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.
He said 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. Another federal judge has ruled in favor of MERS, industry lobbyists said.
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