SB 1552, Foreclosure Reform, from Economic Fairness of Oregon

“For more than five years, Oregon leaders have heard the devastating effects of the foreclosure crisis through the experiences of their constituents. Homeowners attempting to save their homes are met with lengthy lender delays, and ineffective and unenforceable modification programs.

Oregon leaders mobilized in attempts enact legislation multiple times over the last three years to combat the problem, and succeeded in their efforts in 2012 with the hard-fought win of SB 1552.

SB 1552 is a major victory over bank lobbyists who were determined to block foreclosure reform in Oregon. Despite their best efforts, the voice of the people won out. SB 1552 offers mediation to homeowners in foreclosure or underwater in their mortgages, giving them the opportunity to discuss foreclosure- avoidance measures with their bank and a neutral third party. 21 other

states already use mediation, with well-established programs resulting in foreclosure alternatives more than 50% of the time. This will go a long way toward solving Oregon’s ongoing foreclosure crisis. According to estimates by national experts, more than 10,000 Oregonians each year will be able to avoid foreclosure as a result of SB 1552. Another benefit Oregonians will see as a result of 1552 is the end of the dual track system, in which one arm of a lender actively negotiates a modification with a homeowner while a different arm simultaneously pursues foreclosure.

Oregonian’s can stay apprised of the latest developments on the implementation of SB 1552 by visiting the websites of the Oregon Department of Justice or Economic Fairness Oregon –,

SB 1552 Summary

Mandatory Meeting with Underwater Homeowners – Requires lenders to meet with homeowners who are underwater in the presence of a third party mediator upon

Mediation for Homeowners in Default – Prior to starting the foreclosure process, lenders must mediate with homeowners in default to negotiate possible alternatives to foreclosure, unless homeowner chooses to opt-out.

Housing Counseling – Requires homeowner to visit a housing counselor prior to proceeding with mediation.

Fast Track to Mediation – If the homeowner is unable to get an appointment with a housing counselor within 30 days, the housing counselor requirement is waived so the homeowner can proceed directly to mediation.

Advance Notification – Notice of mediation must be sent 60 days prior to service of the notice of sale. The existing 120 day timeline from notice of sale to foreclosure sale remains.

Authority to Negotiate – Banks must send someone to mediation with the authority to accept or reject proposals for foreclosure avoidance measures. If good cause is shown, the mediator may allow the lender’s representative to attend the mediation by phone or video. • Attorney General Oversight – Directs the Attorney General to draft rules and oversee the foreclosure mediation program.

Costs – Lender and homeowner share the cost of mediation. Homeowner may be charged a fee of up to $200. Mediator may waive cost to homeowner.

Exception for Small Lenders – Lenders doing fewer than 250 foreclosures a year (including those filed by affiliates or agents) are exempt from the mediation requirements.

End to “Dual Tracking” – Prohibits all lenders from “dual tracking” homeowners (renegotiating loan terms with homeowners while at the same time pursuing foreclosure) by only allowing a lender to foreclose if: a. The borrower has violated a current foreclosure avoidance agreement, or; b. The borrower is not eligible for any foreclosure avoidance measure.

Proper Notice – Once a lender has determined it can foreclose, it must provide the homeowner with notice 30 days before the foreclosure date is scheduled. A sale date may be postponed 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 date.

Enforcement –Prior to sale, the lender must record certification of compliance with mediation and the dual track provisions. Lack of this certification would create a cloud on the home’s title. Sanction for violation of the dual track provision is a $500 fine, actual damages, and reasonable attorney fees to the prevailing plaintiff.

Effective Date – The bill has an emergency clause and takes effect on the 91st day after it is signed by the Governor.”

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