An appellate court in Oregon mirrored other courts by holding that parties subject to foreclosure cannot sue the Mortgage Electronic Registration Systems after a foreclosure is filed just because the note and 'deed of trust' are split apart.

The Oregon Court of Appeals issued that decision in Hunt v. Aurora Loan Services and by doing so carried on what has been a favorable ruling for MERS in some cases where plaintiffs sue the real estate registry using the split-the-note legal theory. The legal theory is one in which a plaintiff suggests a MERS' assignment of the 'deed of trust' split the note from the actual deed of trust, making it illegal for the final lender to eventually foreclose.

However, in Hunt, the court held that the plaintiff "has not alleged that the circumstances required by (Oregon law) to non-judicially foreclose a trust deed have not been met and plaintiff has not pointed to any provision of the non-judicial trust deed foreclosure statutes that requires the presentation of documents, including the note, to the debtor as a prerequisite of proceeding non-judicially."

"The Court of Appeals’ affirmation of the lower court’s decision is consistent with the ruling in Niday v. GMAC Mortgage LLC because the Niday decision did not invalidate deeds of trust that identify MERS as beneficiary," MERSCORP, the parent of MERS, said in a statement.

The citation of this case is interesting since Niday, itself, was not a favorable case for MERS.

In fact, it’s on appeal to the Oregon Supreme Court after an appellate court decision in Niday limited the meaning of a "beneficiary of a mortgage contract" to an agent or person who is owed repayment on a loan. Under this theory, MERS  -- unless remaining in a situation where it’s officially owed the debt  -- has no authority to assign foreclosure rights to a lender.

The Niday decision, which was rough on financial firms dependent on MERS in Oregon, now remains the subject of a controversial appeal to the state's highest court.