Chapter 3 Oregon Laws 2005

AN ACT

HB 2153

Relating to lender security protection deposits; creating new provisions; and amending ORS 86.245.

Be It Enacted by the People of the State of Oregon:

SECTION 1. ORS 86.245 is amended to read:

86.245. [(1) Except as provided in subsections (5) and (7) of this section, any lender who requires a lender’s security protection provision in connection with a real estate loan agreement shall pay interest to the borrower on funds deposited in the account at a rate not less than the discount rate.]

[(2)] (1) As used in this section, “discount rate” means the auction average rate on [three-month] 91-day United States Treasury bills, as established by the most recent auction of such Treasury bills, [as reported in the Federal Reserve’s Statistical Release H.15] as published by the United States Department of the Treasury, Bureau of the Public Debt, less 100 basis points. [The discount rate shall be determined with reference to the most recent auction date before May 15 and November 15 each year, beginning November 15, 1995.]

(2) Except as provided in subsections (5) and (7) of this section, any lender who requires a lender’s security protection provision in connection with a real estate loan agreement shall pay interest to the borrower on funds deposited in the account at a rate not less than the discount rate. The discount rate shall be determined with reference to the most recent auction date before May 15 and November 15 each year.

(3) The rate of interest payable on the account shall be adjusted semiannually to reflect changes in the discount rate. These adjustments shall be calculated on May 15 and November 15 each year. Adjustments calculated on May 15 shall take effect on the following July 1, and adjustments calculated on November 15 shall take effect on the following January 1.

(4) Interest shall be computed on the average monthly balance in the account and shall be paid not less than quarterly to the borrower by crediting to the escrow account the amount of the interest due.

(5) Except as provided in subsection (6) of this section, this section [shall] does not apply to real estate loan agreements entered into prior to September 1, 1975, or on which the payment of interest on a lender’s security protection provision violates any state or federal law or regulation.

(6) If federal law or regulation does not prohibit the payment of interest on a lender’s security protection provision by federally chartered or organized lenders, [then] this section [shall apply] applies to the federally chartered or organized lenders and the state chartered or organized lenders that are similar to the federally chartered or organized lenders with respect to a lender’s security protection provision executed in connection with real estate loan agreement entered into prior to and in existence on September 1, 1975.

(7) This section [shall] does not apply to real estate loan agreements [which are made by the State of Oregon or are] made by, [or] held for sale to[,] or sold to[,] the State of Oregon.

SECTION 2. The amendments to ORS 86.245 by section 1 of this 2005 Act apply to lender security protection accounts established prior to, on or after the effective date of this 2005 Act.

Approved by the Governor March 11, 2005

Filed in the office of Secretary of State March 11, 2005

Effective date January 1, 2006

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