Bill Text: OR SB1576 | 2012 | Regular Session | Introduced
Bill Title: Relating to requirements for mediation before foreclosing residential trust deeds; declaring an emergency.
Spectrum: Bipartisan Bill
Status: (Failed) 2012-03-05 - In committee upon adjournment. [SB1576 Detail]
Download: Oregon-2012-SB1576-Introduced.html
76th OREGON LEGISLATIVE ASSEMBLY--2012 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 225
Senate Bill 1576
Sponsored by Senators BOQUIST, BEYER; Senators OLSEN, TELFER
(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.
Requires beneficiary or beneficiary's agent under residential
trust deed to send notice of mediation and enter into mediation
with grantor for purpose of agreeing to foreclosure avoidance
measure. Specifies form and content of notice of mediation, date
by which notice must be sent and method of service.
Specifies duties of beneficiary or beneficiary's agent with
respect to mediation. Requires beneficiary or beneficiary's agent
to record certificate of compliance from mediation service
provider in order to proceed with foreclosure of trust deed.
Permits grantor that is at risk of default to request mediation
with beneficiary or beneficiary's agent.
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to requirements for mediation before foreclosing
residential trust deeds; creating new provisions; amending ORS
86.705, 86.735, 86.740 and 86.742; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + Sections 2 and 3 of this 2012 Act are added to
and made a part of ORS 86.705 to 86.795. + }
SECTION 2. { + (1) As used in this section and section 3 of
this 2012 Act:
(a) '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.
(b) 'Mediation service provider' means the Oregon Office for
Community Dispute Resolution.
(2)(a) Except as provided in paragraph (e) 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 mediation service provider shall supervise the
mediation.
(c) The beneficiary and the grantor shall each pay $200 toward
the cost of the mediation. The beneficiary may recover the
beneficiary's portion of the cost of the mediation from the
grantor if the mediation results in an agreement for a
foreclosure avoidance measure.
(d) The Attorney General by rule may direct moneys received as
a consequence of a legal settlement between the State of Oregon
and mortgage lenders that are appropriated to the Attorney
General for the purposes of this section toward funding the costs
of mediation under this section.
(e) The requirement to enter into mediation with a grantor does
not apply to a beneficiary 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 15 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 notice sent
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 at
the location for 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 mediation 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 and the
grantor must negotiate in good faith under the supervision of the
mediation service provider in accordance with guidelines the
mediation service provider establishes and with the objective of
reaching an agreement on a foreclosure avoidance measure.
(b) If the beneficiary or the beneficiary's agent agrees with
the grantor on a foreclosure avoidance measure, the mediation
service provider shall witness and sign an agreement that sets
forth the terms of the foreclosure avoidance measure. The grantor
may elect to pay the grantor's and the beneficiary's portions of
the cost of 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. The
grantor and the beneficiary shall bear the grantor's and the
beneficiary's own portions of the cost of the mediation.
(6)(a) At the conclusion of the 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 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 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 10 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. 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.
(e) A grantor that is at risk of default because the amount the
grantor owes on the obligation that is secured by the residential
trust deed is greater than the value of the property that is
subject to the residential trust deed by a ratio of 110 percent
or more shall establish the value of the property at the
mediation with documentation that consists of one or more of the
following:
(A) The most recent property tax statement for the property.
(B) An appraisal of the property prepared by an appraiser
certified or licensed under ORS chapter 674. The appraisal must
have been prepared within 90 days preceding the date on which the
grantor made a request under paragraph (a) of this subsection.
(C) A written broker's price opinion signed by an individual
that is licensed under ORS chapter 696. + }
SECTION 3. { + The notice of mediation required under ORS
86.740 (1)(b) must be in a form and with the contents the
Attorney General specifies by rule and must:
(1) List the name, address, telephone number and other contact
information for the grantor or other person named in the
residential trust deed.
(2) Specify the account number or other means by which the
beneficiary or trustee or an agent of the beneficiary or trustee
identifies the obligation that is secured by the residential
trust deed.
(3) Provide the address, telephone number and other contact
information for:
(a) The beneficiary or an agent of the beneficiary that the
beneficiary authorizes to negotiate on the beneficiary's behalf;
(b) The Oregon State Bar's Lawyer Referral Service;
(c) 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
(d) A list of not-for-profit housing counselors approved by the
United States Department of Housing and Urban Development or an
agency of this state.
(4) State that section 2 of this 2012 Act requires the
beneficiary to enter into mediation with the grantor for the
purpose of negotiating a foreclosure avoidance measure.
(5) List the documents the grantor must bring to the mediation.
The Attorney General by rule shall specify the documents the
grantor must bring.
(6) State that the grantor may choose to have an attorney or a
housing counselor approved by the United States Department of
Housing and Urban Development represent the grantor at the
mediation.
(7) State that the grantor must pay a portion of the costs of
the mediation and specify the maximum cost for which the grantor
will be responsible.
(8) State that the mediation and mediation communications, as
defined in ORS 36.110, are confidential in accordance with and to
the extent provided in ORS 36.220 to 36.238.
(9) State that within 30 days after the date of the notice the
mediation service provider will send another notice to the
grantor with a date, time and location for the mediation and with
the other information specified in section 2 (3) of this 2012
Act. + }
SECTION 4. ORS 86.705 is amended to read:
86.705. As used in ORS 86.705 to 86.795:
(1) 'Affordable housing covenant' has the meaning given that
term in ORS 456.270.
(2) 'Beneficiary' means a person named or otherwise designated
in a trust deed as the person for whose benefit a trust deed is
given, or the person's successor in interest, and who is not the
trustee unless the beneficiary is qualified to be a trustee under
ORS 86.790 (1)(d).
(3) 'Eligible covenant holder' has the meaning given that term
in ORS 456.270.
(4) 'Grantor' means the person that conveys an interest in real
property by a trust deed as security for the performance of an
obligation.
(5) 'Residential trust deed' means a trust deed on property
upon which are situated four or fewer residential units, one of
which the grantor, the grantor's spouse or the grantor's minor or
dependent child occupies as a principal residence at the time a
{ - trust deed foreclosure is commenced - } { + notice of
default on the obligation secured by the trust deed is first
recorded under ORS 86.735 + }.
(6) 'Residential unit' means an improvement designed for
residential use.
(7) 'Trust deed' means a deed executed in conformity with ORS
86.705 to 86.795 that conveys an interest in real property to a
trustee in trust to secure the performance of an obligation the
grantor or other person named in the deed owes to a beneficiary.
(8) 'Trustee' means a person, other than the beneficiary, to
whom a trust deed conveys an interest in real property, or the
person's successor in interest, or an employee of the
beneficiary, if the employee is qualified to be a trustee under
ORS 86.790.
SECTION 5. ORS 86.735 is amended to read:
86.735. { - The - } { + 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;
{ - and - }
(2) There is a default by the grantor or other person
{ - owing - } { + that owes + } an obligation, the performance
of which is secured by the trust deed, or by { - their - }
{ + the grantor's or other person's + } successors in interest
with respect to { - any - } { + a + } provision in the deed
{ - which - } { + that + } authorizes sale in the event of
default of
{ - such - } { + the + } provision; { - and - }
(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 { - it - } { + 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;
{ - and - }
{ + (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 of this 2012 Act; and + }
{ - (4) - } { + (5) + } { - No - } { + An + } action
has { + not + } been { - instituted - } { + commenced + } to
recover the debt or any part of { - it - } { + the debt + }
then remaining secured by the trust deed, or, if { - such - }
{ + an + } action has been
{ - instituted - } { + 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 { - instituted - } { +
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 { - shall - }
{ + may + } not be appointed with respect to a single-family
residence { - which is occupied as the principal residence
of - } { + 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 { - for the judicial or
nonjudicial foreclosure of - } { + to foreclose, judicially or
nonjudicially, + } the same trust deed as to any other property
covered { - thereby - } { + by the trust deed + }, or any
other trust deeds, mortgages, security agreements or other
consensual or nonconsensual security interests or liens
{ - securing - } { + that secure + } repayment of the debt.
SECTION 6. ORS 86.740 is amended to read:
86.740. (1) { + (a) Except as provided in paragraph (b) of this
subsection, + } 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 { - shall - }
{ + 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, the notice of sale must be served or mailed in the
manner provided in paragraph (a) of this subsection at least 180
days before the date of the sale. A separate notice of mediation,
in the form and with the contents described in section 3 of this
2012 Act, must accompany the notice of sale.
(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 { - their - } { + 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
{ - any other - } { + another + } state agency,
{ - having - } { + 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) { - Any - } { + A + } person { - requesting - } { +
that requests + }notice as provided in ORS 86.785.
{ + (e) The mediation service provider, as defined in section
2 (1) of this 2012 Act, if the notices are served or mailed under
subsection (1)(b) of this section. + }
{ - (2) - } { + (3) + } A notice served by mail under
subsection (1) of this section is effective when the notice is
mailed.
{ - (3)(a) - } { + (4)(a) + } The disability, insanity or
death of { - any - } { + a + } person to whom { - notice of
sale - } { + the notices required under this section + } must
be given { - under this section - } 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
{ - prior to the recording of - } { + before the + } notice of
default { + is recorded + }, the { - notice shall - } { +
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 { - , as
the case may be, - } in the manner and by the time set forth in
this section.
(b) If the disability, insanity or death of { - any - } { +
a + } person to whom { - notice of sale - } { + the notices
required under this section + } must be given { - under this
section - } occurs on or after the { - recording of - }
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 { - ,
as the case may be, the notice provided in ORS 86.745. This
notice shall be given - } { + 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) { - In the event - } { + If + } there is no
administrator or personal representative of the estate of the
person to whom { - notice of sale must be given - } { + the
notices required + } under this section { + must be given + },
the { - notice - } { + 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.
{ - (4) - } { + (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,
{ - notice of sale - } { + the notices required under this
section + } must be given { - under this section - } to the
beneficiary designated under the transfer on death deed.
SECTION 7. ORS 86.742 is amended to read:
86.742. (1) If the trustee fails to give notice of the sale to
{ - any - } { + a + } person entitled to notice under ORS
86.740 { - (1)(c) - } { + (2)(c) + }, and { - such - }
{ + the + } person did not have actual notice of the sale at
least 25 days { - prior to - } { + before + } the date { +
on which + } the trustee conducted the sale, { - such - } { +
the + } omitted person { - shall have - } { + has + } the
same rights { - possessed by - } { + that + } the holder of a
junior lien or interest who was omitted as a party defendant in a
judicial foreclosure proceeding { + possesses + }, and the
purchaser at the trustee's sale or the purchaser's heirs, assigns
or transferees, { - shall have - } { + have + } the same
rights { - possessed by - } { + that + } a purchaser at a
sheriff's sale following a judicial foreclosure { +
possesses + }.
(2) The omitted person may also commence an action against the
trustee in the circuit court in the county where the real
property is located. In an action against the trustee, the
omitted person { - shall be - } { + is + } entitled to
damages { - upon proof - } { + if the omitted person
proves + } that:
(a) The trustee did not give notice of the sale to the omitted
person in the manner required by ORS 86.740 { - (1)(c) - }
{ + (2)(c) + } and 86.750;
(b) A search of the record under the name of the grantor as
{ - it - } { + the grantor's name + } appears on the trust
deed, or { + as + } the name of the grantor's successor in
interest { + appears + }, would have revealed the omitted
person's interest;
(c) The omitted person could and would have cured the default
under ORS 86.753; and
(d) The omitted person sustained actual damages as a result of
{ - such - } { + the + } person's loss of the opportunity to
cure the default under ORS 86.753 (1).
(3) In an action against the trustee under subsection (2) of
this section, { - any - } { + a + } defendant or third party
defendant may move for dismissal on the ground that the omitted
person would not or could not have cured the default and
reinstated the trust deed if the omitted person had received the
notice required by ORS 86.740
{ - (1)(c) - } { + (2)(c) + }. The court shall hold a hearing
on { - such - } { + the + } motion { - prior to any - }
{ + before a + } hearing on { - any - } { + a + } motion
for summary judgment, and { - prior to trial of - } { +
before trying + } the action. The court shall deny the motion
only if the omitted person produces affidavits or other evidence
sufficient for a reasonable jury to find, applying a standard of
clear and convincing evidence, that the omitted person had the
financial ability to cure the default under ORS 86.753
{ - prior to - } { + before + } the date of the trustee's
sale, and that the omitted person would have done so had the
omitted person received the notice required by ORS 86.740
{ - (1)(c) - } { + (2)(c) + }. If the court grants the motion
to dismiss { - it - } { + , the court + } shall award attorney
fees { - pursuant to - } { + under + } subsection (5) of this
section.
(4) In { - any - } { + an + } action against the trustee or
{ - any other - } { + another + } party under this section the
omitted person shall plead that the omitted person did not have
actual knowledge of the sale at least 25 days prior to the date
the trustee conducted the sale, but thereafter the defendant
{ - shall have - } { + has + } the burden of proving that the
omitted person did have { - such - } notice.
(5) In { - all suits - } { + an action + } brought under
this section, the applicable court may, upon entering judgment,
allow to the prevailing party as a part of the costs a reasonable
amount for attorney fees at trial and on appeal.
(6) The remedies described in subsections (1) to (5) of this
section { - shall be - } { + are + } the sole remedies
available to a person entitled to notice of foreclosure by
advertisement and sale under ORS 86.740 { - (1)(c) - } { +
(2)(c) + }, who failed to receive { - such - } notice.
{ - Such a - } { + The + } person's failure to redeem or to
commence an action against the trustee within five years of the
date of a trustee's sale under ORS 86.755 { - shall bar - }
{ + bars + } any action under this section or any other
applicable law.
SECTION 8. { + Sections 2 and 3 of this 2012 Act and the
amendments to ORS 86.705, 86.735, 86.740 and 86.742 by sections 4
to 7 of this 2012 Act apply to requests for mediation that a
grantor sends and notices of sale and mediation that a trustee or
beneficiary or an agent of a trustee or beneficiary sends on or
after the effective date of this 2012 Act. + }
SECTION 9. { + This 2012 Act being necessary for the immediate
preservation of the public peace, health and safety, an emergency
is declared to exist, and this 2012 Act takes effect on its
passage. + }
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