Bulletin: OR2011001

Dear Associates:   

Stewart previously issued Bulletin SLS2010023 concerning insurance at or after a foreclosure.  Recent litigation in Oregon has drawn attention to ORS 86.735 which specifically states that any assignments of the trust deed being foreclosed must be recorded in the county in which the property described in the trust deed is situated.  There is speculation that trust deeds which identify MERS as the beneficiary and the nominee for the lender secure loans that are typically transferred multiple times, and the recorded assignments may not represent all of these transfers. 

The purpose of this Bulletin is to provide standard guidelines for insuring post-foreclosure sales involving MERS Trust Deeds in Oregon.  This Bulletin is intended to supplement Bulletin SLS2010023.

Stewart is willing to insure title to a purchaser after a non-judicial foreclosure of an Oregon trust deed in which MERS was identified as the nominee, subject to the following conditions:  

1. You must verify that there is no break in the recorded chain of Assignments that identify the foreclosing lender as the holder of the Deed of Trust.  If there is a missing Assignment, please contact a Stewart underwriter to discuss how to proceed.  Stewart will accept Assignments that are executed by representatives of MERS if MERS was identified as the beneficiary in the original trust deed.  Before passing on any Assignment or Appointment of Successor Trustee that is executed by an Attorney-In-Fact, please review a copy of the Power of Attorney to ensure that the Attorney-In-Fact has authority to execute these documents.  If the Power of Attorney is not recorded, please request a copy from the Trustee or the lender to be recorded.
    
2. You must make a determination of occupancy of the residence on the property.  A statement that the property shows vacant in the lender’s internal system does not fulfill this requirement.  The determination can be made through completion of a personal inspection of the property, or receipt of a written statement by the real estate agent representing the lender who is selling the property.  The written statement may be an affidavit, email or other writing and must state the date the agent visited the property and whether or not it was occupied at that date.  If the property is occupied, please contact a Stewart underwriter prior to proceeding with the transaction.  The preliminary title report should contain an exception for rights of parties in possession until occupancy is verified.
    
3. You must check for any bankruptcy filed by the original borrower identified on the trust deed, even if the property is in a non-record bankruptcy county.  If the borrower filed bankruptcy prior to the foreclosure of the trust deed, please contact a Stewart underwriter before proceeding with the transaction.
    
4. You must check the Oregon State Circuit Court for any lawsuit pertaining to the foreclosed property filed by the original borrower on the trust deed against the lender, or vice versa whether or not a "lis pendens" or "notice of pending action" has been recorded.  If you locate a lawsuit, please consult with a Stewart underwriter prior to proceeding with the transaction.
    
5. You must analyze the difference between the amount the lender paid for the property at the foreclosure sale (this information is contained within the Trustee’s Deed) and the amount the new purchaser is paying for the property.  If the amount the purchaser is paying for the property is more than the lender paid for the property at the foreclosure sale, please consult with a Stewart underwriter prior to proceeding with the transaction.
    
6. ORS 86.739 states that the borrower on the trust deed that was foreclosed has the same rights possessed by a junior lienholder who was omitted as a defendant in a judicial foreclosure proceeding if the grantor informs the trustee, the purchaser, the beneficiary or any loan servicer in writing within 60 days of the foreclosure sale that they did not receive notice of the sale and did not have actual notice of the sale.  If you receive a request to close a post-foreclosure sale less than 60 days after the date of the foreclosure sale, please consult with a Stewart underwriter prior to proceeding with the transaction.
    
7. Do not issue an Owner’s Policy to a third party purchaser who purchased at the foreclosure sale without first obtaining approval from a Stewart underwriter.  
    
8. Do not issue an Owner’s Policy to a lender who purchases at the foreclosure sale without first obtaining approval from a Stewart underwriter.  This requirement is applicable to the reversion of the property to the lender.  It also applies to Owner’s Policies requested by HUD, the Secretary of Veterans Affairs and other investors.

You are responsible for completing your standard title exam, which includes an evaluation of the foreclosure documents in the chain of title to ensure they have been recorded in the correct time frames as outlined by Oregon statutes.   

If you have any information about any post-foreclosure sale that was not addressed above but generates concern that the validity of the foreclosure could be challenged, please speak with a Stewart underwriter prior to proceeding with the transaction.

If you have questions related to this bulletin, please contact your local underwriting personnel or Stewart Legal Services.

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