FAQ - SPECIAL CONSUMER RIGHTS IN OREGON - FORECLOSURE IN OREGON
SPECIAL CONSUMER RIGHTS IN OREGON:
QUESTION: Are there any other rules affecting the creditor or debtor in foreclosure?
ANSWER: Yes, and more forthcoming all of the time as Oregon, like California, above, tries to sort out the financial havoc wreaked by the recent recession. Most favor the consumer.
Some of the consumer protections are above in the form of limits against deficiency judgments. The legislature is working on more.
Oregonians facing foreclosure often have difficulty contacting their lender to discuss their options, such as a possible loan modification. At the time of this article, bills are pending in the Oregon Legislature which
substantially softens the harsher remedies of foreclosure upon the residential borrower. SB 628 requires that the lender or loan servicer notify a homeowner facing foreclosure of the right to a meeting (either face-to-face or by phone) and that the lender/loan servicer assess whether the borrower is eligible for a loan modification. This is a little like the law in California, see above, except harder for the lenders to “exempt” themselves as in California, see above.
Tenants in foreclosure. There are bills protecting Oregon renters living in foreclosed homes by requiring advance notice of the foreclosure proceedings and providing protections related to leases and security deposits. The notice will provide information about tenants rights and where they can go for assistance.
Deficiency judgments after foreclosure: See HB 3004. Prior to the mortgage lending crisis, many homebuyers financed 80 percent of the purchase price with a mortgage and trust deed and the remaining 20 percent with second mortgage financed from the same lender. The second was commonly called a “HELOC” (“home equity line of credit) but were not in fact truly used as a line of credit for home equity but in fact were used to actually purchase the property. These consumers did not have the same protections under Oregon’s foreclosure laws as borrowers with a single mortgage loan. HB 3004 closes that loophole by precluding lenders that foreclosure on borrower with an 80/20 loan from collecting from the second loan if the home sells for less than what the borrower owes.
Bills in prohibition against negative loans: Protects Oregon mortgage borrowers against abusive lending practices by restricting the sale of negative amortization loans and by requiring lenders to provide translated disclosures when loans are marketed and negotiated in languages other than English.
Bills in enforcement of new federal mortgage lending standards. Protect mortgage borrowers by allowing the department to enforce new federal laws that require additional disclosures to borrowers and restrict loan servicing abuses and misleading advertising. The bill also increases surety bond requirements and enables Oregon to participate in a national licensing system for loan originators, to ensure they have met education requirements, passed background checks, and followed the laws in other states.
Bills to protect consumers at risk of foreclosure from both consultants who offer to help homeowners avoid foreclosure and equity purchasers who acquire a financial interest in the property. The bill requires consultants and equity purchasers to provide a written contract with clear disclosures to the homeowners and other safeguards. It also gives the homeowner rights to cancel the contract. The bill also requires a trustee acting for the lender to send the homeowner facing foreclosure a clearly written notice at least 120 days before the sale, with helpful information about the homeowner’s options. Much like that in California, see above.
Bills to enhance loan originator enforcement. Expands enforcement over loan originators, the individual salespeople who work for mortgage lenders and interact directly with borrowers. The Department of Consumer and Business Services can ban or suspend loan originators from the industry for fraudulent practices, negligence or incompetence, or violating industry rules.\
Debt management services HB 2191. Protects financially vulnerable Oregonians who are increasingly turning to consumer debt management services for assistance, by prohibiting misleading advertising, requiring specific disclosures, and requiring all providers of debt management services to be registered with the state, including debt settlement companies and loan modifiers.
See other consumer defenses to debts under “General Defenses Common to All States”, below. See also other debtor ramifications of a foreclosure, below.