Oregon Legislative Update: Short Session Winds Down With Focus on Foreclosure Legislation

This week marks the final days of the 2012 legislative session in Oregon, though the state’s historic first short session may not be quite as short as originally planned.

“By all accounts, the Oregon Legislature we will be out by Friday at the very latest,” said Pamela Leavitt, contract lobbyist for the Northwest Credit Union Association (NWCUA). “The target had been Feb. 29, but that’s looking unlikely at this point, if for no other reason than the time it takes to process paperwork and get bills from one chamber to the other.”

Of Governor John Kitzhaber’s four big healthcare and education initiatives, two (Health Care “Transformation” and the Early Learning Education bills) have passed or are moving. However, the Health Care Exchange bill and the Oregon Education Investment Board bills are still bottled up.

“Two bills we are working on, House Bill 4040, which establishes the Oregon Growth Fund, and House Bill 4084, the bill to address Elder Abuse, are still alive and still working through the legislative process,” Leavitt said. “We expect HB4084 could be on the House and Senate floors as early as today.”

Negotiations on the mortgage lending/foreclosure bills continue, with two bills having already passed the Senate.
Senate Bill 1552 mandates mediation prior to foreclosure. This bill passed the Senate with an amendment to exempt lenders who do less than 250 foreclosures per year, effectively removing credit unions from the picture.

Senate Bill 1564 forbids the “dual-track” practice in which a bank simultaneously works with a homeowner to restructure a mortgage while at the same time working to foreclose the house. The bill, which passed the Senate on Feb. 16, also places violations under the Unlawful Trade Practices Act (UTPA) and grants regulation to the attorney general.

Senate Bill 1564 is believed to be dead in the House based on the UTPA language, while Senate Bill 1552 was referred to the House Rules Committee. The House General Government and Consumer Protection Committee would normally see the bill but is closing down as the month ends. The House Rules Committee can consider bills all the way until the end of the session.

Rep. Gene Whisnant, R-Bend, has proposed an amendment to Senate Bill 1552. The amendment would:

  1. Clarify and simplify compliance requirements, including:
    1. Repeal of the recent “emergency“ AG rules, and a statutory prohibition on the AG adopting new rules regulating lending under UTPA;
    2. Allocation of the multi-state settlement funds to housing counseling services operated by local agencies under contract with the state Housing and Community Services Department, rather than administration and expenditure of these funds by the AG’s office; and
    3. Retroactive statutory validation of the “MERS system” for appointing a nominee of the beneficiary and not recording assignments of the note secured by a “MERS trust deed.”
  2. Create a new form of notice that would be required to be served on borrowers at the point a lender has decided to proceed with foreclosure that:
    1. Informs a borrower to contact the lender immediately, if the borrower has not previously responded to lender requests to discuss available foreclosure avoidance alternatives; or
    2. Informs a borrower that the lender has determined the borrower does not meet the lender’s criteria for any foreclosure avoidance alternatives, but encourages the borrower to contact the lender if the borrower’s financial situation changes; and
    3. Provides a borrower with information regarding local housing counseling services that are available to the borrower to help the borrower review and evaluate alternatives.

“Our amendment to SB 1552 expands homeowner assistance to include counseling and mediation services by using the Oregon Housing and Community Services (OHCS) agency to distribute dedicated funds from the recently announced bank settlement agreement,” Whisnant said. “Our intent is to help more Oregon distressed homeowners with increased services by the 21 local OHCS offices, which have been helping people through federal and state assistance programs. I worked to have the bill directed to the Consumer Protection Committee, but we’ve run out of time in this brief session. I’ll work with the House Rules Committee to secure bipartisan support for these amendments so we can pass it before this session adjourns.”

“The consumer advocates and many Democrats are very upset about the language,” Leavitt said. “With this proposal, we believe that both bills will not pass during this February session.”


Questions? Contact a member of the Association’s Legislative Affairs team:
Jennifer Wagner, Director of Legislative Advocacy
Mark Minickiello, Vice President, Legislative Affairs
Stacy Augustine, Senior Vice President & General Counsel

Posted in Advocacy News, NCUA.