Case Title: Niday v. GMAC Mortgage, LLC

Citation: 

Docket Number: S060655

State: oregon

Court: Oregon Supreme Court

Date: 2013-06-06T00:00:00Z

Document:
1 
 
 
Filed:  June 6, 2013 
IN THE SUPREME COURT OF THE STATE OF OREGON 
REBECCA NIDAY, 
fka Rebecca Lewis, 
 
Respondent on Review, 
 
 
 
v. 
 
GMAC MORTGAGE, LLC,  
a foreign limited liability company; 
and EXECUTIVE TRUSTEE SERVICES, INC.,  
a California corporation, 
 
Defendants-Respondents, 
 
 
and 
 
MORTGAGE ELECTRONIC REGISTRATION  
SYSTEMS, INC., 
a Delaware corporation, 
 
Petitioner on Review. 
 
(CC CV10020001; CA A147430; SC S060655) 
 
 
En Banc 
 
 
On review from the Court of Appeals.* 
 
 
Argued and submitted on January 8, 2013. 
 
 
Gregory A. Chaimov, Davis Wright Tremaine LLP, Portland, argued the cause for 
petitioner on review Mortgage Electronic Registration Systems, Inc. With him on the 
brief were Frederick B. Burnside and Kevin H. Kono. 
 
 
W. Jeffrey Barnes, pro hac vice, W. J. Barnes, PA, Beverly Hills, argued the cause 
for respondent on review.  With him on the brief was Elizabeth Lemoine, Makler 
Lemoine & Goldberg, PC, Portland. 
 
 
2 
 
Hope A. Del Carlo, Portland, filed a brief on behalf of amicus curiae Oregon Trial 
Lawyers Association. 
 
Rolf C. Moan, Assistant Attorney General, Salem, filed a brief on behalf of 
amicus curiae State of Oregon. 
 
 
BREWER, J. 
 
 
The decision of the Court of Appeals is affirmed.  The judgment of the circuit 
court is reversed, and the case is remanded to that court for further proceedings.  
 
 
Kistler, J., concurred in part and specially concurred in part and wrote an opinion 
in which Balmer, C.J. joined. 
 
 
 
*Appeal from Clackamas County Circuit Court, Henry C. Breithaupt, Judge. 251 
Or App 278, 284 P3d 1157 (2012). 
 
 
 
 
 
1 
 
 
BREWER, J. 
1 
 
 
This is the second of two cases this court decides today that is concerned 
2 
with the nonjudicial foreclosure of trust deeds under the Oregon Trust Deed Act (OTDA) 
3 
and the mortgage finance industry's practice of naming the Mortgage Electronic 
4 
Recording System, Inc., (MERS), rather than the lender, as a trust deed's "beneficiary."  
5 
In Brandrup v. ReconTrust Co., __ Or __, ___ P3d ___ (June 6, 2013), we answered 
6 
questions certified to us by a United States District Court about whether and how that 
7 
practice comports with the OTDA's nonjudicial foreclosure requirements.  In the present 
8 
case, we apply our answers in Brandrup to a dispute that comes to this court through a 
9 
petition for review of a decision of the Court of Appeals.  
10 
 
 
The underlying case is an action for declaratory and injunctive relief, 
11 
brought by a home loan borrower against MERS and other entities that were attempting 
12 
to utilize the OTDA's "advertisement and sale" procedure, ORS 86.710, to foreclose the 
13 
trust deed that secured her promise to repay.  Plaintiff argued that, although the trust deed 
14 
identified MERS as the beneficiary of the trust deed, neither MERS nor any of the other 
15 
entities involved in the foreclosure had any legal or beneficial interest in the trust deed 
16 
that would allow them to proceed under the OTDA.  The trial court granted summary 
17 
judgment to defendants, but the Court of Appeals reversed that decision, holding that a 
18 
genuine issue of material fact existed as to whether all of the requirements for nonjudicial 
19 
foreclosure set out in the OTDA had been satisfied.  Niday v. GMAC Mortgage, LLC, 251 
20 
Or App 278, 300, 284 P3d 1157 (2012).  We also conclude that a genuine issue of 
21 
material fact exists, albeit a different one than the one the Court of Appeals identified.  
22 
 
2 
I. BACKGROUND 
1 
 
 
Our analysis in this case relies heavily on our answers in Brandrup to the 
2 
federal court's certified questions, and the reader would be well-advised to review our 
3 
opinion in that case before delving into the present opinion.  Of particular importance is 
4 
the general discussion of mortgage loans and trust deeds, recordation requirements, and 
5 
the OTDA that precedes the discussion of the certified questions.  Brandrup, __ Or at __ 
6 
(slip op at 4-13).  Because that portion of the Brandrup opinion covers most of the 
7 
necessary ground, we limit the background discussion in the present case to a brief 
8 
description of MERS and its function in the home mortgage business.    
9 
 
 
MERS and its parent company, MERSCorp, were created in the 1990's in 
10 
response to a sharp increase in trading in mortgage loans that resulted from a developing 
11 
secondary market for mortgage-backed securities.  In an effort to make that market more 
12 
efficient, companies that were involved in making and trading in mortgage loans, 
13 
including the Federal National Mortgage Association (Fannie Mae) and the Federal 
14 
Home Loan Mortgage Corporation (Freddie Mac), combined to create MERS.  See, 
15 
generally, R. K. Arnold, "Yes, There is Life on MERS," 11 Prob & Prop 33, 34 (1997).   
16 
MERS operates a national electronic database, the MERS System, which privately tracks 
17 
transfers of ownership interests and servicing rights in mortgage loans among the lenders, 
18 
investors, and other companies that are its members.       
19 
 
 
The present case examines the MERS arrangement in the specific context 
20 
of the OTDA.  The OTDA allows for nonjudicial foreclosure of a particular kind of 
21 
security instrument, a trust deed.  A trust deed conveys an interest in real property -- a 
22 
 
3 
lien -- to a trustee, who holds that interest, in trust, to secure an obligation owed by the 
1 
"grantor" of the trust deed to the trust deed's "beneficiary."  ORS 86.705(2), (4), (7).  
2 
Under the OTDA, if the grantor defaults on his or her obligation to the beneficiary (by, 
3 
for example, failing to repay a loan made by the beneficiary), the trustee may foreclose 
4 
the trust deed by "advertisement and sale" of the trust property, if certain prerequisites are 
5 
satisfied.  ORS 86.710, ORS 86.735.  Among the listed prerequisites is a requirement that  
6 
"the trust deed, any assignments of the trust deed by the trustee or the 
7 
beneficiary and any appointment of a successor trustee [be] recorded in the 
8 
mortgage records in the counties in which the property described in the 
9 
deed is situated[.]"   
10 
ORS 86.735(1). 
11 
II. FACTS AND PROCEDURAL HISTORY 
12 
 
 
With that background in mind, we turn to the facts of the present case.  In 
13 
2006, plaintiff obtained a loan from Greenpoint Mortgage Funding, Inc. to finance the 
14 
purchase of a home in Clackamas County, memorializing her promise to repay the loan, 
15 
with interest, in an "adjustable rate note."  The note expressly stated that the note might 
16 
be transferred from "Lender" (Greenpoint) to a different "Note Holder."  Along with the 
17 
note, plaintiff executed a "Deed of Trust" that (1) identified MERS as the trust deed's 
18 
beneficiary, but solely as "nominee for lender"; and (2) conveyed an interest in the 
19 
property plaintiff had purchased to a named trustee, to secure the promise of repayment 
20 
memorialized in the note and other related promises.  Specifically, the trust deed 
21 
provided:   
22 
"The beneficiary of the Security Instrument is MERS (solely as nominee 
23 
for Lender and Lender's successors and assigns) and the successors and 
24 
 
4 
assigns of MERS.  This Security Instrument secures to Lender:  (i) the 
1 
repayment of the Loan, and all renewals, extensions and modifications of 
2 
the Note; and (ii) the performance of Borrower's covenants and agreements 
3 
under this security Instrument and the Note.  For this purpose, Borrower 
4 
irrevocably grants and conveys to Trustee, in trust, with power of sale [the 
5 
property plaintiff had financed], together with all the improvements now or 
6 
hereafter erected on the property * * *.  Borrower understands and agrees 
7 
that MERS holds only legal title to the interests granted by Borrower in this 
8 
Security Instrument, but, if necessary to comply with law or custom, MERS 
9 
(as nominee for Lender and Lender's successors and assigns) has the right: 
10 
to exercise any or all of those interests, including, but not limited to, the 
11 
right to foreclose and sell the property, and to take any action required of 
12 
Lender including, but not limited to, releasing and canceling this Security 
13 
Instrument."   
14 
In a separate definition section, the trust deed identified plaintiff as "Borrower," 
15 
Greenpoint as "Lender," First American Title Insurance Co. as "Trustee," and MERS as 
16 
"the beneficiary under this Security Instrument."  The trust deed provided that, although 
17 
"Borrower" would be notified in writing of any change in the entity collecting payments 
18 
due under the note, "the note or a partial interest in the note (together with this Security 
19 
Instrument) c[ould] be sold one or more times without prior notice to borrower."   
20 
 
 
The trust deed was recorded in the Clackamas County real property records 
21 
within a few days after its execution.  Shortly thereafter, plaintiff received notice that the 
22 
servicing rights to her loan had been transferred to GMAC Mortgage, LLC (GMACM).  
23 
Plaintiff thereafter made her payments to GMACM.  At some point, plaintiff allegedly 
24 
ceased to make payments. 
25 
 
 
In April 2009, plaintiff received a "Trustee's Notice of Sale" from 
26 
 
5 
Executive Trustee Services (ETS), which purported to be acting as agent for the trustee.1  
1 
The notice referred to the trust deed that plaintiff had signed and stated that, as provided 
2 
in ORS 86.735, "the beneficiary [MERS] and the trustee" had elected to sell the property 
3 
identified in the trust deed (i.e., plaintiff's home), at a specified place and time, to satisfy 
4 
the obligation secured by the trust deed.  Plaintiff wrote to ETS, demanding that the 
5 
scheduled sale be cancelled.  In her letter, plaintiff pointed out that the loan had been 
6 
originated by Greenpoint, that she had never been advised of any assignment of the trust 
7 
deed to MERS, ETS, or GMACM, that there was no record of any such assignment, and 
8 
that it thus appeared to her that the trustee's sale had been instituted by a party or parties 
9 
that had no rights in either the note or the trust deed and, therefore, had no authority to 
10 
nonjudicially foreclose.  The letter ended by demanding copies of various documents 
11 
relating to the trust deed, including documents establishing the "entire chain of title to the 
12 
Deed of Trust and note."  Plaintiff did not hear back from ETS, but the trustee's sale was 
13 
rescheduled for a later date.   
14 
 
 
Before the rescheduled sale occurred, plaintiff filed this action for 
15 
injunctive and declaratory relief, naming MERS, GMACM, and ETS as defendants.  In 
16 
her complaint, plaintiff described the events outlined above, and further alleged that  
17 
"plaintiff has never been provided with any Assignment or other document 
18 
demonstrating the transfer of the full and unencumbered interest in both the 
19 
                                              
 
1  
ETS purports to be the agent of the current trustee, LSI Title Company of 
Oregon, LLC.  The parties generally refer to ETS as the trustee and, hereinafter, for the 
sake of simplicity, we do so as well.   
 
6 
Note and the Deed of Trust from the original lender * * * to any person or 
1 
entity * * * and has no knowledge how defendant MERS or defendant ETS 
2 
ever acquired any legal rights under the Note and Deed of Trust sufficient 
3 
to institute foreclosure proceedings."   
4 
Plaintiff sought to enjoin the scheduled sale on the ground that defendants had failed to 
5 
demonstrate that they had a legal interest in the trust deed or the underlying note that 
6 
would entitle them to foreclose.  Plaintiff also sought declarations that (1) defendants did 
7 
not have the necessary legal or equitable interests in either the note or the deed of trust to 
8 
institute a foreclosure under the OTDA; (2) there had been no lawful assignment of the 
9 
deed of trust "from the original lender to any of the defendants;" and (3) defendant's 
10 
attempt to foreclose by advertisement and sale was "legally defective and precluded from 
11 
enforcement." 
12 
 
 
Defendants filed a motion for summary judgment, asserting it was 
13 
"indisputable" that plaintiff had defaulted on her loan and that ETS and GMACM were 
14 
proper parties to initiate the foreclosure.  With respect to the latter point, defendants 
15 
asserted that MERS was "the beneficiary of the Deed of Trust, as nominee of the original 
16 
lender's assignee, Aurora Bank"; that ETS was the agent of the "duly appointed 
17 
successor" to the original trustee; and that GMACM received the right to "service" the 
18 
loan from the original lender and, under its servicing agreement with the new owner of 
19 
the loan, Aurora Bank, 2 GMACM was authorized to initiate foreclosure on Aurora 
20 
                                              
 
2  
Aurora Bank, the reputed owner of the note, is not a party to this action.   
 
7 
Bank's behalf.3   Defendants attached an affidavit by a GMACM employee and certain 
1 
other materials in support of those assertions.  Plaintiff responded that defendants' 
2 
evidence was insufficient because it failed to show that (1) MERS had a beneficial 
3 
interest in the property that would allow it to initiate foreclosure or to assign or transfer 
4 
any interest in the property to other defendants; or (2) GMACM or ETS had obtained an 
5 
interest in the trust deed by means of valid assignments or transfers that would allow 
6 
them to foreclose.     
7 
 
 
At the hearing on the summary judgment motion, the parties' arguments 
8 
shifted away from a general debate about the sufficiency of MERS' and the other 
9 
defendants' "interests" in the note and trust deed and toward a more specific statutory 
10 
question -- whether the precondition that "any assignments of the trust deed by the 
11 
beneficiary * * * [be] recorded in the mortgage records of the [relevant] county," ORS 
12 
86.735(1),4 had been satisfied.  Defendants argued that, insofar as the beneficiary 
13 
originally named in the trust deed remained the beneficiary at the time foreclosure 
14 
proceedings were initiated, there were no "assignments of the trust deed by the 
15 
beneficiary" to record.  Plaintiff argued that MERS was not the "beneficiary" within the 
16 
                                              
 
3  
ORS 86A.175 authorizes certain entities to "service or collect" mortgage 
loans "with the permission of the lender, note owner, note holder or other holder of an 
interest in a note."  For purposes of that statute, "service[ing] or collect[ing]" includes 
"exercising contractual, statutory or common law remedies, such as * * * judicial or 
nonjudicial foreclosure."  ORS 86A.175(3)(e)(C). 
 
4  
ORS 86.735(1) is set out in its entirety above,  __ Or at __  (slip op at 3). 
 
8 
meaning of ORS 86.735(1) and that there was reason to believe that the true beneficiary, 
1 
Greenpoint, had assigned the trust deed, because a party who was a stranger to the 
2 
original transaction was trying to foreclose.  According to plaintiff, the assignee's failure 
3 
to record that or any subsequent assignment raised a factual question as to whether a 
4 
precondition of nonjudicial foreclosure had been satisfied.   
5 
 
 
The trial court granted defendant's motion for summary judgment.  The 
6 
court concluded that MERS was the trust deed's beneficiary, and it also appeared to 
7 
conclude that ETS was a lawfully appointed trustee that was authorized to foreclose 
8 
under ORS 86.735 if the statutory requirements were satisfied.  The court further 
9 
concluded that, insofar as there was no evidence of any assignment of the trust deed by 
10 
ETS or MERS, there was no triable issue of fact with respect to the contention that 
11 
defendants had failed to satisfy the recording requirement in ORS 86.835(1).    
12 
 
 
Plaintiff appealed, arguing that the summary judgment record contained 
13 
evidence that Greenpoint, and not MERS, was the trust deed's original "beneficiary," and 
14 
that Greenpoint had transferred its interest in the trust deed without recording the transfer.  
15 
Plaintiff argued that, in light of that evidence, questions of fact remained as to (1) 
16 
whether MERS or the other defendants had a sufficient interest in the trust deed to initiate 
17 
foreclosure under the OTDA, and (2) whether the recording requirement in ORS 
18 
86.735(1) had been satisfied.5   
19 
                                              
 
5  
The latter point was raised in the Court of Appeals by amicus curiae 
Oregon Trial Lawyers Association (OTLA).  The Court of Appeals rejected defendants' 
 
 
9 
 
 
The Court of Appeals reversed.  Niday, 251 Or App at 301.  After 
1 
examining the definition of "beneficiary" in ORS 86.705(2) in the context of the 
2 
surrounding statutes and case law, it concluded that, regardless of the trust deed's 
3 
designation of MERS as "the beneficiary under this Security Instrument," Greenpoint, the 
4 
lender whose right to repayment the trust deed secured, was, at inception, the trust deed's 
5 
"beneficiary" for purposes of the OTDA.  Id. at 298-99.  After observing that there was 
6 
evidence in the summary judgment record that Greenpoint had transferred its interest in 
7 
the promissory note, and that, under this court's cases, a mortgage (or trust deed) is 
8 
transferred by operation of law when the note it secures is transferred, the court 
9 
considered whether such a transfer of the promissory note would constitute an 
10 
"assignment[] of the trust deed" for purposes of the statutory requirement at ORS 
11 
86.735(1).  Id. at 299-300.   
12 
 
 
The Court of Appeals rejected defendants' contention that the statutory term 
13 
"assignments" refers only to formal, written assignments that are capable of recordation 
14 
in their own right.  It held that the evidence that Greenpoint had transferred the note 
15 
created a genuine issue of material fact as to whether ORS 86.735(1) had been satisfied.  
16 
Id.  Notably, the Court of Appeals did not address plaintiff's other argument for 
17 
enjoining, and declaring invalid, the contemplated foreclosure -- that MERS and the other 
18 
defendants had no legal or equitable interest in the trust deed that would permit them to 
19 
                                              
contention that that argument had not been preserved in the trial court, and gave plaintiffs 
the benefit of OTLA's argument.  251 Or App at 293 n 11, 300 n 15.  
 
10 
initiate foreclosure under the OTDA.  
1 
III. DOES A GENUINE ISSUE OF FACT REMAIN AS TO WHETHER 
2 
THE OTDA'S RECORDING REQUIREMENT, ORS 86.735(1), WAS 
3 
SATISFIED? 
4 
 
 
Before this court, defendants argue that, contrary to the Court of Appeals' 
5 
decision, there is no evidence in the summary judgment record that creates a triable issue 
6 
of fact as to whether a "beneficiary" of the trust deed made an "assignment" of the trust 
7 
deed within the meaning of the recording requirement in ORS 86.735(1).  Defendants 
8 
begin with the Court of Appeals' rejection of MERS's status as "beneficiary."  They argue 
9 
that MERS can be, and is, the "beneficiary" of the trust deed at issue, by virtue of its 
10 
designation as such in the trust deed.    
11 
 
 
Defendants rely on the OTDA's definition of the term, at ORS 86.705(2):   
12 
 
13 
 
"As used in ORS 86.705 to 86.795: 
14 
 
"* * * * * 
15 
 
"(2) 'Beneficiary' means a person named or otherwise designated in a 
16 
trust deed as the person for whose benefit a trust deed is given, or the 
17 
person's successor in interest, and who is not the trustee unless the 
18 
beneficiary is qualified to be a trustee under ORS 86.790(1)(d)."   
19 
Defendants contend that the phrase "named or otherwise designated" shows that the 
20 
legislature intended that the parties to a trust deed have the ability to contractually 
21 
identify the "beneficiary" without regard to whom the trust deed actually benefits.  
22 
Defendants posit that the definition must be read consistently with "long established 
23 
Oregon statutory and common law principles authorizing agents * * * to act as 
24 
beneficiary and hold legal and record title to interests in real estate."  In other words, 
25 
defendants argue, the "named or otherwise designated" wording shows that the legislature 
26 
 
11 
intended to permit the lender (who usually is "the person for whose benefit the trust deed 
1 
is given") to designate its agent or nominee as the trust deed's beneficiary.    
2 
 
 
This court rejected all of those arguments, and others like it, in Brandrup, 
3 
__ Or at __ (slip op at 13-22).  In Brandrup, we noted that a proposed interpretation of 
4 
the definition of the word "beneficiary" in ORS 86.705(2) that is virtually identical to the 
5 
one that defendants now offer failed to account for a significant portion of the definition's 
6 
words, which focused on the beneficiary's function in the trust deed arrangement as "the 
7 
person for whose benefit the trust deed is given."  We reasoned that, to give all of the 
8 
words of the definition their intended meaning, it was necessary to conclude that, in 
9 
addition to being the person "for whose benefit the trust deed is given," the beneficiary 
10 
must be "named or otherwise designated" as such in the trust deed.  Id. at __ (slip op at 
11 
15-16).  We observed that, in a typical trust deed transaction where the obligation that is 
12 
secured by the trust deed is memorialized in a promissory note, the "beneficiary" would 
13 
be the person who is entitled to repayment of the note obligation, that is, either the lender 
14 
or the lender's successor in interest.  Id. at __ (slip op at 16).  Finally, we concluded that, 
15 
although a lawful agent might have authority to act on the true beneficiary's behalf with 
16 
respect to the trust deed, and might even appear on documents in the beneficiary's stead, 
17 
such an agent "cannot become the 'beneficiary' for purposes of [the] statutory requirement 
18 
[set out at ORS 86.735(1), which] is defined, in part, by the status of the 'beneficiary.'"  
19 
Id. at __ (slip op at 21).    
20 
 
 
In the trust deed at issue here, MERS is "named" as the beneficiary ("The 
21 
beneficiary of the Security Instrument is MERS (solely as nominee for Lender and 
22 
 
12 
Lender's successors and assigns and the successors and assigns of MERS)[.]").  But 
1 
MERS is not "the person for whose benefit the trust deed is given."  Rather, the terms of 
2 
the trust deed "designate" the "Lender" (Greenpoint) as that person ("This Security 
3 
Instrument secures to Lender:  (i) the repayment of the Loan, and all renewals, extensions 
4 
and modifications of the Note; and (ii) the performance of Borrower's covenants and 
5 
agreements under this security Instrument and the Note.").  Thus, for purposes of the 
6 
requirement for nonjudicial foreclosure that "any assignments of the trust deed by the * * 
7 
* beneficiary" be recorded, the "beneficiary" of the trust deed is Greenpoint or its 
8 
successors, and not MERS. 
9 
 
 
Defendants argue, however, that even if "naming" MERS as the beneficiary 
10 
in the trust deed is not sufficient, by itself, to make it so, the fact remains that the trust 
11 
deed conveys to MERS the right to exercise "all" of the beneficial owner's interests under 
12 
the trust deed (as the beneficial owner's agent) if that should become necessary to qualify 
13 
MERS as the trust deed's beneficiary.  Defendants refer to the following provision in the 
14 
trust deed:    
15 
"Borrower understands and agrees that MERS holds only legal title to the 
16 
interests granted by Borrower in this Security Instrument, but, if necessary 
17 
to comply with law or custom, MERS (as nominee for Lender and Lender's 
18 
successors and assigns) has the right: to exercise any or all of those 
19 
interests, including, but not limited to, the right to foreclose and sell the 
20 
property, and to take any action required of Lender including, but not 
21 
limited to, releasing and canceling this Security Instrument." 
22 
(Emphasis added.)  Anticipating an argument that the trust deed beneficiary must have a 
23 
right to receive repayment of the loan obligation that the trust deed secures, defendants 
24 
contend that the foregoing provision conveys to MERS, "if necessary to comply with law 
25 
 
13 
or custom," a right to receive payment of the loan obligations on behalf of the lender or 
1 
noteholder."    
2 
 
 
But the right to "receive" payment on a note "on behalf of" a principal is 
3 
distinct from the right to repayment on one's own behalf.  As discussed above, it is the 
4 
latter right that defines a trust deed "beneficiary" in the ordinary trust deed transaction.  
5 
__ Or at __ (slip op at 11) (the beneficiary is the person "entitled to repayment of the note 
6 
obligation").  Thus, as this court observed in Brandrup, with respect to identical wording 
7 
in the trust deeds at issue in that case, "[u]nless the * * * provision transforms MERS into 
8 
[the person to whom the obligation that the trust deed secures is owed], it cannot 
9 
transform MERS into the 'beneficiary' of the trust deed."  Brandrup,  __ Or at __ (slip op 
10 
at 25).   
11 
 
 
As broad as the "law or custom" provision appears to be, it is not broad 
12 
enough to convey that particular right.  As this court explained in Brandrup: 
13 
"The provision first states that MERS holds 'only legal title to the interests 
14 
granted by borrower in this Security Instrument.'  When the provision 
15 
thereafter states that MERS has the right 'to exercise any or all of those 
16 
interests, if necessary to comply with law or custom,  it refers to the 
17 
interests 'granted by the borrower in this security instrument.'" 
18 
Id. at __ (slip op at 25) (emphasis in original).  But the only interests that are granted by a 
19 
borrower in a trust deed are a legal interest in the real property that the trust deed burdens 
20 
and that legal interest's beneficial counterpart.  Thus, the "law or custom" provision 
21 
cannot convey to MERS the right that would qualify it as the trust deed's beneficiary -- 
22 
the right to repayment of the obligation that the trust deed secures.  It follows that, 
23 
regardless of MERS' designation as such in the trust deed, and regardless of wording in 
24 
 
14 
the trust deed that purports to grant MERS various "interests" belonging to the lender "if 
1 
necessary to comply with law or custom," MERS cannot be the beneficiary of the trust 
2 
deed in this case.  Rather, insofar as the trust deed "secures to Lender" the "repayment of 
3 
the Loan" and other covenants relating to that obligation, the lender (Greenpoint) was the 
4 
original "beneficiary" of the trust deed for purposes of the OTDA.  The Court of Appeals 
5 
did not err in so holding.  Niday, 251 Or App at 298-99. 
6 
 
 
Defendants argue that, in any event, the Court of Appeals erred in 
7 
concluding that an issue of fact existed with respect to whether there had been any 
8 
"assignment[] of the trust deed" by Greenpoint that triggered the recording requirement in 
9 
ORS 86.735(1).  In so holding, the Court of Appeals relied on (1) evidence that the 
10 
promissory note secured by the trust deed had been transferred, and (2) the legal premise 
11 
that a trust deed is "assigned" by operation of law when the underlying promissory note is 
12 
transferred.   Niday, 251 Or at 299.  But defendants contend that, when, as a prerequisite 
13 
to nonjudicial foreclosure, the legislature adopted the requirement in ORS 86.835(1) that 
14 
"any assignments of the trust deed by the trustee or the beneficiary" be recorded, it did 
15 
not intend that "assignments" include transfers of a promissory note that result in an 
16 
equitable transfer of the associated trust deed by operation of law.  To the contrary, 
17 
defendants argue, the legislature intended to require recordation only of formal, written 
18 
assignments of the trust deed.   
19 
 
 
Again, this is an issue that was discussed and decided in Brandrup, but this 
20 
time, Brandrup supports defendants' interpretation of the statutory phrase.  In Brandrup, 
21 
this court concluded that the phrase "any assignments" was not, itself, dispositive.  We 
22 
 
15 
noted that ORS 86.735(1) -- and the very concept of recordation -- assumes the existence 
1 
of an assignment in recordable form, i.e., a written document that is separate from the 
2 
note and that describes the burdened property.  We acknowledged that parties to the 
3 
transfer of a promissory note can always memorialize the transaction in a separate writing 
4 
that is recordable, but we observed that ORS 86.735(1) does not express any requirement 
5 
that that be done.  Brandrup, __ Or at __ (slip op at 31). 
6 
 
 
We noted, further, that ORS 86.735(1) bears a resemblance to a statute that 
7 
was in effect when the OTDA was enacted in 1959 that provided, in part, that "every 
8 
assignment of mortgage shall be recorded," former ORS 86.070 (1959).6  This court had 
9 
interpreted that statute in Barringer v. Loder, 47 Or 223, 224-28, 81 P 778 (1905), as 
10 
recognizing that a mortgage could be transferred by indorsement of the associated 
11 
promissory note, but as only requiring the recording of those assignments of mortgage 
12 
that were "in writing, executed and acknowledged with the same formality as required in 
13 
deeds and mortgages of real property."  We concluded in Brandrup that the legislature 
14 
likely had former ORS 86.070 (1959) in mind when it adopted similar wording in ORS 
15 
86.735(1), and that it intended to assign a similar, narrow meaning to the term 
16 
"assignment" in the latter statute.  Brandrup, __ Or at __ (slip op at 33-34).  We 
17 
concluded, in other words, that in providing that a trustee may nonjudicially foreclose 
18 
only if "any assignments of the trust deed by the trustee or beneficiary * * * are 
19 
                                              
 
6  
Former ORS 86.070 was repealed in 1965.  Or Laws 1965, ch 252, § 1. 
 
16 
recorded," ORS 86.735(1) refers to written assignments of a trust deed in recordable 
1 
form, and not to assignments of trust deeds that result by operation of law by transfer of 
2 
the note.    
3 
 
 
According to that understanding, although the Court of Appeals correctly 
4 
observed that there is evidence in the summary judgment record that the trust deed's 
5 
beneficiary, Greenpoint, sold the promissory note associated with the trust deed, that 
6 
transaction does not qualify as an "assignment[] of the trust deed" for purposes of the 
7 
recording requirement of ORS 86.735(1).  Neither is there evidence in the summary 
8 
judgment record of any "assignment" of the trust deed in the intended sense, that is, a 
9 
formal, written assignment of the trust deed, itself.  Thus, on the question of whether 
10 
defendants violated ORS 86.735(1) by initiating foreclosure when Greenpoint sold the 
11 
promissory note but did not record an assignment of the trust deed, there is no issue of 
12 
material fact.   
13 
IV.  DOES A GENUINE ISSUE OF FACT REMAIN? 
14 
 
 
That leaves us to consider whether a genuine issue of material fact exists 
15 
that is pertinent to plaintiff's original challenge to the scheduled foreclosure sale -- that 
16 
none of defendants possessed a qualifying legal interest in the trust deed or note that 
17 
would allow them to initiate foreclosure under the OTDA.  That challenge is based on 
18 
plaintiff's allegations that she had received a "Trustee's Notice of Sale" that referred to 
19 
ETS as the trustee of the trust deed and MERS as its beneficiary, that, in spite of the trust 
20 
deed's designation of MERS, the original beneficiary was the lender, and that plaintiff 
21 
had no knowledge or information as to whether or how any of defendants had acquired 
22 
 
17 
any legal rights in the note and trust deed that were sufficient to institute foreclosure 
1 
proceedings.  
2 
 
 
In support of their motion for summary judgment, defendants submitted (1) 
3 
copies of the promissory note and trust deed; (2) an affidavit by an employee of the loan 
4 
servicer (GMACM) describing what defendants believed were the relevant transactions; 
5 
(3) a report from the MERS database showing the same transactions; and (4) a copy of 
6 
MERS's appointment of ETS as a successor to the original trustee, showing that the 
7 
appointment had been recorded in the county land records.7  Defendants asserted that that 
8 
evidence established that  
9 
"GMACM, as the holder of the original note and servicer of plaintiff's loan, 
10 
properly initiated the foreclosure of the Deed of Trust on behalf of MERS, 
11 
the beneficiary of the Deed of Trust as the nominee of the original lender's 
12 
assignee, Aurora Bank.  LSI [(ETS's principal)], the duly appointed 
13 
successor trustee, properly executed the non-judicial foreclosure." 
14 
Plaintiff responded that defendants' evidence relied on the legitimacy of MERS's status as 
15 
the trust deed's beneficiary.  Plaintiff insisted that MERS was not the trust deed's 
16 
beneficiary, but a mere nominee of the beneficiary, and that it therefore lacked authority 
17 
not only to foreclose, but also to assign interests in the trust deed or underlying note to 
18 
                                              
 
7  
In the hearing, defendants apparently produced the original promissory 
note.  It is unclear from the record what, if anything, the note showed about the person 
entitled to enforce the note or, if different, the owner of the note.  We know that 
GMACM claimed to be "holding" the note in its capacity as servicer of the loan, and that 
GMACM did not claim to own the note or to act on its own behalf in the foreclosure 
proceeding.  There is no evidence in the record as to whether or how the note had been 
transferred to GMACM.   
 
18 
others.  Plaintiff also pointed to defendants' failure to produce, in response to her 
1 
demands, any document showing that MERS or ETS had acquired interests in the note 
2 
and trust deed that would entitle them to nonjudicially foreclose.   
3 
 
 
Because the trial court did not include any explanation of its decision in its 
4 
written order, its reasons for granting summary judgment for defendants must be 
5 
discerned from its comments during the summary judgment hearing.  Those comments 
6 
suggest, on the one hand, that the court accepted MERS's designation as beneficiary in 
7 
the trust deed as conclusive evidence of that status, and thus concluded that no triable 
8 
issue of fact existed with respect to MERS's authority to initiate (or, specifically, to direct 
9 
the trustee to initiate) a nonjudicial foreclosure proceeding.  But the trial court also 
10 
suggested that the question of whether the trustee was acting on behalf of a lawful 
11 
beneficiary was a matter between the trustee and the beneficiary, not one that the 
12 
borrower could assert to derail a foreclosure under the statute.  At any rate, the court 
13 
appeared to conclude that defendants' evidence established ETS's authority, as a validly 
14 
appointed successor to the original trustee, to direct or participate in a nonjudicial 
15 
foreclosure proceeding under ORS 86.735.  The Court of Appeals' opinion did not 
16 
address either of those apparent conclusions or the broader question of whether 
17 
defendants had interests in the note and trust deed that would authorize them to proceed 
18 
with foreclosure under the statute.  We now turn to those issues.  
19 
 
 
We begin with the trial court's apparent conclusion that the summary 
20 
judgment record conclusively established that MERS was the beneficiary of the trust 
21 
deed and, thus, was entitled to initiate a foreclosure proceeding.  That determination 
22 
 
19 
appears to rest entirely on the fact that the trust deed, which was recorded in the pertinent 
1 
real property records, identified MERS as its "beneficiary."    
2 
 
 
However, as discussed above, __ Or at __ (slip op at 11-14), and in 
3 
Brandrup, __ Or at __ (slip op at 13-27), the fact that MERS was identified in the trust 
4 
deed as the "beneficiary" does not make it so for purposes of the OTDA.  Rather, the 
5 
"beneficiary" is the person to whom the obligation that the trust deed secures is owed, 
6 
Brandrup, __ Or at __ (slip op at 22), in this case, either the lender or its successor.  As 
7 
noted above,  __ Or at __ (slip op at 13-14), under that meaning, MERS is not the trust 
8 
deed's beneficiary.  MERS therefore cannot claim any authority, as the trust deed's 
9 
beneficiary, to initiate or direct the nonjudicial foreclosure of a trust deed.     
10 
 
 
Still, as this court recognized in Brandrup, __ Or at __ (slip op at 41-46), 
11 
even if MERS lacks authority to act as the trust deed's beneficiary, it may have authority 
12 
to act on behalf of the beneficiary if it can demonstrate that it has an agency relationship 
13 
with the beneficiary and that the agency agreement is sufficiently expansive.  Although in 
14 
Brandrup we discussed that possibility in connection with the issue of MERS' authority 
15 
to assign a trust deed, it would seem to apply equally to the present issue of MERS's 
16 
authority to foreclose the trust deed.  In either case, MERS' authority to act as the 
17 
beneficiary's agent depends on who succeeded to the lender's rights, whether those 
18 
persons manifested consent that MERS act on their behalf and subject to their control, 
19 
and whether MERS has agreed to so act.  Brandrup, __ Or at __ (slip op at 44) (citing 
20 
Hampton Tree Farms, Inc. v. Jewett, 320 Or 599, 617, 892 P2d 683, 694 (1995)).    
21 
 
 
Although Brandrup is not a summary judgment case, it nevertheless is 
22 
 
20 
instructive with respect to how MERS' status as a trust deed beneficiary's agent, and the 
1 
nature and scope of its authority as an agent, might be established.  In that case, this court 
2 
rejected the proposition that MERS's designation in a trust deed as "nominee for Lender 
3 
and Lender's successors and assigns" established an agency relationship between MERS 
4 
and the original lender or any successor to the original lender.  We did so primarily 
5 
because the original lender and its successors were not signatories to the trust deed.   __ 
6 
Or at __ (slip op at 46).  We acknowledged, however, that, depending on its terms, the 
7 
much-discussed agreement between MERS and members might establish MERS's 
8 
authority to act as a "common agent" for the original lender and any successors who are 
9 
members of MERS.  Brandrup, __ Or at __ (slip op at 23 n 7, 46).  And, Brandrup aside, 
10 
there is always the possibility of a separate agreement between MERS and a lender’s 
11 
successors in interest, authorizing MERS to act as the successors’ agent in a foreclosure 
12 
proceeding.  
13 
 
 
But, as far as we can tell, there is nothing in the summary judgment record 
14 
in this case that identifies the successors to the original lender’s interests or shows that 
15 
MERS is authorized, as the agent of the successors to the original lender’s interests, to 
16 
initiate or direct a nonjudicial foreclosure proceeding under the OTDA.  There is some 
17 
evidence that the current owner of the note is Aurora Bank and that Aurora Bank is a 
18 
member of MERS.  But there is no evidence as to whether Aurora Bank is a successor to 
19 
the original lender's interests.  Nor is there evidence of an agency agreement between 
20 
Aurora Bank and MERS, or between MERS and its members as a whole, much less one 
21 
that authorizes MERS to initiate foreclosures on behalf of Aurora Bank.  Further, there is 
22 
 
21 
some suggestion that GMACM is the "holder" of the note.  If the note is negotiable, it is 
1 
possible that GMACM is a successor to the original lender's interests or that both Aurora 
2 
Bank and GMACM share that role; however, neither the record nor the parties' arguments 
3 
establish those matters beyond genuine dispute.8   
4 
 
 
The trial court nevertheless appeared to reason9 that the beneficiary's 
5 
authority in a decision to proceed with nonjudicial foreclosure is immaterial.  To the 
6 
extent that the court so reasoned, we disagree.  On the one hand, it is true that the trustee, 
7 
and only the trustee, is authorized to foreclose a trust deed by advertisement and sale.  
8 
ORS 86.710, ORS 86.735.  However, the OTDA contemplates that the beneficiary of the 
9 
trust deed -- the original lender or its successor -- is entitled to determine whether and 
10 
how to foreclose a trust deed after default.  For example, ORS 86.710 expressly provides 
11 
that the beneficiary can reject the nonjudicial foreclosure procedure in favor of an 
12 
                                              
 
8  
The parties have not addressed the identity of the beneficiary if, as we 
conclude, it is not MERS.  That issue is by no means academic.  If a note is negotiable, 
the "party entitled to enforce the note" (the "PETE") under ORS 73.0301 may not be the 
same person as the owner of the note, that is, the party entitled to the economic benefits 
of the note.  Because a mortgage or trust deed follows the note that it secures, United 
States Nat. Bank v. Holton, 99 Or 419, 428-29, 195 P 823 (1921), the potential separation 
of ownership and PETE status raises the question of whether a lender’s successor -- that 
is, the beneficiary -- must be the owner, the PETE, or both?  Most courts that have thus 
far addressed the issue have concluded that PETE status, not ownership, confers the right 
to foreclose.  See, e.g., Edelstein v. NY Mellon, 286 P3d 249, 257 (Nev 2012).  Because 
the parties have not addressed the issue, we do not discuss it further here. 
 
9  
The court opined that the foreclosure of the trust deed at issue could 
proceed, without regard to whether MERS was authorized to act as the trust deed's 
beneficiary, because "we have a trustee and the trustee is foreclosing." 
 
22 
ordinary judicial foreclosure.  More importantly, the beneficiary has absolute authority to 
1 
appoint a successor trustee at any time after a trust deed is executed under ORS 
2 
86.790(3), an authority that all but guarantees the beneficiary's control over any 
3 
foreclosure decision.   
4 
 
 
However, even if the beneficiary's authority were immaterial, summary 
5 
judgment still would be improper in the present case.  That is so because, on the present 
6 
record, MERS' involvement in the appointment of the current trustee casts doubt on the 
7 
trustee's status.  The trial court concluded that ETS was the lawfully appointed trustee 
8 
("of record, we have * * * the chain, if you will, back to the original trustee First 
9 
American Title").  The trial court apparently relied on a document in the summary 
10 
judgment record showing that MERS had appointed ETS as successor to the original 
11 
trustee, and also showing that the appointment had been recorded in the Clackamas 
12 
County real property records.  But, appointments of a successor trustee may only be made 
13 
by the trust deed beneficiary, ORS 86.790(3), and, as discussed, MERS is not, and never 
14 
has been, the beneficiary of the trust deed for purposes of the OTDA.  In the absence of 
15 
evidence in the record showing the identity of the lender's successors in interest and that 
16 
MERS had authority to act for those successors in interest,10 an issue of fact remains as to 
17 
the validity of ETS's appointment as successor trustee, and, in consequence, its authority 
18 
                                              
 
10  
As discussed above, __ Or at __ (slip op at 20-21), there is nothing in the 
summary judgment record that establishes MERS's authority to act as the agent for 
anyone. 
 
23 
to initiate and pursue a nonjudicial foreclosure proceeding under the OTDA.11  It follows 
1 
that the trial court erred in granting summary judgment to defendants. 
2 
 
 
The decision of the Court of Appeals is affirmed.  The judgment of the 
3 
circuit court is reversed, and the case is remanded to that court for further proceedings.
4 
                                              
 
11 
This same logic would apply to any contention that GMACM had authority 
to direct nonjudicial foreclosure as the servicer of the loan with the lender's or note 
owner's/holder's permission to proceed, ORS 86A.175(1), (3)(e)(C).  Even if there were 
undisputed evidence in the record showing that GMACM had the required status or 
authority to direct a nonjudicial foreclosure (and there is not), the uncertain state of the 
record with respect to ETS's status as the trustee still would preclude summary judgment. 
 
1 
 
 
KISTLER, J., concurring in part and specially concurring. 
1 
 
 
For the reasons stated in the opinion concurring in part and dissenting in 
2 
part in Brandrup v. Recontrust Company, N.A., ___ Or ___ , ___ P3d ___ (decided this 
3 
date), I concur in part in the majority's reasoning and in its judgment. 
4 
 
 
Balmer, C.J., joins in this opinion concurring in part and specially 
5 
concurring.  
6