In response to the ongoing foreclosure crisis in this country, many states have implemented mediation programs to assist homeowners in finding ways to avoid foreclosure. In 2012, the state of Oregon passed Senate Bill 1552, which implemented a new foreclosure mediation program for homeowners in nonjudicial foreclosure. Read on to learn more about how Oregon’s Foreclosure Avoidance Mediation Program works, how you may be able to benefit from the process, and issues that the program is currently facing.
(To learn about other options for dealing with foreclosure, visit Nolo's Foreclosure section.)
What Is Foreclosure Mediation?
Foreclosure mediation is a process that is used to help homeowners avoid foreclosure by coming up with an alternate solution that benefits both the homeowners and the lender. Mediation consists of a face-to-face meeting between:
- the homeowners
- their lender, and
- a neutral third-party (the mediator).
At the meeting, the parties discuss the homeowners’ financial situation and try to negotiate a way for the homeowners to keep the home or give up the property without going through a foreclosure. By working together, the parties are often able to reach an agreement.
Potential outcomes of mediation include:
- loan modification
- repayment agreement
- forbearance agreement
- short sale
- deed in lieu of foreclosure.
(To get information about each of these options, see our Alternatives to Foreclosure area.)
Oregon Foreclosure Process
In Oregon, foreclosures may be judicial or nonjudicial. (To learn more about the difference between judicial and nonjudicial foreclosure, and the procedures for each, see Will Your Foreclosure Take Place In or Out of Court?)
(To learn more about foreclosure in Oregon, see the Summary of Oregon's Foreclosure Laws.)
Oregon’s Foreclosure Avoidance Mediation Program
Senate Bill 1552 (2012) established a Foreclosure Avoidance Mediation Program beginning on July 11, 2012, pertaining to nonjudicial foreclosures of residential trust deeds. The program is available for two types of homeowners:
- those who have received a Notice of Mediation from their lender (issued when the lender begins the nonjudicial foreclosure by filing a Notice of Default) and
- those who are “at-risk” of default and who wish to mediate with their lender.
How to Participate
If you have received a Notice of Mediation, contact the Collins Center, which is the mediation service provider, by going to their website at www.foreclosuremediationOR.org or calling (toll free) 855-658-6733. Be sure to respond by the deadline on the Notice of Mediation to confirm with the mediation service provider that you want to enter into mediation.
If your home is not in foreclosure, but you are at risk of defaulting on your loan, you can also request mediation by calling the Collins Center or via its website.
The Mediation Scheduling Notice
Within 30 days after the Notice of Mediation is served on or mailed to the homeowner, the mediation service provider will send a mediation scheduling notice to the homeowner and lender. The mediation scheduling notice will contain the date, time, and location of the scheduled mediation session.
Homeowners Must Meet With a Housing Counselor
Before attending the mediation, the homeowner must meet with a qualified housing counselor. Housing counseling services are free. Go to www.foreclosuremediationor.org/counselors for a list of qualified housing counseling agencies.
Documents Required From the Homeowner
The homeowner must provide the following documents to the mediation service provider at least 15 days prior to the first scheduled mediation session:
- a completed Universal Intake Form
- pay stubs (two most recent months)
- a profit and loss statement (if self-employed)
- bank statements (two most recent months)
- a benefits statement or letter from the benefit provider (showing the amount, frequency, and duration of social security, disability, unemployment, or other non-wage benefit income)
- a divorce decree, judgment, or separation agreement (if relying on child support, alimony or maintenance payments)
- utility bills (most recent)
- property tax statement or appraisal (most recent), and
- tax returns (two most recent years).
Documents Required From the Lender
The lender must provide the following documents, among others, to the homeowner (via the mediation service provider) at least 15 days prior to the first scheduled mediation session:
- a complete payment history
- evidence that the lender is the real party in interest (proof of the right to foreclose)
- documents showing chain of title for the property at issue (including recorded and unrecorded conveyances, endorsements, and assignments)
- the net present value model used by the lender to evaluate the homeowner for a foreclosure avoidance measure (including the input values used by the lender)
- the total amount that the homeowner must pay to stop foreclosure proceedings, and
- an itemized description of all costs and expenses incurred by the lender in connection with the foreclosure, including trustee and attorney fees.
Cost to Participate in the Mediation Program
Homeowners must pay a $200 fee to the mediation service provider at the time they confirm their participation in the mediation program. If your income is less than a certain amount (less than 200% of the federal poverty level), you are eligible for reduced fee of $50.
Certain Lenders Are Exempt From the Program
Certain lenders do not have to participate in the program. View the list of lenders that are exempt from Oregon’s Foreclosure Avoidance Mediation Program. If your lender is exempt, contact it directly to discuss alternatives to foreclosure.
Problems With Oregon’s Mediation Program
Oregon’s Foreclosure Avoidance Mediation Program only applies to nonjudicial foreclosures. As a result, many lenders have stopped filing out-of-court foreclosures and have chosen to proceed judicially. This allows them to avoid the mediation program altogether. In fact, nonjudicial foreclosures have substantially declined in Oregon following the new mediation law and an unrelated appellate court ruling on lenders’ assignment recording practices.
Another problem is that the mediation law does not penalize lenders that refuse to participate in mediation with at-risk borrowers, a term that is not defined in the statute. Consequently, some lenders are not cooperating with mediation requests from at-risk borrowers.
Legislative efforts are being undertaken to close loopholes with the mediation program, as well as possibly expand the program to include judicial foreclosures, but for now, the program’s effectiveness is questionable.
For More Information
For more information about the Oregon Foreclosure Avoidance Mediation Program, go to www.doj.state.or.us and click “Foreclosure Mediation”.
You can also contact the State of Oregon’s Department of Consumer and Business Services, Housing and Community Services, at www.oregonhomeownersupport.gov, as they may be able to help you.
Additional foreclosure prevention assistance can be obtained from the official Oregon state website at www.oregon.gov/DCBS/foreclosurehelp/pages/index.aspx.