Oregon Regulatory Update

Oregon Regulatory Update

Our April 19, 2012 Compliance Memorandum discussed Oregon Senate Bill 1552, which was effective April 11, 2012.  Senate Bill 1552 (the “laws”) authorized the Oregon Attorney General to adopt rules to implement the Foreclosure Avoidance Mediation Program (the “Program”).  The Attorney General recently promulgated temporary rules, which were effective July 11, 2012, and which will remain effective until January 6, 2013.

 

OAR 137-110-0001 – 137-110-0670  Foreclosure Avoidance Mediation Program

Application

 

The rules apply to any mediation resulting from the issuance of a notice of mediation by a lender seeking to foreclose a residential trust deed and to an at-risk borrower’s request to enter into foreclosure avoidance mediation (“mediation”) with respect to a residential trust deed.

 

Definitions

 

“Date of mediation” means the date of the mediation session with the lender or the lender’s agent and a mediator and borrower present.

 

 

“Foreclosure Avoidance Mediation Program” means the mediation program established under Oregon law pursuant to Senate Bill 1552.

 

 

“Foreclosure avoidance mediation roster” means the roster of qualified mediators maintained by the mediation service provider.

 

 

“Housing counselor” means an individual or entity offering guidance on home buying, renting, reverse mortgages, and default and foreclosure prevention.

 

 

“Mediation” means a process undertaken under the Program in which a mediator assists and facilitates the borrower and lender in attempting to reach a mutually acceptable resolution of a controversy involving a residential trust deed loan and includes all contacts between a mediator and any party or agent of a party, until a resolution is agreed to by the parties.  Mediation begins with the first contact between a borrower or lender and the mediation service provider and concludes when an agreement is reached between the borrower and the lender or, in the event an agreement is not reached, with the issuance of a certificate of compliance by the mediation service provider or the closure of the case by the mediation service provider without the issuance of a certificate of compliance.

 

 

“Mediation agreement” means an agreement arising out of a mediation, including any term or condition of the agreement.

 

 

“Mediation communications” means:

  • All communications that are made in the course of or in connection with a mediation, to a mediator, a mediation program or a party to, or any other person present at, the mediation proceedings; and
  • All memoranda, work products, documents and other materials, including any draft mediation agreement, that are prepared for or submitted in the course of or in connection with a mediation or submitted by a mediator, the mediation service provider or a party to, or any other person present at, a mediation session.

 

“Mediation program” means a community dispute resolution program, mediator organization, or the mediation service provider through which mediation is made available under the Program and includes the director, agents, and employees of the Program.

 

 

“Mediation service provider” means the entity approved by the Attorney General to provide mediation services.

 

 

“Mediation session” means a meeting involving the mediator, the borrower, and the lender or its representatives.

 

 

“Mediator” means a third party who performs mediation within the Program.

 

 

“Party” means the borrower, the lender, and the lender’s agent if the lender authorizes the agent to appear on the lender’s behalf at mediation.

 

Notice to Attorney General

For the purposes of the rules and the Program, any requirement or option to mail a copy of a notice or otherwise notify the Attorney General may be through either one of the following means:

  • By U.S. mail addressed to Attorney General of Oregon, Foreclosure Avoidance Mediation Program, 1162 Court St. NE, Salem, OR 97301-4096; or
  • By e-mail addressed to DOJ@foreclosuremediationOR.org.  E-mail notifications may be accomplished using the web-based computer program provided by the mediation service provider to the extent that such functionality is available for a particular notice or form.

 

Fees Paid by the Borrower, Fee Waiver

In mediations initiated in connection with a notice of default or initiated at the request of an at-risk borrower, the borrower must pay a fee of $200 to the mediation service provider at the time the borrower confirms his or her participation in the mediation.  If there are joint or multiple borrowers, one borrower needs to pay the fee.  The borrower may apply for a waiver of $150 of the fees at the time the borrower confirms his or her participation in the mediation.  The borrower must pay a $50 fee at the time of requesting the waiver.

 

 

If the mediation service provider denies a borrower’s application for a fee waiver, the borrower must pay the remaining $150 within 15 days of receiving the mediation service provider’s determination not to grant a fee waiver but not later than the date of the scheduled mediation session.  A borrower who fails to timely pay fees will be considered to have declined mediation, and the mediation session will be canceled.

 

Fees by the Lender

In mediations initiated in connection with a notice of default, the lender or the lender’s agent must pay a total mediation fee of $425 to the mediation service provider, $200 which must be paid at the time of serving or mailing the notice of mediation and $225 prior to the scheduled mediation session.  In mediations initiated at the request of an at-risk borrower, the lender or the lender’s agent  must pay a total mediation fee of $500 to the mediation service provider, $200 which must be paid at the time of serving or mailing the notice of mediation and $300 prior to the scheduled mediation session.  A junior lienholder must pay the $425 provided above.

 

 

A lender that is otherwise exempt from mediation may participate in mediation by paying the above-described fee and by following the mediation guidelines set forth in the rules.

 

 

Failure of a lender to timely pay fees will result in cancellation of the mediation session.

 

Lender Requirements when Mediation is Initiated with a Notice of Default

Unless exempt, a beneficiary filing a notice of default on a residential trust deed must:

  • Provide a notice of mediation to the borrower and the mediation service provider at least 60 days before serving or mailing the notice of sale.
  • Include the following contents in the notice of mediation:
    • List the last known name, address, telephone number, and other contact information for the borrower or other person named in the residential trust deed;
    • Specify the account number or other means by which the lender or trustee or an agent of the lender or trustee identifies the obligation that is secured by the residential trust deed;
    • Provide the address, telephone number, and other contact information for:
      • The lender or an agent of the lender that the lender authorizes to negotiate on the lender’s behalf;
      • The Oregon State Bar’s Lawyer Referral Service;
      • Service agencies or other providers that offer free or low-cost legal services from a list of agencies or providers that the Attorney General adopts by rule; and
      • A list of not-for-profit housing counselors approved by the U.S. Department of Housing and Urban Development (“HUD”) or an agency of Oregon compiled by the Oregon Housing and Community Services agency (the “agency”);
    • State that the borrower must consult with a housing counselor approved by HUD;
    • State that the borrower may choose to have an attorney or HUD-approved housing counselor represent the borrower at mediation;
    • State that the lender is required to enter into mediation with the borrower for the purpose of negotiating a foreclosure avoidance measure;
    • Contain a brief, plain language description of the foreclosure avoidance measures offered by the lender or the lender’s agent or a description of the foreclosure avoidance measure described in the laws;
    • List the documents the borrower is required to bring pursuant to the rules;
    • State the fees associated with mediation and specify the maximum cost for which the borrower will be responsible;
    • State that the mediation and mediation communications are confidential in accordance with Oregon law;
    • State that within 30 days after the date of the notice a mediation service provider will send another to the borrower with a date, time and location for the mediation and other requirements of Oregon law.

 

The notice of default:

  • Must be served on the mediation service provider in the manner prescribed under Oregon law.  However, the mediation service provider must accept service if the notice is submitted using a web-based computer program provided by the mediation service provider and the provider acknowledges its actual receipt of the notice by e-mail or confirmation generated within the provider’s web-based computer program.
  • Must substantially comply with the model form provided in Appendix A to the rules and is available as “Form 410” on the website referenced below.

 

The lender must comply with mediation guidelines set out in the rules.

 

Mediation Service Provider Requirements when Mediation is Initiated with a Notice of Default

Within 30 days after the date on which the lender caused a notice of mediation to be served or mailed, the mediation service provider must send a mediation scheduling notice to the borrower and lender.  The mediation scheduling notice must:

·        State the date, time, and location of the scheduled mediation session;

·        Identify and provide contact information for the mediation services provider;

·        Provide a date at least 30 days before the scheduled mediation by which the borrower must contact the mediation service provider to confirm that the borrower will enter into mediation and pay fees.  The notice must conspicuously state that failure to confirm participation and pay applicable fees by the specified date will be deemed refusal to participate by the borrower;

·        State the fees associated with mediation;

·        Provide the address, telephone number, and other contact information for a list of not-for-profit housing counselors approved by HUD and compiled by the Oregon Housing and Community Services Department;

·        State that the borrower must consult with a housing counselor approved by HUD;

·        List the documents each party must bring to mediation; and

·        Provide contact information for low cost legal service providers and the Oregon State Bar.

 

 

The notice must substantially comply with the model form provided in Appendix B to the rules and is available as “Form 420” on the website referenced below.

 

Borrower Requirements when Mediation is Initiated with a Notice of Default

If the borrower wishes to participate in mediation, the following requirements apply:

  • On or before the date specified by the mediation service provider in its mediation scheduling notice, the borrower must confirm with the mediation service provider that the borrower wishes to enter mediation.
  • The borrower must attend housing counseling with a HUD-approved housing counselor prior to the mediation session.
  • The counseling requirement does not apply if the borrower notifies the mediation service provider that the borrower has been unable to obtain an appointment to consult with a qualified housing counselor within 30 days after receiving the notice of mediation and executes an affidavit including:
    • The name of the borrower;
    • The name of the lender;
    • The address of the property; and
    • A statement that the borrower of the named property has been unable to obtain an appointment to consult with a qualified housing counselor within 30 days after receiving the notice of mediation.
  • The affidavit described above must substantially comply with the model form provided in Appendix C to the rules and is available as “Form 430” on the website referenced below.

 

Borrower Requirements when Mediation is Initiated by a Borrower at Risk of Default

A borrower who is at risk of default may request mediation with the lender using the paper or web-based computer form available from the mediation service provider.  The borrower must deliver this request to the lender or trustee or the lender’s agent or trustee’s agent.

 

 

A borrower that requests mediation may notify the mediation service provider and the Attorney General of the request.  A request for mediation made using the web-based computer form available from the mediation service provider will be considered sufficient notice to the mediation service provider and the Attorney General.  A borrower must attend housing counseling with a HUD-approved housing counselor prior to the mediation session.  The borrower must comply with the mediation guidelines set out in the rules.

 

Lender or Trustee Requirements when Mediation is Initiated by a Borrower at Risk of Default

Within 15 days of receiving a request for mediation from an at-risk borrower, the lender or trustee or the lender’s or trustee’s agent must respond to the borrower’s request.  The response must include contact information for the Attorney General and the mediation service provider.

 

Within 15 days of receiving a request for mediation from an at-risk borrower, the lender or trustee or the lender’s or trustee’s agent must notify the Attorney General and the mediation service provider of the borrower’s request and the lender’s response by:

  • Mailing a notice to the mediation services provider; or
  • By electronic means using the web-based computer program by the mediation service provider.

 

At the time of providing the notice required above, the lender must pay the required fee.  The lender must comply with the mediation guidelines set out in the rules.

 

Mediation Service Provider Requirements when Mediation is Initiated by a Borrower at Risk of Default

Within 10 days after receiving a lender’s notification of a request for mediation by an at-risk borrower, the mediation service provider must send a mediation scheduling notice to the borrower and the lender that, with the exception of the deadline by which the notice must be sent out, complies with the requirements of the rules.

 

Mediation Guidelines

The mediator has no authority to impose a settlement on the borrower or the lender or to render any decisions on any substantive issue or make any legal determinations.  The mediator may rely on assertions made in the documents provided by the parties and need not make an independent inquiry into the proper chain of title or any other matter.

 

 

The mediator will:

  • Act as an impartial intermediary and not as an advocate for the lender or the borrower;
  • Make appropriate disclosures to the parties about the mediator’s skills and the specific mediation approaches the mediator uses;
  • Support the ability of the parties to make informed decisions regarding the mediation process and outcomes by ensuring that parties are provided with information regarding the mediation process and by ensuring that relevant documents are available to the parties;
  • Conduct mediations fairly, diligently, even-handedly, and with no personal stake in the outcome;
  • Avoid actual, potential, or perceived conflicts of interest that can arise from a mediator’s relationships or experiences that reasonably raise a question about the mediator’s impartiality;
  • Affirmatively disclose to the mediation service provider and the parties any actual, potential, or perceived conflicts of interest that could raise a question about the mediator’s impartiality;
  • Where a party, the mediator or the mediation service provider questions the mediator’s ability to act impartially, and the issue cannot be resolved to the satisfaction of the questioner, the mediator must decline to serve or withdraw if already serving as the mediator in a particular mediation.  Having questioned a mediator’s impartiality, and that mediator having declined to serve, the ability of a party to exclude any subsequent mediator will be at the discretion of the mediation service provider;
  • Not engage in any other services, other than mediation, for any of the parties involving the same or significantly related issues, unless the parties agree in writing; and
  • Preserve the borrower’s and the lender’s desired levels of confidentiality consistent with the rules.

 

The borrower must provide the following documents to the mediation service provider to be provided to the lender at least 15 days prior to the first scheduled mediation session:

  • A completed “Universal Intake Form” provided in Appendix D and available as “Form 610” on the website referenced below;
  • Pay stubs that confirm the borrower’s income for the two full months immediately preceding the month during which the borrower submits the pay stubs;
  • A profit and loss statement, if available, if the borrower is self-employed;
  • Bank statements for the two full months immediately preceding the month during which the borrower submits the bank statements;
  • A benefits statement or letter from the benefit provider showing the amount, frequency, and duration of the benefit, if relying on social security, disability, unemployment, or other non-wage benefit income;
  • A divorce decree or judgment or separation agreement, if the borrower is relying on child support, alimony, or maintenance payments;
  • The borrower’s most recent electric, heat, gas, or other utility bill;
  • Most recent property tax statement or appraisal; and
  • The borrower’s tax returns from the two most recent years.

 

If the borrower fails to timely provide the above documents, the borrower and the lender must nevertheless appear at the first scheduled mediation session.  A borrower who does not timely provide a required document is at increased risk of the mediation concluding without the lender being able to agree to a foreclosure avoidance measure.

 

 

The lender must provide the following documents to the mediation service provider to be provided to the borrower at least 15 days prior to the first scheduled mediation session:

  • The borrower’s complete payment history for the obligation that is secured by the residential trust deed that the lender seeks to foreclose;
  • Evidence that the lender is the real party in interest with respect to the obligation, including:
    • A true copy of the original debt instrument that is the basis for the right the lender seeks to foreclose; and
    • Documents showing chain of title for the property at issue, including recorded and unrecorded conveyances, endorsements, and assignments of the trust deed, the note, and the security instrument;
  • A copy of the authorization from the lender to the lender’s agent, if the lender’s agent appears at mediation;
  • A copy of the following documents that apply to the note or obligation that is secured by the trust deed:
    • A servicing agreement the lender entered into with another person; or
    • An agreement by means of which the lender pledged as collateral for a security the lender issued or sold all or a part of the ownership interest in the note or other obligation.

 

To the extent that the borrower has timely provided their documents, the lender or the lender’s agent must provide the following documents to the mediation service provider or mediator for presentation to the borrower at or before the first scheduled mediation session:

  • The lender’s or the lender’s agent most recent broker price opinion or appraisal;
  • A document that identifies each net present value model used by the lender or the lender’s agent to assess the borrower for a foreclosure avoidance measure and the input values used by the lender or lender’s agent, and the output values produced by the net present value model;
  • A document that lists the total amount that a borrower must submit to the trustee to discontinue foreclosure proceedings, along with an itemized description of all costs and expenses incurred by the lender or lender’s agent in connection with the foreclosure, including trustee and attorney fees; and
  • Any other document the lender believes limits the scope of the agent’s authority to agree to a particular foreclosure avoidance measure.

 

Nothing in the rules requires a lender or the lender’s agent to disclose the algorithmic formula of the net present value model used by the lender or the lender’s agent.

 

 

If a lender fails to timely provide the above required documents, the borrower and the lender must nevertheless appear at the first scheduled mediation session.  A lender who fails to provide a required document is at risk of the mediation concluding without the lender receiving a certificate of compliance.

 

 

All parties must attend the scheduled mediation session unless the mediation is rescheduled in accordance with the rules.  Within 10 days of the mediation scheduling notice, either party may request that the mediation service provider reschedule the date for the mediation session to a date or location that is more convenient.  The rescheduled mediation session must be no earlier than 45 days and not later than 90 days after the date on which the notice of mediation was served or mailed.

 

 

Except as provided above, a request from a party for rescheduling of the mediation session may not be granted except upon showing of good cause or upon a written agreement of the parties and the mediator.  Notice of the written agreement must be provided by facsimile, e-mail, regular mail, or by use of a web-based computer program provided by the mediation service provider.

 

If the mediation service provider grants rescheduling, the mediation service provider must issue a notice that provides the new date, time, and location of mediation within 10 days of the request for rescheduling.  With the consent of the parties, a mediation session may be adjourned and a second mediation scheduled.

 

Confidentiality

Except as otherwise provided in this rule or by the terms of any agreement to mediate executed by the parties prior to a mediation session, the foreclosure avoidance mediation process is confidential and mediation communications are inadmissible.  The mediation service provider is a mediation program for the purposes of the laws.  No videotaping, transcription, or other recording of mediation sessions is permitted except by written agreement by the parties.  Before participating in a mediation session, the borrower and lender may execute an “agreement to mediate” specifying the confidentiality provisions of the mediation.  Mediations in which a state agency is a party are subject to the laws.  An agreement to mediate executed by the parties prior to mediation is not confidential.

 

 

Nothing in the rules prevents a mediator from disclosing the outcome of the mediation to the mediation service provider or from completing a report of the mediation outcomes on forms approved by the Attorney General.  Such disclosures and reports are not confidential and may be disclosed or admitted as evidence in a subsequent proceeding.  Nothing in the rules limits the ability of the mediation service provider or the Attorney General to disclose confidential mediation communications, the disposition of matters referred for mediation, and the terms of mediation agreements to another person for use in research, training, or educational purposes, subject to the following:

  • A mediator or mediation program may only use or disclose confidential mediation communications if the communications are used or disclosed in a manner that does not identify individual mediations or parties.
  • A mediator or mediation program may use or disclose confidential mediation communications that identify individual mediations or parties only if and to the extent allowed by a written agreement with, or written waiver of confidentiality by, the parties.

 

Participation in the Mediation Session

Any party wishing to participate in mediation, including otherwise exempt lenders or junior lienholders, must do so in accordance with the provisions of the rules.  If a trust deed includes joint or multiple borrowers, and fewer than all borrowers confirm participation in the mediation session, the mediation may nevertheless occur with the consent of the lender.  The mediation service provider may assist the parties in obtaining an interpreter.  However, if the mediation service provider is unable to provide an interpreter, the party needing an interpreter is responsible for securing and paying for the interpreter.  The manner of participation of a language interpreter during a mediation session will be determined by the mediator.

 

Agreements

In the event the foreclosure issues are resolved before the scheduled mediation session, the parties must advise the mediation service provider of their settlement using paper or web-based forms provided by the mediation service provider.  Any agreement reached as a result of mediation must be reduced to writing.

 

Certificate of Compliance

The mediation service provider must issue a certificate of compliance upon notification by the mediator that the mediation has concluded and the lender has complied with the requirements of the rules.  The certificate of compliance must be issued to the lender or the lender’s agent no later than 5 days following the conclusion of the mediation.

 

The mediation service provider must issue a certificate of compliance if a borrower fails to confirm by the date required under the laws that the borrower intends to enter into mediation.

 

 

The certificate of compliance will include:

  • The name of the borrower;
  • The name of the lender;
  • The address of the property at issue;
  • Reference to the recording information of the trust deed at issue;
  • A certificate that either:
    • The lender or its agents appeared at mediation and complied with the requirements of the laws;
    • The borrower elected to enter into mediation but failed to appear at the time and place scheduled for mediation; or
    • The borrower declined to enter into mediation with the lender, or did not confirm intent to participate by the required date.

 

The certificate of compliance must substantially comply with the model form provided in Appendix E and is available as “Form 670” on the website referenced below.

 

 

The certificate of compliance must be submitted via hard copy to the borrower(s) and beneficiary(ies) by facsimile machine, by U.S. mail, or in person.  Additionally, the mediation service provider may make the certificate of compliance available to the borrower and the lender via a web-based computer program.

 

 

All of the referenced forms are available online athttp://www.doj.state.or.us/consumer/foreclosure_mediation.shtml.

 

OAR 137-120-0001 – 137-110-0020 – Foreclosure Avoidance Measure Notices

 

If a lender determines that a borrower is not eligible for any foreclosure avoidance measure or that the borrower has not complied with the terms of a foreclose avoidance measure to which the borrower has agreed, the lender or the lender’s agent must serve a notice of that determination to the borrower that includes:

  • The name of the borrower;
  • The name of the lender;
  • The address of the property at issue;
  • A statement that the lender has either:
    • Determined that the borrower is not eligible for any of the following: a forbearance agreement, a temporary or permanent loan modification, a short-sale, a deed-in-lieu of foreclosure, or any other foreclosure avoidance measure.  The basis for the lender’s determination must be described with specificity in plain language; or
    • Determined that the borrower is not in compliance with the terms of an agreement for forbearance, a temporary or permanent loan modification, a short-sale, a deed-in-lieu of foreclosure, or any other foreclosure avoidance measure.  The basis for the lender’s determination must be described with specificity in plain language;
  • Stating each foreclosure avoidance measure considered;
  • Stating whether the lender has been able to make contact with the borrower or receive adequate response from the borrower.  If the borrower is ineligible for a foreclosure avoidance measure because the lender has been unable to make contact with the borrower or receive adequate response from the borrower, stating what efforts were made to contact the borrower and the inadequacy of the response;
  • Stating the date specified for the property’s trustee sale; and
  • Provide contact information for low-cost legal service providers and the Oregon State Bar.

 

The notice must substantially comply with the model form provided into the Appendix to these rules and is available as “Form 20” online athttp://www.doj.state.or.us/consumer/foreclosure_mediation.shtml.

 

A copy of the notice must be submitted to the Attorney General of Oregon at 1162 Court St. NE, Salem, OR, 97301 or foreclosureadvoidance@doj.state.or.us