Bill Text: OR HB2400 | 2013 | Regular Session | Introduced

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Bill Title: Relating to foreclosures of residential trust deeds; declaring an emergency.

Spectrum: Partisan Bill (Democrat 7-0)

Status: (Failed) 2013-07-08 - In committee upon adjournment. [HB2400 Detail]

Download: Oregon-2013-HB2400-Introduced.html

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     77th OREGON LEGISLATIVE ASSEMBLY--2013 Regular Session

NOTE:  Matter within  { +  braces and plus signs + } in an
amended section is new. Matter within  { -  braces and minus
signs - } is existing law to be omitted. New sections are within
 { +  braces and plus signs + } .

LC 1074

                         House Bill 2400

Sponsored by Representative WITT; Representatives BAILEY,
  BUCKLEY, DOHERTY, FREDERICK, GELSER, HOLVEY (Presession filed.)

                             SUMMARY

The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.

  Removes exemption for certain beneficiaries from requirement to
enter into mediation with grantor before initiating foreclosure
of residential trust deed by advertisement and sale. Removes
exemption for certain beneficiaries from requirement for
beneficiary to pay $100 fee to county clerk when recording notice
of default.
  Requires beneficiary or beneficiary's agent to enter into
mediation with grantor in good faith.
  Becomes operative 91 days after effective date of Act.
  Declares emergency, effective on passage.

                        A BILL FOR AN ACT
Relating to foreclosures of residential trust deeds; creating new
  provisions; amending ORS 86.735 and 86.740 and sections 2 and
  4, chapter 112, Oregon Laws 2012; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
  SECTION 1. Section 2, chapter 112, Oregon Laws 2012, is amended
to read:
   { +  Sec. 2.  + }(1) As used in this section and sections 3
and 4a   { - of this 2012 Act - }  { + , chapter 112, Oregon Laws
2012 + }, 'foreclosure avoidance measure' means an agreement
between a beneficiary and a grantor that uses one or more of the
following methods to modify an obligation that is secured by a
trust deed:
  (a) The beneficiary defers or forbears from collecting one or
more payments due on the obligation.
  (b) The beneficiary modifies, temporarily or permanently, the
payment terms or other terms of the obligation.
  (c) The beneficiary accepts a deed in lieu of foreclosure from
the grantor.
  (d) The grantor conducts a short sale.
  (e) The beneficiary provides the grantor with other assistance
that enables the grantor to avoid a foreclosure.
  (2)(a) Except as provided in paragraph (d) of this subsection,
a beneficiary that seeks to foreclose a residential trust deed
under ORS 86.735 shall enter into mediation with the grantor for
the purpose of negotiating a foreclosure avoidance measure in
accordance with the provisions of this section.
  (b) The Attorney General shall:

  (A) Appoint a mediation service provider to coordinate a
mediation program and shall enter into an agreement to pay the
mediation service provider for the mediation service provider's
services from the Foreclosure Avoidance Mediation Fund
established in section 4   { - of this 2012 Act - }  { + ,
chapter 112, Oregon Laws 2012 + }.  The appointment and the
agreement are not subject to ORS chapter 279A or 279B.
  (B) Prescribe qualifications, training and experience
requirements for mediators by rule.
  (C) Set the schedule of fees for the mediation by rule.
  (c) The beneficiary and the grantor shall share the cost of the
mediation, except that the grantor's portion of the cost may not
exceed $200. The mediator may waive the grantor's portion of the
fee in accordance with rules that the Attorney General adopts to
describe circumstances that permit a waiver.
  (d) The requirement to enter into mediation with a grantor does
not apply  { - : - }
    { - (A) To an individual, a financial institution, as defined
in ORS 706.008, a mortgage banker, as defined in ORS 86A.100, or
a licensee, as defined in ORS 725.010, if the individual,
financial institution, mortgage banker or licensee provides to
the Attorney General a sworn affidavit that states that during
the preceding calendar year the individual, financial
institution, mortgage banker or licensee did not commence or
cause an affiliate or agent of the individual, financial
institution, mortgage banker or licensee to commence more than a
total of 250 actions to foreclose a residential trust deed by
advertisement and sale under ORS 86.735 or a residential mortgage
by suit under ORS 88.010. An individual, financial institution,
mortgage banker or licensee that intends to claim an exemption
under this subparagraph shall file the affidavit either: - }
    { - (i) Within 30 days after the operative date specified in
section 11 of this 2012 Act to claim the exemption for calendar
year 2012 and not later than January 31 in any subsequent
calendar year in which the individual, financial institution,
mortgage banker or licensee intends to claim the exemption;
or - }
    { - (ii) At the time the individual, financial institution,
mortgage banker or licensee files a notice of default under ORS
86.735. - }
    { - (B) - }  if the grantor fails to confirm that the grantor
will enter into mediation by the date specified under subsection
(3)(c) of this section.
  (3) Within 30 days after the date on which the beneficiary
caused a notice of mediation to be served or mailed as provided
in ORS 86.740, the mediation service provider shall send a notice
to the grantor and the beneficiary that:
  (a) Schedules a date, time and location for the mediation.  The
date must be not earlier than 45 days and not later than 90 days
after the date on which the notice of mediation was served or
mailed as provided in ORS 86.740.
  (b) Identifies and provides contact information for the
mediation service provider.
  (c) Specifies a date at least 30 days before the scheduled date
of the mediation by which the grantor must contact the mediation
service provider to confirm that the grantor will enter into
mediation. The notice must state that the mediation service
provider will deem the grantor to have declined to enter into
mediation if the grantor fails to confirm by the specified date.
  (d) Lists the costs of the mediation and specifies the portion
of the costs for which the grantor is responsible.
  (e) Provides any other information that the Attorney General
requires by rule.
  (4)(a) If the grantor confirms by the date specified under
subsection (3)(c) of this section that the grantor will enter
into mediation, the beneficiary or the beneficiary's agent shall
appear at the time and the location identified in the mediation
service provider's notice under subsection (3) of this section
with the documentation described in paragraph (b) of this
subsection.
  (b) The beneficiary or the beneficiary's agent must appear in
person at the location of the mediation unless the mediator
permits the beneficiary or the beneficiary's agent to appear in
another manner for good cause shown. The fact that a beneficiary
or beneficiary's agent is located outside this state does not
alone constitute good cause for the purposes of this paragraph.
The beneficiary or the beneficiary's agent must appear at the
mediation with:
  (A) The grantor's complete payment history for the obligation
that is secured by the residential trust deed that the
beneficiary seeks to foreclose;
  (B) Evidence that the beneficiary is the real party in interest
with respect to the obligation, including but not limited to:
  (i) A true copy of the original debt instrument that is the
basis for the right the beneficiary claims to foreclose the trust
deed; and
  (ii) Documents that show the chain of title for the property
that is subject to the residential trust deed from the date of
the original loan for which the beneficiary seeks foreclosure to
the date of the notices given under ORS 86.740, including
conveyances, endorsements and assignments of the residential
trust deed, the note and the security instrument, whether
recorded or unrecorded;
  (C) A copy of the authorization from the beneficiary to the
beneficiary's agent, if the beneficiary's agent appears at the
mediation;
  (D) A copy of any of the following documents that apply to the
note or obligation that is secured by the trust deed:
  (i) A servicing agreement the beneficiary entered into with
another person; or
  (ii) An agreement by means of which the beneficiary pledged as
collateral for a security the beneficiary issued or sold all or a
portion of the ownership interest in the note or other
obligation; and
  (E) Other documentation the Attorney General specifies by rule.
  (c) The beneficiary or the beneficiary's agent that enters into
mediation with the grantor must have or be able to obtain, before
the initial mediation session concludes, authority to accept or
reject a proposal for a foreclosure avoidance measure and
authority to enter with the grantor into an agreement for a
foreclosure avoidance measure.
  (5)(a) The beneficiary or the beneficiary's agent must enter
into mediation { +  in good faith and + } in accordance with
mediation guidelines the Attorney General establishes by rule.
  (b) If the beneficiary or the beneficiary's agent agrees with
the grantor on a foreclosure avoidance measure, the beneficiary
or beneficiary's agent and the grantor shall set forth the terms
of the foreclosure avoidance measure in a written agreement, a
copy of which the beneficiary or beneficiary's agent shall
provide to the Attorney General. The beneficiary may elect to pay
the grantor's portion of the cost of the mediation or the grantor
and the beneficiary may agree to include the cost of the
mediation as part of and in accordance with any payment plan that
is part of the foreclosure avoidance measure.
  (c) If the beneficiary or the beneficiary's agent and the
grantor do not agree on a foreclosure avoidance measure, the
mediation service provider shall notify the Attorney General that
the mediation did not result in an agreement.
  (6)(a) At the conclusion of the mediation, if the beneficiary
has complied with the requirements of subsections (4) and (5) of
this section, the mediation service provider shall provide the
beneficiary or the beneficiary's agent with a certificate of
compliance in a form and with contents that the Attorney General
specifies by rule. The certificate must state that the
beneficiary has complied with the requirements of this section.
  (b) If the grantor does not confirm by the date specified under
subsection (3)(c) of this section that the grantor will enter
into mediation, the mediation service provider shall provide the
beneficiary or the beneficiary's agent with a certificate of
compliance in a form and with contents that the Attorney General
specifies by rule. The certificate must state that the grantor
declined to enter into mediation with the beneficiary.
  (c) The mediation service provider shall provide a copy of the
certificate the mediation service provider issues under paragraph
(a) or (b) of this subsection to the grantor and to the Attorney
General.
  (7)(a) A grantor that is at risk of default before the
beneficiary or the trustee has filed a notice of default for
recording under ORS 86.735 may notify the beneficiary or trustee
in the trust deed or the beneficiary's or trustee's agent that
the grantor wants to enter into mediation. Within 15 days after
receiving the request, the beneficiary or trustee or the
beneficiary's or trustee's agent shall respond to the grantor's
request and shall notify the Attorney General and the mediation
service provider identified in subsection (2)(b) of this section.
The response to the grantor must include contact information for
the Attorney General and the mediation service provider.
  (b) A grantor that requests mediation under paragraph (a) of
this subsection may also notify the Attorney General and the
mediation service provider of the request. The Attorney General
shall post on the Department of Justice website contact
information for the mediation service provider and an address or
method by which the grantor may notify the Attorney General.
  (c) Within 10 days after receiving notice of the request under
paragraph (a) of this subsection, the mediation service provider
shall send a notice to the grantor and the beneficiary that,
except with respect to the date by which the mediation service
provider must send the notice, is otherwise in accordance with
the provisions of subsection (3) of this section.
  (d) A beneficiary or beneficiary's agent that receives a
request under paragraph (a) of this subsection is subject to the
same duties as are described in subsections (2), (4) and (5) of
this section.
  SECTION 2. Section 4, chapter 112, Oregon Laws 2012, is amended
to read:
   { +  Sec. 4.  + }(1) The Foreclosure Avoidance Mediation Fund
is established in the State Treasury, separate and distinct from
the General Fund. The fund consists of moneys the Attorney
General collects or receives for the purpose of paying the
expenses of coordinating a mediation program under section 2
 { - of this 2012 Act - }  { + , chapter 112, Oregon Laws
2012, + } and related expenses. The moneys in the fund are
continuously appropriated to the Attorney General for the
purposes of paying the expenses of coordinating the mediation
program and related expenses.
  (2) The Attorney General may receive moneys for the purposes
set forth in subsection (1) of this section from any public or
private source.
    { - (3)(a) - }  { +  (3) + }   { - Except as provided in
paragraph (b) of this subsection, - }  A trustee or beneficiary
that files a notice of default under ORS 86.735 shall pay to the
county clerk that records the notice $100 in addition to and not
in lieu of any fee that the county clerk charges for recording
the notice of default.  The county clerk at the end of each month
shall forward the proceeds of the $100 charge to the Attorney
General for deposit into the fund described in subsection (1) of
this section.

    { - (b) An individual, a financial institution, as defined in
ORS 706.008, a mortgage banker, as defined in ORS 86A.100, or a
licensee, as defined in ORS 725.010, is not subject to the $100
charge described in paragraph (a) of this subsection if the
individual, financial institution, mortgage banker or licensee
provides to the county clerk a sworn affidavit that states that
during the preceding calendar year the individual, financial
institution, mortgage banker or licensee did not commence or
cause an affiliate or agent of the individual, financial
institution, mortgage banker or licensee to commence more than a
total of 250 actions to foreclose a residential trust deed by
advertisement and sale under ORS 86.735 or a residential mortgage
by suit under ORS 88.010. An individual, financial institution,
mortgage banker or licensee that intends to claim an exemption
under this paragraph shall provide the affidavit either: - }
    { - (A) Within 30 days after the operative date specified in
section 11 of this 2012 Act to claim the exemption for calendar
year 2012 and not later than January 31 in any subsequent
calendar year in which the individual, financial institution,
mortgage banker or licensee intends to claim the exemption;
or - }
    { - (B) At the time the individual, financial institution,
mortgage banker or licensee files a notice of default under ORS
86.735. - }
  SECTION 3. ORS 86.735, as amended by section 6, chapter 112,
Oregon Laws 2012, is amended to read:
  86.735. A trustee may foreclose a trust deed by advertisement
and sale in the manner provided in ORS 86.740 to 86.755 if:
  (1) The trust deed, any assignments of the trust deed by the
trustee or the beneficiary and any appointment of a successor
trustee are recorded in the mortgage records in the counties in
which the property described in the deed is situated;
  (2) There is a default by the grantor or other person that owes
an obligation, the performance of which is secured by the trust
deed, or by the grantor's or other person's successors in
interest with respect to a provision in the deed that authorizes
sale in the event of default of the provision;
  (3) The trustee or beneficiary has filed for record in the
county clerk's office in each county where the trust property, or
some part of the trust property, is situated, a notice of default
containing the information required by ORS 86.745 and containing
the trustee's or beneficiary's election to sell the property to
satisfy the obligation;
  (4) The beneficiary or the beneficiary's agent has filed for
recording in the official records of the county or counties in
which the property that is subject to the residential trust deed
is located the certificate of compliance the beneficiary received
under section 2, chapter 112, Oregon Laws 2012  { - , if the
beneficiary must enter into mediation with the grantor under
section 2 (2)(a), chapter 112, Oregon Laws 2012 - } ;
  (5)(a) The beneficiary or the beneficiary's agent has complied
with the provisions of section 4a, chapter 112, Oregon Laws 2012;
and
  (b) The grantor is not in compliance with the terms of a
foreclosure avoidance measure upon which the beneficiary and the
grantor have agreed; and
  (6) An action has not been commenced to recover the debt or any
part of the debt then remaining secured by the trust deed, or, if
an action has been commenced, the action has been dismissed,
except that:
  (a) Subject to ORS 86.010 and the procedural requirements of
ORCP 79 and 80, an action may be commenced to appoint a receiver
or to obtain a temporary restraining order during foreclosure of
a trust deed by advertisement and sale, except that a receiver
may not be appointed with respect to a single-family residence

that the grantor, the grantor's spouse or the grantor's minor or
dependent child occupies as a principal residence.
  (b) An action may be commenced to foreclose, judicially or
nonjudicially, the same trust deed as to any other property
covered by the trust deed, or any other trust deeds, mortgages,
security agreements or other consensual or nonconsensual security
interests or liens that secure repayment of the debt.
  SECTION 4. ORS 86.740, as amended by section 7, chapter 112,
Oregon Laws 2012, is amended to read:
  86.740. (1)(a) Subsequent to recording notice of default as
provided in ORS 86.735 and at least 120 days before the day the
trustee conducts the sale, notice of the sale with the contents
described in ORS 86.745 must be served pursuant to ORCP 7 D(2)
and 7 D(3) or mailed by both first class and certified mail with
return receipt requested.
  (b) If the sale is for the purpose of foreclosing a residential
trust deed   { - and the beneficiary in the trust deed must enter
into mediation with the grantor under section 2 (2)(a), chapter
112, Oregon Laws 2012 - } , a separate notice of mediation, in
the form and with the contents described in section 3, chapter
112, Oregon Laws 2012, must be served or mailed in the manner
provided in paragraph (a) of this subsection at least 60 days
before the notice of sale described in paragraph (a) of this
subsection is served or mailed.
  (2) The notices described in subsection (1) of this section
must be served or mailed to the last-known address of the
following persons or the legal representatives of the persons, if
any:
  (a) The grantor in the trust deed.
  (b) Any successor in interest to the grantor whose interest
appears of record, or of whose interest the trustee or the
beneficiary has actual notice.
  (c) Any person, including the Department of Revenue or another
state agency, that has a lien or interest subsequent to the trust
deed if the lien or interest appears of record or the beneficiary
has actual notice of the lien or interest.
  (d) A person that requests notice as provided in ORS 86.785.
  (e) The mediation service provider that the Attorney General
appoints under section 2 (2)(b), chapter 112, Oregon Laws 2012,
if the notices are served or mailed under subsection (1)(b) of
this section.
  (3) A notice served by mail under subsection (1) of this
section is effective when the notice is mailed.
  (4)(a) The disability, insanity or death of a person to whom
the notices required under this section must be given does not
delay or impair in any way the trustee's right under a trust deed
to foreclose under the deed. If the disability, insanity or death
occurs before the notice of default is recorded, the notices
required under this section must be given instead to the
guardian, the conservator of the estate of the person or the
administrator or personal representative of the person in the
manner and by the time set forth in this section.
  (b) If the disability, insanity or death of a person to whom
the notices required under this section must be given occurs on
or after  { + the date on which + } the notice of default is
recorded, the trustee shall, if and when the trustee has
knowledge of the disability, insanity or death, promptly give the
guardian, the conservator of the estate or the administrator or
personal representative  { + the + } required notices by sending
the notices by first class and certified mail with return receipt
requested to the last-known address of the guardian, conservator
or administrator or personal representative.
  (c) If there is no administrator or personal representative of
the estate of the person to whom the notices required under this
section must be given, the notices may be given instead to the

heirs at law or devisees of the deceased person in the manner and
by the time set forth in this section.
  (5) If the owner of real property subject to foreclosure dies
and the real property is also subject to a transfer on death
deed, as provided by ORS 93.948 to 93.979, the notices required
under this section must be given to the beneficiary designated
under the transfer on death deed.
  SECTION 5.  { + (1) The amendments to ORS 86.735 and 86.740 and
sections 2 and 4, chapter 112, Oregon Laws 2012, by sections 1 to
4 of this 2013 Act become operative 91 days after the effective
date of this 2013 Act.
  (2) The Attorney General may take any action before the
operative date specified in subsection (1) of this section that
is necessary to enable the Attorney General to exercise, on and
after the operative date specified in subsection (1) of this
section, all of the duties, functions and powers conferred on the
Attorney General by the amendments to ORS 86.735 and 86.740 and
sections 2 and 4, chapter 112, Oregon Laws 2012, by sections 1 to
4 of this 2013 Act. + }
  SECTION 6.  { + The amendments to ORS 86.735 and 86.740 and
sections 2 and 4, chapter 112, Oregon Laws 2012, by sections 1 to
4 of this 2013 Act apply to notices of sale and mediation that a
trustee or beneficiary, or an agent of the trustee or
beneficiary, sends on or after the operative date specified in
section 5 of this 2013 Act. + }
  SECTION 7.  { + This 2013 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
is declared to exist, and this 2013 Act takes effect on its
passage. + }
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