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. The cost, like the previous
year, will be $1.
O
M irador .
COMMUNITY S'
BY JAKE THOMAS
T
Organic cotton
sheets, towels,
& blankets
Natural Kitchen
& Home
Food dryers
2 1 0 6 SE D iv is io n
Books on meat-free
cooking, gardening
& sustainability
5 0 3 * 2 3 1 ’5175
m ira d o rco m m u n ity sto re x o m
M on-S at 10-6 * Sun 11-5
SEPT. 22 & 23
Canning jars &
equipment,
cookware, kitchen
took & appliances
X j
O re g o n C o n v e n tio n C o n te r
10 a m - 6 p m
$ 6 /d a y (kids 10 and un der free)
The Affordable Food Festival
including
Dr. Esselstyn
Inspired Bill Clinton's
Plant-Based Diet
■ III i r a f i w r
3 i
S 5
including
8»
S 58 4 Ì Ì
ip
1 ' U I Ï 11 1 BS
é
Juicers
rtlandVegFest
Tint Sponsor