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About Street roots. (Portland, OR) 1998-current | View Entire Issue (Sept. 28, 2012)
Street roots Sept. 28, 2012 Right 2 Dream Lenders bypass foreclosure mediation law Too to sign new Created to help keep Oregonians in their homes, the state program appears thwarted by bank tactics lease, threatens According to Blomquist, non-judicial out process of taking their bank to court. foreclosures used to be a relatively easy for S T A F F W R IT E R Under the law, when a lender issues a banks, but now they don’t want to become notice of default to a homeowner - typically his spring, when the Oregon ensnared in the new laws requirements. a precursor to a non-judicial foreclosure (a Legislature created a mediation Foreclosures are also in a lull, according to foreclosure without court supervision) — it program to help homeowners RealtyTrac, because of recent court decisions also has to include a notice that the negotiate with lenders and avoid or modify involving the Mortgage Electronic homeowner has a right to mediation. Eleven foreclosures, there was hope that the new Registration Systems, a shell company that state agencies that manage mortgages have requirements would prompt lenders to was used by the banks to facilitate the sent out notices to homeowners indicating cooperate more with homeowners to housing boom and now causing confusion they are in default and they have a right to preserve their housing. But the high hopes during the housing bust. mediation. However, private lenders have of the Oregon Department of Justice, which MERS was basically used by banks to oversees the new program, have given way to gotten around this requirement simply by not bypass requirements to record mortgage foreclosing on homeowners. frustration. documents at local Keith Dubanevich, associate attorney “What’s happening county recorders’ general, anticipated the new program would is that it appears that offices. The result in about a thousand modified since the program Mccordlsif I© B e lli complicated mortgages a month. The number actually went into effect on mechanism allowed modified: zero. July 11 that the banks BubaaewIeK associate banks to rapidly attorney fo n e ra i, more than The reality, Dubanevich said, is that the are not proceeding bundle and sell debt bill’s language gives the lender “the option to with the non-judicial 140 Oregonians have on homes to foreclosures that they go to mediation or not.” requested m ediation w ith investors. Courts in were previously,” said The law was passed following a landmark Oregon, and th e ir lenders, bwt none of Oregon Attorney $25 billion settlement between 49 state elsewhere, are General Ellen attorneys general and the country’s five these requests has resulted grappling with largest loan servicers over charges that these Rosenblum in an la m ediation. whether or not the interview with Street financial institutions routinely foreclosed on entire set-up is legal, Roots in August. “The homeowners without the proper and the question is documentation. The agreement, concluded mediation program headed to the state Supreme Court. only applied to non-judicial foreclosures, so if this past February included provisions aimed Homeowners in Oregon have successfully they’re not serving the homeowners with a at providing relief to homeowners rattled by fought non-judicial foreclosures in court by notice of default then there’s not an the housing collapse. challenging banks’ use of MERS. In July, the opportunity for homeowners in default to The settlement brought in nearly $30 Oregon Court of Appeals ruled that banks million to Oregon. The Legislature directed request mediation.” that used MERS could not foreclose without Rosenblum said that homeowners who are $7.6 million toward funding the new judicial supervision, and the decision has having trouble with their mortgages but are meditation program. made banks reluctant to seek non-judicial However, those in the program say it is not in default have the best hope of reaching foreclosures. an arrangement allowing them to stay in having no impact as banks seek to avoid the The other option for lenders is to conduct law’s new requirements. their homes. foreclosures through the courts, which have Banks are initiating fewer foreclosures Linda Navarro, president and CEO of the more consumer protections but no mediation Oregon Bankers Association, called the because they are trying to avoid newly requirement. Dubanevich expects judicial imposed requirements that they go through mediation program “pretty flawed” and fere e le s ures to become mo re eommo fh - ------ mediation with a homeowner before seizing a faulted the law for imposing unclear “I think the courts will become busy,” he definitions and liabilities for banks. Navarro home. And lenders appear reluctant to said. punted specific questions about the initiate foreclosures because they are Navarro would prefer not to go this route, spooked by a recent court decision that could association’s objections to the association’s pointing out that judicial foreclosures take lobbyist Paul Cosgrove, who did not respond significantly affect their ability to foreclose more time to process and will slow the by press time. on 65 percent of mortgages in the state. recovery of the housing market. Collins Center for Public Policy, a Florida According to Dubanevich, more than 140 She said that mediation program can work think tank selected to oversee the Oregonians have requested mediation with if banks participate effectively, and the law, mediations, did not comment for this article their lenders, but none of these requests Navarro said, needs to be revised when the despite repeated attempts to contact them. resulted in mediation. And, he says, Legislature goes back into session next year. According to a report released in August homeowners who were already in default on Navarro hopes lawmakers will also address by RealtyTrac, an online marketplace for their mortgage are not eligible for the new foreclosed properties, foreclosures in Oregon any legal questions surrounding MERS next program. session. are at a five-year low with banks avoiding the Angela Martin, the executive director of However, in the long run the program may new mediation program. The number of non Economic Fairness Oregon, said that the not have the desired impact. According to judicial foreclosures dropped 42 percent the banks just don’t want to participate in the RealtyTrac’s Blomquist, other states have month before the program went into effect, program and find it easier just to drag the launched mediation programs that created a according to the report. process out rather than meet with distressed lull in foreclosures. However, these programs Recently released numbers from homeowners who want to cut a deal. She said ended up delaying the inevitable foreclosure RealtyTrac show that there were 864 non some banks don’t even bother respond to for homeowners who simply couldn’t keep judicial foreclosures in Oregon in August, homeowners’ requests for mediation. up with mortgage payments. which is 67 percent fewer foreclosures than “That’s where we have the banks “You get the sense that the other shoe is the 2,638 during August 2011. thumbing their nose at Oregon law,” said “From the banks’ perspective, [the law] is going to drop,” he said. Martin. The only remedy for homeowners creating more effort to foreclose,” said Daren who have their request for mediation Blomquist, vice president at RealtyTrac. ignored, she said, is to go through a drawn- suit against city S T A F F R EPO R TS ct. 10 will be the one-year anniversary of Right 2 Dream Too, and the members homeless rest stop are celebrating by signing a second one-year lease with the property owners. They’re also firming up their expectations of City Hall to suspend its fine process and declare R2DToo’s site at Fourth Avenue and Burnside a legal transitional housing campground area as allowed under state law. In a letter to the city dated Aug. 31, R2DToo’s attorney, Mark Kramer, says that if the city refuses to suspend monthly fine assessments against the nonprofit, he will seek a judge’s decision to void the regulatory process in this case. The letter was addressed to City Commissioner Dan Saltzman, head of the Bureau of Development Services that overseas the regulatory process, and Commissioner Nick Fish, who heads up the city’s homeless and housing programs. “The regulations they’re using is intended for Boy scout camps and KOA campgrounds, but not shelters for homeless folks,” Kramer told Street Roots. R2DToo rents the lot at Fourth and Burnside for $1 from owners Michael Wright and Dan Cossette. The organization’s spokesperson, Ibrahim Mubarak, said the owners are supportive of their cause, but should not be burdened with the city’s fines that exceed $1,200 a month. The organization has raised its own money to help cover some, but not all, of the costs levied against the property owners. “They want to fine us out of existence,” Mubarak says. “They know we don’t have much money and depend on grants and donations.” R2DToo claim their site - where about 80 homeless men and women stay each night - qualifies as a transitional housing area as allowed under state law. State statute permits a city to create two such sites, on property it selects. Portland has already sanctioned one such campground with Dignity Village. Commissioner Saltzman’s office has said he is open to consider a second sanctioned operation, but not on the site now occupied by R2DToo. The R2DToo rally on Oct. 10 begins at 8:30 and will culminate in the signing of the new lease. 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