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Oregon: Proof of Standing Clarified in Appellate Ruling

Posted By USFN, Tuesday, March 13, 2018
Updated: Monday, March 12, 2018

March 13, 2018

by John Thomas
McCarthy & Holthus, LLP – USFN Member (Washington)

On February 28, 2018 the Oregon Court of Appeals issued an opinion reversing and remanding the trial court’s summary judgment decision in favor of the foreclosing plaintiff, on the basis that the loan servicer’s declaration in support of its motion for summary judgment did not establish that the plaintiff was the holder of the note at the time that the judicial foreclosure was initiated (as it contained inadmissible hearsay on that point). [U.S. Bank National Association, as Trustee for the Structured Asset Investment Loan Trust, 2005-10 v. McCoy, 290 Or. App. 525 (2018)].

Generally, to have standing, a loan beneficiary seeking to foreclose judicially must hold the note (negotiable instrument) at the time that the foreclosure complaint is filed. Although the servicer’s summary judgment declaration in McCoy asserted that “[Plaintiff] was the holder at the time this foreclosure action was initiated and remains the holder of the Note and beneficiary of the Deed of Trust,” the borrower moved to strike the testimony as inadmissible hearsay. In agreeing with the borrower, the Court of Appeals observed that the servicer’s declaration did not establish that the witness had personal knowledge as to the whereabouts of the note, nor was there a business record accompanying the declaration specific to the possession of the note.

As a result of McCoy, servicers should anticipate more challenges to foreclosures from borrowers (and potentially judges) where a servicer’s affidavit filed in support of a dispositive motion for entry of judgement does not adequately demonstrate either that the witness has personal knowledge of the possession of the note at the time the foreclosure was filed, or does not include a record of the collateral file whereabouts (containing the promissory note) attached to the declaration as an exhibit (such as a screen printout).

Servicers should expect a more thorough declaration for execution along these lines from default counsel.

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