Sandler will be speaking at CBA Live 2011 and presenting an Annual Fair Lending Report on Tuesday, June 14, at 3:30 pm in Orlando, Florida. Mr. Sandler will be giving an overview of current regulatory and enforcement developments and discussing the most significant fair lending risks confronting consumer lenders in the next twelve months.
James Parkinson will be speaking at the ACI’s "FCPA Compliance in Emerging Markets" program in Washington, D.C., on June 15-16.
Kirk Jensen will be speaking on Litigation Developments at the AFSA State Government Affairs & Legal Issues Forum on June 22.
Jonice Gray Tucker will moderate a panel on Fair Servicing Analysis at the 6th Annual Strategic Markets and Diversity Conference on June 23 in Arlington, Virginia.
Andrew Sandler will be participating on a panel at the Florida Bar Annual Convention on Friday, June 24 as part of the "Presidential Showcase". On the panel with Mr. Sandler is Paul Bland, Public Justice. The Moderator is Justice R. Fred Lewis, a Justice of the Florida Supreme Court, a former Chief Justice and founder of Justice Teaching.
Andrew Sandler and Jonice Gray Tucker will speak at an American Bar Association webinar on mortgage servicing issues on July 21 at 1 pm. The program entitled, "Mortgage Servicing Under Fire: Regulatory, Litigation, and Enforcement Trends Stemming from the Foreclosure Crisis and More" will also feature Terry Goddard, the former Arizona Attorney General, as a speaker.
Andrew Sandler will be teaching the Litigation Strategy Session: Developing Strong Protocols, Admissible Documentation & Comprehensive Strategies in Order to Survive Regulatory Enforcement Actions & Litigation Workshop on Tuesday, July 26, in Chicago. This workshop precedes ACI’s Consumer Finance Class Actions & Litigation Conference taking place July 27-28 at the Sutton Place Hotel, Chicago, IL.
Jonice Gray Tucker will be moderating a panel focusing on Regulatory and Litigation Developments in Servicing at the California Mortgage Bankers’ Servicing Conference on August 29 in Las Vegas.
Firm Publications
David Krakoff, James Parkinson, and Bradley Marcus authored FCPA: Recent Enforcement Activity Sounds Warning for Financial Services Industry, which was published in the Business Crimes Bulletin on June 1.
Kirk Jensen and Jeffrey Naimon conducted a podcast on the Servicemembers Civil Relief Act on May 26.
Jonice Gray Tucker, Thomas Dowell, and Lauren Randell authored Robo-Signing Revisited: Is the Foreclosure Documentation Crisis Spreading to Bankruptcy Courts?, which was published by Thomson Reuters on May 23.
Mortgages
Freddie Mac Extends Relief to Storm Victims. On May 31, Freddie Mac announced a menu of relief policies in response to the recent outbreak of violent storms in the Midwest. Freddie Mac gave its loan servicers discretion to suspend mortgage payments, foreclosure proceedings, or eviction proceedings for up to twelve months, waive late fees or other penalties, and not report forbearance or delinquencies. Borrowers in homes owned or guaranteed by Freddie Mac that are located in counties that have been declared Major Disaster Areas are eligible for relief under the plan. For a copy of the announcement, please see http://freddiemac.mediaroom.com/index.php?s=12329&item=40467.
State Regulators Reach Multistate Agreement with Mortgage Banking Firm. On June 1, the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) announced a 10-state settlement regarding certain alleged loan originator licensing practices of Mortgage Access Corporation (MAC), dba Weichert Financial Services, a mortgage banking company affiliated with Weichert Realtors. MAC denied any wrongdoing, but voluntarily agreed to a $3 settlement. The settlement follows an examination conducted under the protocols of the Multi-State Mortgage Committee. The states that participated in the examination and consent order are Connecticut, Kentucky, Louisiana, Massachusetts, New Jersey, New York, North Carolina, Pennsylvania, Vermont and Virginia. For a copy of the announcement, final consent agreement and order, please click here.
Florida Creates Separate Licensing for In-House Loan Processors in lieu of Licensing as Mortgage Loan Originators. On May 31, the Florida governor signed into law a bill that amends provisions of Florida’s mortgage licensing law to provide for and require the separate licensing of in-house mortgage loan processors and to revise other control person requirements and reporting requirements for mortgage lenders. Effective July 1, 2011, any individual who is an employee of a mortgage broker or a mortgage lender and who either receives, collects, distributes, and analyzes information for processing a mortgage loan or communicates with consumers to obtain information necessary to process a mortgage loan (not including offering or negotiating or counseling consumers about mortgage loan rates or terms), must be licensed as a mortgage loan processor, not as a mortgage loan originator. The amendments specify that an individual may not act as an in-house mortgage loan processor unless such individual is employed exclusively by a single mortgage broker or mortgage lender and further provides that the associated mortgage broker or mortgage lender is subject to disciplinary acts for violations of its in-house loan processors. The bill additionally requires mortgage lenders to submit reports of the condition to the NMLS registry and to authorize the NMLS registry to obtain a credit report for each of the mortgage lender’s control persons in order to renew a mortgage lender license. For a copy of the enrolled amendments, please see http://www.flsenate.gov/Session/Bill/2011/1316/BillText/er/PDF.
Tennessee Adds Exemptions to Licensing Requirement for Mortgage Lenders, Brokers, and Servicers. Effective May 20, Tennessee added additional exemptions to the requirement that any person acting as a mortgage lender, mortgage loan broker, or mortgage loan servicer in Tennessee must first obtain a license under the Tennessee Residential Lending, Brokerage and Servicing Act. Act of May 2, 2011, Tenn. Pub. Ch. No. 228 (amending Tenn. Code Ann. § 45-13-201). The new exemptions include any person who, (i) as a seller, receives or makes five or fewer residential mortgage loans in any consecutive twelve-month period, (ii) engages solely in commercial real estate lending, (iii) makes a mortgage loan to an employee as an employment benefit, incentive, or relocation package, (iv) performs an act related to a mortgage loan pursuant to court order, (v) performs only real estate brokerage activities and is licensed pursuant to the Tennessee Real Estate Broker License Act of 1972, or (vi) performs land title insurance services related to a closing of a sale transaction. The exemptions do not apply to a person acting as a mortgage loan originator if the United States Department of Housing and Urban Development has determined that licensure as a mortgage loan originator is required under the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act), 12 U.S.C. § 5101, et seq. For a copy of the Tennessee law, please see http://state.tn.us/sos/acts/107/pub/pc0228.pdf.
Vermont Adds Individual Licensing Requirement for Loan Modification Activities. The Vermont Legislature recently amended the Vermont Licensed Lender Act, Vt. Stat. Ann. tit. 8, § 2201, to require loan modification employees of mortgage loan servicing companies to obtain individual mortgage loan originator licenses to continue their loan modification efforts for loans serviced by the loan servicing company. The statute defines "loan modification" as an adjustment or compromise of an existing residential mortgage loan and excludes a refinancing transaction. This provision takes effect on July 1, 2011. For a copy of the legislation, please see http://www.leg.state.vt.us/docs/2012/Acts/ACT021.pdf.
Maine Amends Mortgage Release Statutes, Requires Delivery of Original Release to Mortgagor. On May 16, the governor of Maine signed House Bill 748, which amended Maine’s statutes regarding the release of a mortgage. The legislation added a provision requiring that, within 30 days after receiving the recorded release of the mortgage from the registry of deeds, the mortgagee must send the release by first class mail to the mortgagor. The legislation also provides that, if the release is not sent by first class mail to the mortgagor within 30 days, the mortgagee will be liable to an aggrieved party for damages equal to exemplary damages of $500. In addition to recording fees, the mortgagee may charge the mortgagor for any postage fees incurred in sending the release to the mortgagor. The legislation will be effective 90 days after the adjournment of the legislature, which is scheduled for June 15. For a copy of the legislation, see http://www.mainelegislature.org/legis/bills/bills_125th/chappdfs/PUBLIC146.pdf.
Banking
FDIC Encourages Electronic Filing. On May 31, the FDIC released a Financial Institution Letter (FIL-40-2011), which encourages FDIC-supervised banks and associated parties to use an electronic filing system for Securities Exchange Act filings and submit periodic reports, proxy materials, other securities disclosure documents, and related correspondence to the FDIC. The Letter notes that publicly-available securities disclosure documents filed electronically will generally be immediately accessible on the FDIC’s Web site. The Letter also notes that use of the electronic filing system is currently voluntary and that the transition period allows publicly-owned FDIC-supervised banks to familiarize themselves with the system and offer comments on it before the FDIC requires electronic filing for all securities disclosure filings, which will not occur before 2012. According to the FDIC, electronic filing will provide banks with more time to prepare reports that have short deadlines for receipt by the FDIC and it will enhance public access to Exchange Act disclosures submitted to the FDIC. A copy of FIL-40-2011 is available at http://www.fdic.gov/news/news/financial/2011/fil11040.pdf.
Consumer Finance
Federal Reserve Issues Correction to Regulation Z Final Rule Issued on April 25, 2011. On May 31, the Federal Reserve issued a correction to the final rule published in the Federal Register of April 25, 2011. The final rule amends Regulation Z, which implements the Truth in Lending Act, in order to clarify certain aspects of the rules that implement the Credit Card Accountability Responsibility and Disclosure Act of 2009. The correction clarifies that the requirement that a cosigner, guarantor, or joint accountholder must agree to assume liability for a credit line increase on an account involving individuals younger than 21 years old does not apply when the individual initiating the request for the increase is the cosigner, guarantor, or joint accountholder who is at least 21 years old. Additionally, the correction clarifies the procedures related to decreasing rates, fees and charges pursuant to the Servicemember Civil Relief Act. Click here for a copy of the Federal Register containing the correction.
Securities
SEC Adopts Final Whistleblower Compensation Rules. On May 25, the Securities and Exchange Commission (SEC) adopted final rules to implement Section 922 of the Dodd-Frank Act, which created an expanded whistleblower program for individuals who alert the SEC to violations of the securities laws. The final rules provide for an award to a whistleblower of 10-30% of the value of settlements or judgments obtained by the SEC that result in total monetary sanctions of over $1 million. Eligible individuals must voluntarily provide original information to the SEC leading to a successful SEC enforcement action. Whistleblowers may also receive a percentage of settlements or judgments obtained by other agencies in certain circumstances. With limited exceptions, individuals such as internal corporate compliance and audit officials, attorneys, and individuals who directed, planned, or initiated the violations, are prohibited from receiving whistleblower awards. Responding to numerous comments submitted regarding the proposed rules, the SEC strengthened the incentives for employees to report violations through internal compliance programs, but refused to require that violations first be reported internally before reporting to the SEC. Prior to the Dodd-Frank Act, SEC whistleblower awards were capped at 10% and limited to insider trading cases. The rules become effective 60 days after publication in the Federal Register or submission to Congress. Click here for a copy of the SEC’s press release and fact sheet; click here for a copy of the final rule.
Litigation
U.S. District Court Rules Non-Judicial Foreclosure of MERS Mortgage Violated Oregon Trust Deed Act.
U.S. District Court Rules Non-Judicial Foreclosure of MERS Mortgage Violated Oregon Trust Deed Act. Judge Panner, ruling for the U.S. District Court for the District of Oregon, granted the plaintiff’s request for a declaratory judgment that the defendants violated the Oregon Trust Deed Act, ORS 86.735(1), in pursuing non-judicial foreclosure of their loan without recording all assignments of the trust deed. Hooker v. Northwest Trustee Services, Inc., Civ. No. 10-3111-PA (D. Or. May 25, 2011). In this case, the plaintiffs had obtained a loan from GN Mortgage, LLC in 2005. At that time, a trust deed was recorded naming the Mortgage Electronic Registration Systems, Inc. (MERS) as the beneficiary, "solely as nominee for Lender and Lender’s successors and assigns." The note was subsequently assigned several times, and MERS tracked the new lenders in its system. No assignments of the deed of trust were recorded. When the plaintiffs defaulted on their loan in 2009, MERS assigned the deed of trust to Bank of America and appointed Northwest Trustee Services as successor trustee, and Northwest executed a notice of default and election to sell. The assignment of the trust deed, appointment of successor trustee, and notice default were then recorded. After the plaintiffs filed suit, the defendants attempted to correct the documents by having the current lender appoint the trustee, and new documents were recorded. However, the court ordered the defendants to submit a complete chain of title. The MERS records submitted by the defendants indicated a chain of title beginning with Guaranty Bank, with no indication of how Guaranty Bank obtained the loan from GN Mortgage. The court noted that under Oregon law, only the beneficiary of the deed of trust may invoke the power of sale, not merely a nominee for the lender. GN Mortgage (or its successor in interest), as the lender of record, was the beneficiary of the trust deed. The court then noted that under Oregon law, a trustee could invoke the power of sale only if "any assignments of the trust deed by the trustee or the beneficiary ... are recorded in the mortgage records." The court held that tracking the successive assignments of the deed of trust by MERS was insufficient to protect the interests of the homeowner and violates the Oregon Trust Deed Act, because the assignments of the trust deed were not recorded as required by law. Click here for a copy of the opinion.