Foreclosure Actions Down—Way Down—As Oregon’s New Foreclosure Mediation Program Ramps Up—Way Up

There is good news on the often gloomy foreclosure defense front.

Oregon’s new foreclosure mediation program is only a few months old, but lenders (yes, lenders!) have referred over 1,700 new cases to the Mediation Case Manager, the agency responsible for running the program for the state. Of that, more than 1300 cases were just received in the last few weeks.

Chase Bank is the largest bank participating so far with more than 600 requests. The four banks with the most mediation requests are Chase, Nationstar, Green Tree Servicing and US Bank. Bank of America and Wells Fargo—the state’s largest mortgage lender—have yet to submit mediation requests. However, B of A and Well Fargo are (purportedly) preparing to submit a large volume of cases “soon.”

If true, that is really, really good news.

The new mediation program requires the state’s large mortgage lenders to offer a meeting with homeowners before they can foreclose. Lenders must submit mediation requests to the Mediation Case Manager and homeowners are then contacted by a Mediation Case Manager representative notifying them of the request. Homeowner’s must then pay a fee—$50 or $175 depending on household income—to participate in the program and work with a HUD-approved housing counselor. Housing counselors will work with homeowners throughout the process and help homeowners obtain and complete the required documents and upload these documents to the mediation program online portal. Housing counselors will also be available to review the lender's documents once they are available in the online system. In some cases, housing counselors may attend the mediation conference with homeowners and serve as an advocate and aid in the discussion on foreclosure avoidance options.

At present, there are currently 100+ mediations scheduled for November and December.

Unsurprisingly, the success of the new mediation program has had a direct impact on the number of new foreclosure actions throughout the state. New foreclosure cases have virtually ground to a halt while the first wave of mediations make their way through the program. According to numbers compiled by Gorilla Capital, a Eugene company that buys and resells distressed properties, foreclosures in the state’s largest seven counties have fallen by 42 percent from a year ago and 80 percent from a month earlier month. While this might be a temporary reprieve, the opportunity for a struggling homeowner to have a face-to-face meeting with a lender is meaningful and should not be ignored. Our hope is that a large percentage of these mediations will result in some sort of agreement—whether that agreement is for a loan modification, a short sale or a deed-in-lieu of foreclosure.

Time will tell.

If you have any questions about the new mediation program, please visit the Oregon Foreclosure Avoidance Program website or call Garland, Griffiths Knaupp at (503) 846-0707. We’re here to help.

"Enormous Increase" in Foreclosure Meditation Requests

The new Oregon Foreclosure Avoidance Program has received over 450 mediation requests since its inception on August 4, 2013. What is most compelling about this number is that the vast majority of mediation requests have come from lenders. In the first 13 months of the prior Oregon mediation program, only 286 cases were referred to mediation. However, the prior program was overhauled by Senate Bill 558, which came into law last spring. Under Senate Bill 558, both non-judicial and judicial foreclosures are now subject to the mediation requirement. Under the prior program, only non-judicial foreclosures required mediation. As a consequence, many lenders simply stopped using nonjudicial foreclosures and moved to judicial foreclosures instead. This unintended loophole virtually gutted the "mediation requirement" under the old mediation program. 

Under the new program, a lender who intends to foreclose (whether the vehicle is a judicial or nonjudicial foreclosure) must first request a meeting with the homeowner. A representative from the Oregon Foreclosure Administration Program--the agency responsible for administrating the mediation program--will notify the homeowner of the request. The homeowner has 25 days to respond and must pay a fee -- $50 or $200 depending on income -- and provide some financial information to the lender. The lender must provide payment history and a copy of the loan documents to the homeowner. 

According to Oregon Attorney General Ellen Rosenblum, indications are that hundreds of additional cases could be referred to the new program in the upcoming weeks.

“No one’s happy about impending foreclosures, but we’re delighted with these numbers because, unlike the earlier program, it means this one is working the way it’s supposed to,” said Rosenblum. “We worked hard to close the loophole that allowed banks to avoid face-to-face meetings with borrowers. We remain hopeful that getting lenders and borrowers together at the same table will help prevent foreclosures and keep Oregonians in their homes.”

The mediation requirement will not end the foreclosure problem. Almost 29,000 Oregonians still remain more than 90 days in arrears on their mortgages. Many embattled homeowners have moved and cannot be located. Others lack the resources to pay even a modified mortgage. However, the recent change to the mediation law will result in a significant upswing in the number of face-to-face meetings between homeowners and lenders and that is certainly a step in the right direction.

If a foreclosure action has been initiated against you after August 4, 2013 and you are uncertain about whether or not your lender has complied with the requirements of the new mediation program, we would encourage you to contact us immediately. Alternatively, visit the Oregon Foreclosure Avoidance Program website for more information about the new mediation program.