75th OREGON LEGISLATIVE ASSEMBLY--2009 Regular Session
NOTE: Matter within { + braces and plus signs + } in an
amended section is new. Matter within { - braces and minus
signs - } is existing law to be omitted. New sections are within
{ + braces and plus signs + } .
LC 2676
Senate Bill 628
Sponsored by Senator BONAMICI, Representative HOLVEY
SUMMARY
The following summary is not prepared by the sponsors of the
measure and is not a part of the body thereof subject to
consideration by the Legislative Assembly. It is an editor's
brief statement of the essential features of the measure as
introduced.
Requires mandatory mediation between trustee and grantor before
sale to foreclose residential trust deed. Provides for notice and
procedures for conducting mediation.
Sunsets on January 2, 2014.
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to residential property foreclosures; creating new
provisions; amending ORS 86.740; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. ORS 86.740 is amended to read:
86.740. (1) Subsequent to recording notice of default as
provided in ORS 86.735 and at least 120 days before the day the
trustee conducts the sale, notice of the sale { - shall - }
{ + must + }be served pursuant to ORCP 7 D(2) and 7 D(3) or
mailed by both first class and certified mail with return receipt
requested { - , - } { + . If the sale is for the purpose of
foreclosing a residential trust deed, the notice described in
this subsection must be served as provided in this subsection at
least 180 days before the date of the sale. A separate notice in
accordance with section 3 of this 2009 Act that prescribes
mandatory mediation in advance of the sale must also be served as
provided in this subsection if the sale is for the purpose of
foreclosing a residential trust deed. The notices described in
this subsection must be served or mailed + } to the last-known
address of the following persons or { - their - } { + the + }
legal representatives { + of the persons + }, if any:
(a) The grantor in the trust deed.
(b) { - Any - } { + A + } successor in interest to the
grantor whose interest appears of record, or of whose interest
the trustee or the beneficiary has actual notice.
(c) { - Any - } { + A + } person, including the Department
of Revenue or any other state agency, { - having - } { + that
has + } a lien or interest subsequent to the trust deed if the
lien or interest appears of record or the beneficiary has actual
notice of the lien or interest.
(d) { - Any - } { + A + } person { - requesting - } { +
that requests + } notice as provided in ORS 86.785.
{ + (e) The Department of Consumer and Business Services. + }
(2) A notice served by mail under subsection (1) of this
section is effective when the notice is mailed.
(3)(a) The disability, insanity or death of { - any - } { +
a + } person to whom notice of sale must be given under this
section does not delay or impair in any way the trustee's right
under a trust deed to foreclose under the deed. If the
disability, insanity or death occurs { - prior to the recording
of - } { + before the + } notice of default { + is
recorded + }, the notice { - shall - } { + must + } be given
instead to the guardian, the conservator of the estate of the
person or the administrator or personal representative of the
person, as the case may be, in the manner and by the time set
forth in this section.
(b) If the disability, insanity or death of { - any - } { +
a + } person to whom notice of sale must be given under this
section occurs on or after the { - recording of - } notice of
default { + is recorded + }, the trustee shall, if and when the
trustee has knowledge of the disability, insanity or death,
promptly give the guardian, conservator of the estate or the
administrator or personal representative, as the case may be, the
notice provided in ORS 86.745. This notice shall be given by
first class and certified mail with return receipt requested, to
the last-known address of the guardian, conservator or
administrator or personal representative.
(c) { - In the event - } { + If + } there is no
administrator or personal representative of the estate of the
person to whom notice of sale must be given under this section,
the notice may be given instead to the heirs at law or devisees
of the deceased person in the manner and by the time set forth in
this section.
{ + (4)(a) If the trustee knows or has reason to know that
the grantor of a residential trust deed primarily speaks or reads
a language other than the English language, the trustee shall
cause the notices described in subsection (1) of this section to
be served to the grantor in both the English language and in the
language the grantor primarily speaks or reads.
(b) For purposes of this subsection, a trustee has reason to
know that a grantor primarily speaks or reads a language other
than the English language if the trustee or an agent or affiliate
of the trustee has previously communicated with the grantor in
the other language in the course of a transaction related to the
residential trust deed or in the course of servicing a note or
loan related to the residential trust deed. + }
SECTION 2. { + Sections 3 to 7 of this 2009 Act are added to
and made a part of ORS 86.705 to 86.795. + }
SECTION 3. { + A notice prescribing mandatory mediation in
advance of a trustee's sale to foreclose a residential trust deed
must:
(1) Set forth the name, address, telephone number and other
contact information for the grantor or other person named in the
residential trust deed;
(2) Itemize the amount in default and past due on the
obligation secured by the residential trust deed, the amount that
must be paid to cure the default and all associated costs and
fees;
(3) Provide the account number or other information the trustee
or beneficiary or an agent of the trustee or beneficiary uses to
identify the obligation the grantor owes to the beneficiary;
(4) Provide the address, telephone number or other contact
information for:
(a) The trustee, beneficiary and agent of the trustee or
beneficiary that is authorized to negotiate on the trustee's or
beneficiary's behalf; and
(b) The Oregon State Bar's lawyer referral service;
(5) State that the trustee and the grantor must participate in
a mandatory process of mediation for the purpose of avoiding a
trustee's sale;
(6) State that the trustee and the grantor will each bear half
of the cost of the mediation;
(7) List the documents and other information the grantor must
bring to the mediation;
(8) List the names of at least three persons qualified under
section 6 of this 2009 Act to serve as mediators and provide for
each an address, telephone number and other contact information;
and
(9) State that the grantor is entitled to be represented at the
mediation by an attorney. + }
SECTION 4. { + (1) Within 30 days after the date on which the
trustee caused a notice that prescribes mandatory mediation to be
served or mailed as described in ORS 86.740 (1), the trustee
shall send a second notice by first-class mail to the grantor
that:
(a) Schedules a time and location for the mediation on a date
that is not later than 90 days after the date on which the notice
that prescribes mandatory mediation was served or mailed as
described in ORS 86.740 (1); and
(b) Proposes a mediator from the list in the notice of
mandatory mediation and informs the grantor that the grantor may
object in writing to the trustee's nomination and propose another
mediator from the list within 10 business days after the mailing
date for the second notice.
(2) If the grantor objects to the trustee's proposed mediator,
the trustee will schedule the mediation with the mediator that
the grantor proposes unless the trustee objects. If the trustee
and the grantor each object to the other's proposed mediator, the
trustee will schedule the mediation with the remaining mediator.
(3) The trustee shall pay the initial expenses of the mediation
and is entitled to receive the grantor's portion of the expenses
of the mediation in accordance with the provisions of section 5
of this 2009 Act.
(4) During the period that begins on the date the notice of
mandatory mediation described in ORS 86.740 (1) was served or
mailed and ending on the date on which a mediation conducted
under this section concludes, a trustee or an agent or affiliate
of the trustee may not add fees or charges to the obligation the
grantor owes the trustee. This subsection does not affect:
(a) Interest charged under the terms of the loan agreement or
other evidence of the obligation; or
(b) Service fees or charges that the grantor paid as part of
the obligation before the date on which the notice described in
ORS 86.740 (1) was served or mailed. + }
SECTION 5. { + (1) If a grantor is represented at a mediation
conducted to avoid a sale of real property described in a
residential trust deed, the mediator, the trustee or the grantor
may offer a reasonable settlement proposal to avoid the sale,
including a proposal generated by an automated loan modification
formula developed by the Federal Deposit Insurance Corporation.
With the consent of both parties, the mediator may adopt rules to
facilitate a settlement and may, with the parties' consent, have
authority to suspend or continue the mediation, provided that the
mediation may not be continued later than 120 days after the date
on which the initial notice that prescribed mandatory mediation
was served.
(2) If the grantor is not represented, the mediator shall use
the automated loan modification formula developed by the Federal
Deposit Insurance Corporation to generate a settlement proposal.
(3) If the trustee and grantor reach a settlement, the mediator
shall witness and sign a document that sets forth the terms of
the settlement. The mediator shall report to the Department of
Consumer and Business Services that the parties have reached a
settlement. The trustee within two business days after signing a
settlement document under this subsection shall dismiss all
proceedings under ORS 86.705 to 86.795, reinstate the residential
trust deed and continue the obligation under the terms of the
settlement document.
(4) If the parties do not reach a settlement, the mediator
shall report to the department that the parties have not reached
a settlement. Unless the trustee and the grantor agree, the
mediator may not in the mediator's report recommend a resolution
to the dispute. The trustee may proceed with the sale scheduled
according to the notice required under ORS 86.740 (1) to
foreclose a residential trust deed.
(5) If the trustee and grantor reach a settlement, the grantor
may elect to include the grantor's portion of the cost of the
mediation in the payment plan described in the settlement
document. If the trustee and grantor do not reach a settlement,
the grantor shall bear the grantor's portion of the cost of the
mediation. + }
SECTION 6. { + To qualify as a mediator for the purposes of
the mediation described in section 5 of this 2009 Act, a person
must be trained in the use of the automated loan modification
formula developed by the Federal Deposit Insurance Corporation
and be:
(1) A member of the Oregon State Bar or otherwise qualified as
a mediator as provided in rules adopted under ORS 1.002; or
(2) A housing counselor approved by the United States
Department of Housing and Urban Development in accordance with
the department's Housing Counseling Program Handbook 7610.1. + }
SECTION 7. { + (1) A grantor that did not receive a notice
that prescribes mandatory mediation as provided under ORS 86.740
(1) 180 days before the date of a sale to foreclose a residential
trust deed may apply to the Department of Consumer and Business
Services for an order to suspend the sale. If the department
finds that a notice required under ORS 86.740 (1) was not served
or mailed to the department, the department may issue the
requested order.
(2) An order issued under subsection (1) of this section shall
extend the scheduled date of the sale for a period of 60 days,
pending the completion of a mediation conducted in accordance
with section 5 of this 2009 Act, and shall notify the trustee in
accordance with ORS 183.415 that the trustee is entitled to a
hearing under ORS 183.413 to 183.470. If the trustee by clear and
convincing evidence demonstrates that the grantor received the
required notice, the department shall rescind the order.
(3) If the mediation concludes without a settlement before the
60-day period expires, the department shall rescind the order and
allow the sale to proceed as if the department had not issued the
order. + }
SECTION 8. { + Sections 2 to 7 of this 2009 Act are repealed
on January 2, 2014. + }
SECTION 9. ORS 86.740, as amended by section 1 of this 2009
Act, is amended to read:
86.740. (1) Subsequent to recording notice of default as
provided in ORS 86.735 and at least 120 days before the day the
trustee conducts the sale, notice of the sale must be served
pursuant to ORCP 7 D(2) and 7 D(3) or mailed by both first class
and certified mail with return receipt requested { - . If the
sale is for the purpose of foreclosing a residential trust deed,
the notice described in this subsection must be served as
provided in this subsection at least 180 days before the date of
the sale. A separate notice in accordance with section 3 of this
2009 Act that prescribes mandatory mediation in advance of the
sale must also be served as provided in this subsection if the
sale is for the purpose of foreclosing a residential trust deed.
The notices described in this subsection must be served or
mailed - } to the last-known address of the following persons or
the legal representatives of the persons, if any:
(a) The grantor in the trust deed.
(b) A successor in interest to the grantor whose interest
appears of record, or of whose interest the trustee or the
beneficiary has actual notice.
(c) A person, including the Department of Revenue or any other
state agency, that has a lien or interest subsequent to the trust
deed if the lien or interest appears of record or the beneficiary
has actual notice of the lien or interest.
(d) A person that requests notice as provided in ORS 86.785.
{ - (e) The Department of Consumer and Business Services. - }
(2) A notice served by mail under subsection (1) of this
section is effective when the notice is mailed.
(3)(a) The disability, insanity or death of a person to whom
notice of sale must be given under this section does not delay or
impair in any way the trustee's right under a trust deed to
foreclose under the deed. If the disability, insanity or death
occurs before the notice of default is recorded, the notice must
be given instead to the guardian, the conservator of the estate
of the person or the administrator or personal representative of
the person, as the case may be, in the manner and by the time set
forth in this section.
(b) If the disability, insanity or death of a person to whom
notice of sale must be given under this section occurs on or
after the notice of default is recorded, the trustee shall, if
and when the trustee has knowledge of the disability, insanity or
death, promptly give the guardian, conservator of the estate or
the administrator or personal representative, as the case may be,
the notice provided in ORS 86.745. This notice shall be given by
first class and certified mail with return receipt requested, to
the last-known address of the guardian, conservator or
administrator or personal representative.
(c) If there is no administrator or personal representative of
the estate of the person to whom notice of sale must be given
under this section, the notice may be given instead to the heirs
at law or devisees of the deceased person in the manner and by
the time set forth in this section.
{ - (4)(a) If the trustee knows or has reason to know that
the grantor of a residential trust deed primarily speaks or reads
a language other than the English language, the trustee shall
cause the notices described in subsection (1) of this section to
be served to the grantor in both the English language and in the
language the grantor primarily speaks or reads. - }
{ - (b) For purposes of this subsection, a trustee has reason
to know that a grantor primarily speaks or reads a language other
than the English language if the trustee or an agent or affiliate
of the trustee has previously communicated with the grantor in
the other language in the course of a transaction related to the
residential trust deed or in the course of servicing a note or
loan related to the residential trust deed. - }
SECTION 10. { + The amendments to ORS 86.740 by section 9 of
this 2009 Act become operative on January 2, 2014. + }
SECTION 11. { + This 2009 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2009 Act takes effect on
its passage. + }
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