The state of Oregon has implemented a mandatory foreclosure mediation program for all homeowners in the state who are behind on their mortgage or who are facing a foreclosure. The exact government law is called SB 1552.
All Oregon homeowners will now have access to mediation services. The program is offered to borrowers who are behind on their mortgage and who may be at risk of foreclosure. In addition, if you have received a formal notice then you will be able to take advantage of the low cost mediation service.
The law has many benefits for homeowners and lenders in Oregon. Among other things, the legislation makes lenders attend a mediation session with the borrower, even if the borrower is not yet in default. What this does is it ensures that homeowners have the opportunity to negotiate a restructured mortgage with the bank or lender before they are behind in their payments. A recurring theme communicated to state officials is that homeowners who were attempting to save their homes were being met with lengthy lender delays, lack of cooperation, and ineffective and unenforceable loan modification programs. The foreclosure mediation process can help minimize those concerns.
It can help ensure that there is a pro-active approach taken to address any housing issues, and may be able to help the borrower avoid a default on their mortgage. A summary of the program terms are listed below.
Foreclosure mediation for homeowners in default is required prior to starting the foreclosure process. The lender needs to mediate with homeowners in default, and the objective is to negotiate possible alternatives to a foreclosure filing. This is offered unless the homeowner chooses to opt-out.
The law requires that the bank or lender notify the homeowner of the availability of mediation, with the purpose of finding a solution and agreeing to some form of foreclosure avoidance measure. Free or low cost housing and credit counseling is mandatory in Oregon. This component requires homeowner to visit a housing counselor prior to proceeding with the mediation process. If the homeowner is unable to get an appointment with a free or low cost housing counselor within 30 days, then they are offered Fast Track to Mediation. This will waive the housing counselor requirement so that the homeowner can proceed directly to mediation services.
A mandatory meeting with underwater homeowners is also required. Lenders will need to meet with homeowners who are underwater in the presence of a third party, neutral mediator. The regulation permits the individual to request mediation with the lender or the lenders agent.
SB 1552 also offers mediation to homeowners who are underwater in their mortgages. This gives them the opportunity to discuss foreclosure - avoidance measures with a neutral third party and their bank.
Another benefit from SB 1552 is that Oregonians will no longer be faced with the dual track system, in which one department of a lender actively negotiates a loan modification with a homeowner while a different department of the same bank simultaneously pursues foreclosure of the property. So the law will only allow a lender to foreclose on a home if the borrower has violated a current foreclosure avoidance agreement or if the homeowner is not qualified for any foreclosure avoidance measure.
Some of the solutions that can be reviewed during the mediation session include a deferment; the lender can decide to temporarily or permanently modify the home loan, a deed in lieu of foreclosure, short sale, or other assistance. Contact a Oregon HUD counseling agency to apply. Read more.
A professional mediation service provider shall supervise the negotiation/mediation sessions. The Oregon State Attorney General has established the qualifications, training and experience requirements that are needed by the mediator. Read more on the Oregon Consumer protection foreclosure laws.
Direct authority to negotiate – The homeowner’s bank or lender needs to send someone to the mediation session who has the authority to either accept or reject proposals for foreclosure avoidance measures. So the bank representative needs to be empowered to negotiate and offer solutions. If good cause is shown, the mediator may allow the lender’s representative to attend the mediation session by video or phone.
Both the lender and the homeowner will share the cost of the mediation sessions in Oregon. The homeowner may be charged a fee of up to $200, however in certain cases the mediator may waive that cost to homeowner.
While effectiveness will vary based on each person’s personal situation, according to estimates provided by experts, it is expected that more than 10,000 Oregonians each year will be able to avoid foreclosure. After going through this mediation process, and exploring all solutions, if a lender determines they can foreclose, then they need to provide the homeowner with at least 30 days notice before the foreclosure date is scheduled. Also, a sale date may be postponed just once for up to 2 days by announcement at the original sale date, or the lender must provide at least 15 days’ written notice of the new scheduled date.
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