Federal Court in Oregon Finds Noteholder's Agent Cannot Be Beneficiary Under Deed of Trust

Foreclosure

On February 29, the U.S. District Court for the District of Oregon held, in James v. Recontrust Co., No. 3:11-cv-00324-ST (D. Or. Feb. 29, 2012), that under Oregon law the “beneficiary” of a deed of trust (as opposed to a mortgage) in that state is the noteholder – i.e., the lender or the lender’s successor – and therefore cannot be the agent of the noteholder, such as an electronic registry system. Oregon law only permits a trustee to conduct a non-judicial foreclosure where all subsequent assignments are recorded in the proper county recorder’s office. In this case, because the note was subsequently assigned without having been recorded (because the electronic registry system was thought at the time to be the beneficiary and therefore that recordation was not required) the court ruled that the non-judicial foreclosure route was prohibited under Oregon’s statutory regime. However, the court did note that Oregon’s judicial foreclosure process remains available in these circumstances.