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. + } ----------