I was noticing that there are no longer trustee's notices of sales listed in the classifieds under the legal notices section. I can't believe we no longer have bank sales on foreclosed properties auctioned on the courthouse steps. Can you tell me why they have stopped the listings and where one might find the information now?
— Joe D., by email
You are very perceptive, Joe, and mostly right on two counts: While there are very few foreclosure notices running in the paper these days, the foreclosure crisis has not ended, but merely become invisible.
It's a complicated story involving multiple layers of lenders and several court cases, but we'll stick to a simple version here to give you an idea what's happened. Put on your thinking cap here, Joe, and stay with us.
Years ago, Fannie Mae, Freddie Mac and a handful of large banks created the Mortgage Electronic Registration System. It was intended as a means to keep track of the volumes of paperwork that accompany mortgages, including who actually owned the mortgages as they were bundled and sold off to other financial institutions or investors.
Eventually, MERS took over a role that counties had previously maintained. Banks that were selling off a mortgage no longer had to file paperwork with a county clerk's office and pay a filing fee, but instead filed with MERS. MERS also began initiating foreclosure proceedings when homeowners could no longer keep up with their mortgages.
That seemed fine and dandy with the banks, who were able to save money and cut down on paperwork. But that went up in a puff of judicial smoke, when the Oregon Court of Appeals ruled in favor of a homeowner who said MERS had no authority to initiate a foreclosure, since MERS had no contract with the homeowner.
There's a lot more complicated detail, Joe, but in short, what that means is that for any loan that went through MERS, the only way to complete a foreclosure now is to go through the court system. Those judicial proceedings are not required to follow the same process as the non-judicial foreclosures, thus the end of most of the foreclosure notices in the newspaper.
There are some obvious issues here: Most people no longer see the foreclosure notices and the courts are faced with a potential tidal wave of cases that previously were handled outside the judicial process. The final say on this has not been said, however; the Oregon Supreme Court is expected to take up the case next month and the state Legislature is also considering action to correct the system.
As for where you can find the foreclosures now, well, good luck. With the vast majority of foreclosures now in the court system, the information is published online only when the property is set to be sold at auction. You could search the Oregon Judicial Information Network — which charges a fee based on the time you spend on the system — but that's effective only if you know some of the specifics of the foreclosure case.
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