Hucke v. BAC Home Loans Servicing, L.P.

Under ORS 86.722, a correction deed that sets aside a trustee's deed is meant to serve as a step in unwinding a foreclosure sale, and does not unilaterally reverse the sale. Transfers of promissory notes do not have to be recorded before nonjudicial foreclosure sales can proceed.

Defendant bank appealed trial court declaration in favor of Plaintiff homeowner. Homeowner contested the legality of a nonjudicial foreclosure sale. Bank was successor in interest to named trustee on trust deed, but had not been named until after the foreclosure sale was completed. Shortly before trial, Bank filed a correction to the deed, naming itself as trustee.

Bank argues on appeal that the corrected deed rendered Homeowner's claims at trial moot and the case should have been dismissed by the trial court. The Court held that a correction deed which sets aside a trustee's deed restores the interest of the purchaser, trustee, borrower, and lender in the same position they were in before the trustee deed was recorded, but does not unilaterally reverse the foreclosure sale. Homeowner's claims were therefore not moot and trial court did not err.

The trial court agreed with Homeowner's argument that the sale was not valid because the assignment to Bank was unrecorded at the time of the foreclosure sale. Two recent decisions, Niday and Brandrup, found that transfers of promissory notes need not be recorded before nonjudicial foreclosures can proceed. Accordingly, the Court reversed and remanded.