At age 65, the last thing Ivan Hooker expected was to see his family legacy destroyed in the downward spiral of the American economy.

At age 65, the last thing Ivan Hooker expected was to see his family legacy destroyed in the downward spiral of the American economy.

His construction-related business, The Truck Stop, went under, and he lost his 114,000-square-foot shop on Rossanley Road. Then, Hooker and his wife, Katherine, defaulted on their mortgage on a $260,000 loan in 2009, and lenders tried to foreclose on their rural Jacksonville house while he struggled for a loan modification.

"Don't just roll over and die," Hooker said. "Fight, fight — that's the American way."

He took his battle to the courts, and last week U.S. District Court Judge Owen Panner gave Hooker hope when the judge came down hard on the lending institutions involved in Hooker's mortgage.

"When the judge ruled in our favor on this, it was truly a miracle," he said.

Panner ruled the lending institutions failed to follow Oregon law, didn't file the right documents with the Jackson County recorder and have unexplained gaps in the paper trail on the trust deed.

The ruling provides a glimpse into the complicated world of mortgage lending and reveals an often circuitous paper trail that ensnares a family that has fallen on hard times.

"Although Guaranty Bank appears to have been the original servicer of the loan, the record is silent as to how or when Guaranty Bank obtained the beneficial interest in the trust deed," Panner wrote. "(The lending institutions) did not record the transfer of the beneficial interest in the trust deed from Guaranty Bank to Wells Fargo or from Wells Fargo to Bank of America in the Jackson County land records."

Panner said the recording of legal documents was done out of order, finding this oversight not atypical for foreclosures conducted outside of courts.

"A procedure relying on a bank or trustee to self-assess its own authority to foreclose is deeply troubling to me," Panner wrote. "While I recognize that (the Hookers) have failed to make any payments on the note since September 2009, that failure does not permit defendants to violate Oregon law regulating non-judicial foreclosure."

In the complex world of lending, Panner took issue with another feature of mortgage lending conducted by Mortgage Electronic Registration Systems, Inc.

MERS, which has been involved in Hooker's mortgage, aids the lending industry in selling off mortgages as securities without recording each sale in county recorder offices.

MERS plans to appeal Panner's ruling.

Karmela Lejarde, communications manager for MERS, said her company offers a free service that provides access to a database of information about a mortgage loan.

She referred any comments on the Panner ruling to a prepared release, in which MERS officials say the company actually makes it easier to track the paper trail on a mortgage.

"The MERS system provides greater public transparency and complements the county land records by providing information about the mortgage loan servicing," the release states.

Panner found MERS makes it more difficult for all parties to discover who owns the loan.

Bank of America officials referred any comments on the case to MERS.

Janis Smith, vice president of corporate communications for MERS, wrote in an email response that MERS does comply with state rules regarding the recording of mortgage information.

"Judge Owen Panner's ruling in Hooker versus Northwest Trustee Services is at odds with other Oregon rulings affirming MERS' role," she wrote.

Smith wrote that both state and federal cases have ruled in favor of MERS' role.

MERS cites three Oregon cases in which the courts have ruled in its favor since October.

However, in six cases since October, federal judges have halted foreclosures involving MERS in Oregon, finding the lenders violated the state's recording law.

James Stout, Hooker's Medford attorney, said, "I think this is going to be a far-reaching case in Oregon."

He has about 10 similar cases in the works, but believes there are about 25 total in Jackson County. Most of them involve MERS, he said.

"I see plenty of MERS (paper) trails that don't track with what the facts say," he said. "That's the problem with the system. There is no accountability for anyone."

Stout said his clients have been criticized for not making payments toward their loan.

"The issue isn't whether they made a payment," Stout said. "The issue is whether the bank foreclosed correctly. This system's broken."

Stout said Hooker attempted to make trial payments before a loan modification. "If you find where the money went, let me know," said Stout.

Hooker said he attempted to work with the lending institutions, paying a lesser amount during a trial period that was never applied to the principal or interest on his loan. He said he still doesn't know where the money went.

Hooker said he hopes the ruling will persuade the lending institutions to accept a loan modification.

Angry that banks received a federal bailout that hasn't trickled down to struggling homeowners, Hooker said that corporations have made it difficult for people to modify their loans, while creating a vast network of murky shadow companies to protect their interests.

"When I discovered the level of greed involved in this, it's really discouraging," he said. "The issue for the homeowner is — will the real owner of my note please stand up?"

Reach reporter Damian Mann at 541-776-4476, or e-mail dmann@mailtribune.com. The Associated Press contributed to this story.