March 6, 2015
by Erik Wilson
RCO Legal, P.S. – USFN Member (Arkansas, Oregon, Washington)
Since August 4, 2013, the Oregon Foreclosure Avoidance Program requires certain beneficiaries to engage in mediation with grantors prior to filing judicial and nonjudicial foreclosures. For background on this program, see “Mediation Updates from Four States: [including] Oregon,” USFN Report (summer 2013 ed.).
The mediation program extends the overall foreclosure timeline that a beneficiary faces when foreclosing a residential trust deed in Oregon. When a beneficiary, or its servicing agent, initiates a pre-foreclosure mediation, the waiting begins. Mediation Case Manager (MCM) can set a first conference date up to 85 days out from the date that the beneficiary begins the process. In MCM’s report to the Oregon Foreclosure Avoidance Program Advisory Committee, it is noted that “initial sessions rarely occur on the notice date” [MCM Advisory Committee Report delivered June 26, 2014]. MCM reports that 62 percent of cases met at least two times, with 24 percent meeting more than two times. The program allows the neutral facilitator to schedule a subsequent session over a party’s objection one time. Any further subsequent sessions must be set by mutual agreement of the parties. With an average of 60 days between sessions, this adds a substantial delay to a beneficiary or servicer filing a foreclosure action.
Beneficiaries are required to provide “… a description of any additional documents the beneficiary requires to evaluate the grantor’s eligibility for a foreclosure avoidance measure …” [ORS 86.729(4)(b)(H)]. However, document issues remain the primary cause of delay. [MCM Advisory Committee Report delivered June 26, 2014].
Very often, grantors will attend a first resolution conference without having provided a complete loss mitigation application to the beneficiary. This can turn the first conference into a document collection and coordination session, rather than a discussion about options available to cure the default. Reaching out to the grantor through its housing counselor, or attorney, to identify the missing and necessary documents is a good first step to shorten the timeline and reach resolution. To this end, good working relationships among the repeat players have been key in resolving document issues in advance of first conferences, and lead to more substantive and meaningful discussion of foreclosure alternatives during the session. The other way that beneficiaries can combat delay is to withhold consent from scheduling subsequent conferences. This limits the number to two conferences, unless all parties agree to another. Restricting the number of conferences in this manner has resulted in more grantors coming to the table with complete packages at the first meeting.
Beneficiaries and servicers are naturally sensitive to increased delays in the already-lengthy Oregon foreclosure process. By taking proactive steps to prevent delays and providing borrowers with clear instructions when notifying them of missing or incomplete loss mitigation applications, timelines to resolve the default or begin foreclosure can be shortened considerably.
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