After a North Portland rental home owned by Dawn Lind went into foreclosure last fall, she jumped into a nationwide legal fight that could affect millions of residential properties.

Lind, who learned the real-estate business from the inside working as a mortgage broker for eight years, is taking on a company critics say helped cause the housing crisis and could now threaten the fundamentals of American property rights—the innocuously named Mortgage Electronic Registration Systems, or MERS.

A 46-year-old mother of three, Lind filed suit Feb. 23 in Multnomah County Circuit Court claiming MERS has no right to foreclose on her two-bedroom house unless the company can prove it owns the mortgage.

Legal experts say her case is not isolated and that it could determine the fate of thousands of Oregon homes facing foreclosure.

“Collectively, that case and cases like it are forcing accountability in the financial system,” says Christopher Peterson, a law professor at the University of Utah. “There’s a chance that these kinds of cases will put pressure, both in the legislatures and in the courts, to build a law that is more protective of borrowers in their homes.”

For Lind, the case is personal.

“I was part of the problem. Now I want to be part of the solution,” says Lind, who recalls signing at least one questionable loan before she was forced out of the faltering mortgage business in January due to lack of business.

“MERS is the center of the problem,” Lind insists.

Both in court and in past press interviews, executives at MERS have strongly rejected allegations of wrongdoing. MERS Vice President Doug Danko declined to comment on Lind’s case.

Based in Reston, Va., MERS was created in 1995 by industry insiders associated with the Mortgage Bankers Association of America. Companies saved billions of dollars in fees bypassing local governments by creating a private database of property information.

MERS made it possible to quickly bundle and transfer debt—a key to selling mortgage-backed securities cooked up during the housing bubble. Critics say MERS was also central in disguising the toxic nature of those assets.

Lind, who lives in Northwest Portland, bought the house in Kenton as an investment in 2005 for $170,000. Like many homeowners, she didn’t know about MERS’s role until foreclosure papers arrived listing MERS as “nominee” for the lender, Greenpoint Mortgage Funding.

Lind learned MERS has foreclosed on thousands of homes across the country—in some cases without the proper paperwork or legal standing, according to state and federal court rulings. Judges in Arkansas, Kansas and Maine have found MERS lacks standing to foreclose in those states, and the company faces lawsuits for racketeering in New York, Florida and Kentucky.

The legal problems with MERS’s approach are twofold, observers say. First, MERS claims to be both the mortgage owner and an agent of the mortgage holder—a claim a New York judge last month labeled “absurd at best.” Second, the company’s database bypasses public-recording laws in place since colonial times.

How many properties are affected? More than 60 million—roughly 60 percent of all mortgage loans in America, according to Peterson.

“The entire national economy is exposed to this one undemocratic shell company that’s maintained and controlled for the benefit of financial institutions,” Peterson says.

For the first time in history, Peterson has written, Americans lack reliable records of who owns many properties. And a string of recent legal defeats has thrown into question whether foreclosures on those properties can hold up in court.

“The drumbeat of federal court cases of the last couple of months has been in favor of the homeowners,” says Phil Querin, a Portland real-estate lawyer.

Those rulings include a Feb. 7 decision by U.S. Bankruptcy Court Judge Frank Alley in Eugene. Regarding a home in Southern Oregon, he ruled MERS could not foreclose under Oregon law because the papers were never recorded.

“It sent tremors throughout the industry,” Querin says. “There were telephone conferences statewide.”

But Patrick Wade, head of the debtor-creditor section of the Oregon State Bar, says no definitive case has arisen in Oregon.

“Maybe this will be that case,” Wade says of Lind’s lawsuit seeking to stay the foreclosure on her house.

“It’s personal to me when they’re taking advantage of so many people who don’t understand the system,” Lind says. “That’s what bothers me the most.”

FACT: Massachusetts Attorney General Martha Coakley opened an investigation into MERS last year. In Oregon, “We are looking into MERS,” says an email from Tony Green, a spokesman for Oregon Attorney General John Kroger. “I can’t say much more than that.”