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. The foreclosure mediation program was subsequently expanded to also include judicial foreclosures beginning on August 4, 2013. Read on to learn more about how Oregon’s Foreclosure Avoidance Program works and how you may be able to benefit from the process.
(To learn about other options for dealing with foreclosure, visit Nolo's Foreclosure section.)
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:
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:
(To get information about each of these options, see our Alternatives to Foreclosure area.)
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.)
Senate Bill 1552 (2012) established a Foreclosure Avoidance Mediation Program beginning on July 11, 2012. The Foreclosure Avoidance Mediation Program initially only applied to nonjudicial foreclosures. As a result, most lenders stopped filing out-of-court foreclosures and chose to proceed judicially instead to avoid the mediation program altogether. In fact, nonjudicial foreclosures nearly ground to a halt in Oregon following the mediation law and an unrelated appellate court ruling on lenders’ assignment recording practices.
However, on June 4, 2013, SB 558 was signed into law (Oregon Laws 2013 chapter 304). The new law expands the program to cover judicial foreclosures and makes changes to the overall structure of the program. The new mediation program was implemented on August 4, 2013.
The 2012 program is no longer accepting new cases.
On or after August 4, 2013, prior to initiating any type of foreclosure proceeding (judicial or nonjudicial), a lender must request a resolution conference with the homeowner in accordance with the rules of the Oregon Foreclosure Avoidance Program. (The homeowner may also request a resolution conference with their lender by meeting certain requirements. See below for more information.)
After the lender requests mediation, the Mediation Case Manager (the service provider) will send a Notice of Resolution Conference to both parties. This request will include:
If you agree to participate in a resolution conference, your lender is not able to initiate any type of foreclosure proceeding until they have complied with the requirements of the program by attending a resolution conference with you. Follow the steps below to participate if you have received a notice regarding a resolution conference.
If you are not in foreclosure, you may be eligible to participate in the program if you are 30 or more days in default on your loan obligation, or you are experiencing a financial hardship that may qualify you for a foreclosure avoidance measure. If you want to participate in the program, you may request a resolution conference with your lender by following the steps listed below.
The expanded foreclosure mediation program is more successful than when the previous program was first launched. In the first six weeks that the new program went into effect, it received 456 requests for face-to-face meetings between mortgage borrowers and lenders, many of which came from banks. (In comparison, in the first six weeks after the mediation program was initially launched in July 2012, it received only one mediation case referred by a private lender, and only 286 requests for mediation in the entire 13 months that it was in effect.)
Lenders who initiated fewer than 175 foreclosure actions in the preceding calendar year do not have to participate in the program. If your lender is exempt, contact it directly to discuss alternatives to foreclosure.
For more information about the Oregon Foreclosure Avoidance Program, go to www.ForeclosureMediationOR.org and click on "Learn More About 2013 Program." You can also go to www.doj.state.or.us and click “Foreclosure Mediation”.