A spokesperson for the Mortgage Electronic Registration Systems expressed disappointment after the Oregon Court of Appeals held that Oregon law requires a beneficiary of a trust deed to be a party to whom "the underlying loan repayment obligation is owed."

The court's reversal of a lower judge's decision negatively effects MERS role as the foreclosing party in the Niday v. GMAC Mortgage case. However, MERS claims the decision will not impact judicial foreclosures or the "validity of mortgages or deeds of trust recorded in MERS name in Oregon." 

"The immediate impact of this decision is that MERS members will now likely have to proceed judicially with foreclosures, which will ultimately increase costs and be an added burden on the state’s court systems," said Janis Smith, vice president of communications for MERS. 

"MERS validity as beneficiary has been affirmed in 48 prior Oregon rulings, including 30 since this case was filed. We also believe that today’s contradictory ruling will cause confusion in the industry," she added.

With this decision, the court essentially threw out MERS suggestion that while working in the non-judicial foreclosure state, the registry can serve as the beneficiary of the trust deed, meeting all of the statutory requirements to foreclose on the property. 

The homeowner in the case argued on appeal that a beneficiary under the Oregon Trust Deed Act is a party that is actually owed a debt.  The appellate court agreed, saying the real beneficiary in this case is GreenPoint Mortgage Funding Inc., the actual lender. The decision essentially shot down MERS claim that it can effectively be classified as a beneficiary in the state, giving the registry true foreclosing power.

MERS intends to file an appeal with the Oregon Supreme Court.