Another Oregon woman successfully halted a post-foreclosure eviction after a judge in Hood River found the bank could not prove it held title to the home.
Sara Michelotti’s victory over Wells Fargo late last week carries no weight in other Oregon courts, attorneys say. But it illustrates a growing problem for banks — if the loans’s ownership history isn’t recorded properly, foreclosed homeowners might be able to fight even an eviction.
“There’s this real uncertainty from county to county about what that eviction process is going to look like for the lender,” said Brian Cox, a real estate attorney in Eugene who represented Wells Fargo.
Michelotti’s case revolved around a subprime mortgage lender, Option One Mortgage Corp., that went out of business during the housing crisis. Circuit Court Judge Paul Crowley ruled that it was not clear when or how Option One transferred Michelotti’s mortgage to American Home Mortgage Servicing Inc., which foreclosed on her home and later sold it to Wells Fargo.
Since the loan’s ownership was not properly recorded in Hood River County records, as required by Oregon law, Crowley ruled that Wells Fargo could not prove it had valid title to the property to evict. Crowley presides over courts in Hood River, Gilliam, Sherman, Wasco and Wheeler counties.
In June, a Columbia County judge blocked U.S. Bank’s eviction of Martha Flynn after finding the loan’s ownership history wasn’t properly recorded. But unlike Flynn’s case, Michelotti’s loan did not involve the Mortgage Electronic Registration Systems – a lightening rod for lawsuits over whether lenders properly foreclosed n homeowners.
“A lot of people get lost in ‘Oh it’s all MERS,’” said Michelotti’s attorney, Thomas Cutler of Harris Berne Christensen in Lake Oswego. “The problem runs broader than that.”
Crowley also rejected the bank’s argument that if Michelotti had paid her mortgage, the eviction would never have occurred.
“(Wells Fargo)’s counter argument to the effect that ‘if (Michelotti) had paid the mortgage we wouldn’t be here’ does not prevail at this junction because the question remains: are the right we here?’” Crowley wrote.
H&R Block Inc. sold Option One in 2008 to Wilbur Ross & Co., a distressed-asset investor, who merged it with American Home Mortgage Investment Corp.
But Crowley said he found no evidence of when the merger took place or why Option One’s name continued to be used on loan documents.
Cox said Wells Fargo had not yet decided how to respond to the ruling.
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OREGON REAL ESTATE ROUND TABLE 