PORTLAND — After its first attempt fizzled, Oregon has taken another crack at requiring mediation conferences between lenders and homeowners facing foreclosure.
Last July, the state launched a program to require lenders to meet with homeowners to discuss alternatives before foreclosing on a mortgage. But the law left a loophole for foreclosures filed in court, The Oregonian reported this week.
When a judicial decision in a separate matter cast uncertainty on the out-of-court foreclosure process that has been that had been common since the 1950s, lenders started filing their foreclosures in court.
Lenders completed 4,180 foreclosures in Oregon in the 12-month period ending in June, according to the real estate data firm CoreLogic, and 4.8 percent of the state's mortgaged homes were behind on payments.
This year, the Legislature revised the program to require what's called a resolution conference no matter how the foreclosure proceeds. The rules were effective Sunday.
"From the homeowner's perspective, the big thing is just getting the banks to the table," said Mike Niemeyer of the Oregon Department of Justice. "And we've done what we can to make it efficient for (the banks) as well."
Homeowners about to be foreclosed on will receive a letter bearing the state seal and a reference to the Oregon Foreclosure Avoidance Program.
It will ask them to start the resolution conference process by opting in and scheduling a meeting with a housing counselor.
Homeowners who feel they're at risk of foreclosure also can request a conference. But they'll either have to be 30 days behind on their mortgage payment or demonstrate a financial hardship. They'll also need a referral from a housing counselor.
Niemeyer said the state expects a slow start of incoming cases as banks get used to the new system. But he said he hopes homeowners who may qualify for the program will jump-start the process by requesting conferences before they fall into foreclosure.
Paul Cosgrove, a lobbyist for bankers, said mortgage servicers had asked for a longer implementation period and only recently received the rules.
"It's difficult for the entities to change, to get all the forms together and train their people, on such short notice," Cosgrove said. "We will do our very best to respond as promptly as we can to people who are requesting mediation, but it will take a bit of time before the system works perfectly smoothly."