Oregon’s Foreclosure Mediation Law

Oregon Senate Chamber

Oregon’s Legislative Assembly passed a law to requiring mediation for the purpose of negotiating “foreclosure avoidance measures.” If Governor Kitzhaber signs the law, then SB 1552, kicks in 90 days later. This post answers some of the frequently asked questions.

Q. What loans?
A. The law applies to residential trust deeds.

Q. Who?
A. SB 1552 applies to beneficiaries of trust deeds, that is, banks and other lenders who seek to foreclose.

Q. What must banks do?
A. If lenders want to foreclose, then they must enter into mediation with the “grantor” (home owner) to negotiate over “foreclosure avoidance measures” if the homeowner formally requests mediation.

Q. What’s a “foreclosure avoidance measure?:
A. An agreement between the lender and homeowner that uses one or more of the following to modify the trust deed:

  • Lender allows the homeowner to skip or delay payments.
  • Lender modifies the payment terms.
  • Lender accepts a “deed in lieu of foreclosure.”
  • Lender allows a short sale.
  • Lender does something else to enable the homeowner to avoid foreclosure.

Q. How will the foreclosure mediation law work?
A. The homeowner requests mediation. Then, within 30 days, the mediation service provider must send both parties the date, time and place of the mediation, which must occur between 45 and 90 days. The law directs the Attorney General to contract with a mediation service provider, and the AG must prepare rules that cover the qualifications and fees of the mediators.

Q. What are the exceptions?
A. The biggest exception is that this law only applies to the big lenders. If the lender did not start more than 250 foreclosures during the previous year, then they can opt out of the mediation requirement. One hopes, however, that the program will benefit lenders and homeowners, so that lenders will want to participate.

Jeff Merrick
Merrick Mediation Services
© 2012