76th OREGON LEGISLATIVE ASSEMBLY--2012 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 234
House Bill 4137
Sponsored by Representative HOLVEY; Representatives BAILEY,
BEYER, BUCKLEY, DEMBROW, DOHERTY, FREDERICK, HARKER, HOYLE,
KENY-GUYER, KOTEK, NATHANSON, TOMEI, WITT (Presession filed.)
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.
Charges mortgage loan servicer with duty of good faith and fair
dealing toward borrower. Describes extent of duty.
Requires servicer to respond to and take action concerning
borrower's qualified correspondence within certain time limits.
Requires servicer to implement policies and procedures that
enable servicer to respond to borrower promptly.
Requires servicer to credit payments to borrower's mortgage
loan account on certain date. Prohibits servicer from charging
late fee until after servicer credits payment to borrower's
account.
Requires servicer to provide borrower with certain statements
of account at fixed times and at borrower's request. Prescribes
timing for and content of statements.
Requires servicer to maintain schedule of fees and charge only
fees that are reasonable, that are for services rendered or costs
incurred, that are authorized by mortgage loan agreement and that
are not prohibited by law.
Requires servicer to inform borrower of and explain borrower's
options for mortgage loan modification or other assistance in
certain circumstances. Provides exceptions.
Requires servicer to submit certain reports to Director of
Department of Consumer and Business Services and to keep certain
books, records and other materials.
Prohibits servicer from violating provisions of Act and from
taking or failing to take certain other actions. Provides that
violation is unlawful practice subject to enforcement under
Unlawful Trade Practices Act.
Becomes operative January 1, 2013.
Declares emergency, effective on passage.
A BILL FOR AN ACT
Relating to regulating mortgage loan servicers; creating new
provisions; amending ORS 646.608; and declaring an emergency.
Be It Enacted by the People of the State of Oregon:
SECTION 1. { + As used in sections 1 to 13 of this 2012 Act:
(1) 'Authorized representative' means a person that a borrower
designates in a signed writing as the borrower's representative.
(2) 'Borrower' means an individual who is obligated to repay a
mortgage loan under a residential mortgage loan agreement.
(3) 'Computation year' means a recurring 12-month period that
begins on the date or anniversary date of the borrower's first
payment under the terms of a mortgage loan agreement.
(4) 'Home Affordable Modification Program' means the program
that the United States Department of the Treasury established
under the authority of 12 U.S.C. 5211 and 5219.
(5) 'Lender' means a person that extends a mortgage loan or
credit to a borrower under the terms of a mortgage loan agreement
or is entitled to all or a portion of the principal, interest and
fees due from the borrower under the terms of the mortgage loan
agreement.
(6) 'Mortgage loan' means a loan or extension of credit that a
borrower agrees to secure by giving a mortgage, trust deed or an
equivalent lien interest in residential real property.
(7) 'Mortgage loan agreement' means a contract or other
arrangement under the terms of which a borrower obtains and
agrees to repay the principal of a mortgage loan, along with
interest and fees, by a certain maturity date.
(8) 'Mortgage loan modification' means a consent, waiver,
forbearance or other amendment of a material term of the mortgage
loan agreement for a specific period of time or for the remaining
term of the mortgage loan agreement to:
(a) Change the interest rate applicable to a mortgage loan;
(b) Reduce or waive a payment of principal or interest due on a
mortgage loan;
(c) Extend the maturity date for a mortgage loan; or
(d) Otherwise agree not to enforce a provision of the mortgage
loan agreement.
(9)(a) 'Qualified correspondence' means a writing that a
borrower sends to a servicer and that:
(A) Relates to the borrower's mortgage loan;
(B) Identifies or enables the servicer to identify the
borrower's name and mortgage loan account; and
(C) States reasons that the borrower believes the account is in
error or asks for information or action related to the account.
(b) 'Qualified correspondence' does not include correspondence
that the servicer receives from the borrower more than one year
after the servicer no longer services the mortgage loan.
(10) 'Residential real property' means real property located in
this state upon which four or fewer improvements designed for
residential occupancy are situated.
(11) 'Servicer' means a person that a lender authorizes, with
respect to a mortgage loan, to:
(a) Collect payments, fees or penalties from the borrower;
(b) Create, keep and maintain records;
(c) Pay insurance premiums, property taxes or other fees or
expenses related to the residential real property that are
necessary to protect the lender's security interest in the
residential real property;
(d) Receive and respond to communications from the borrower
related to the mortgage loan; or
(e) Perform other duties or functions that are set forth in the
authorization the lender gives to the person. + }
SECTION 2. { + (1)(a) Except as provided in paragraph (b) of
this subsection, a person may not conduct business as a servicer
in this state unless the person registers with the Department of
Consumer and Business Services under this section.
(b) A person may conduct business as a servicer in this state
without registering with the department only if:
(A) The person conducts business as a servicer substantially in
compliance with the provisions of sections 1 to 13 of this 2012
Act;
(B) The person proves to the Director of the Department of
Consumer and Business Services by clear and convincing evidence
that the person did not know that this section requires the
person to register with the department; and
(C) The person registers with the department under this section
within 90 days after becoming aware of or receiving actual notice
of the requirement to register under this section.
(2) An applicant for registration as a servicer shall apply to
the director in writing. The director by rule shall prescribe the
form and contents of the application and the manner in which the
applicant must apply. An application for registration at a
minimum must:
(a) List the applicant's name, principal business address in
Oregon and principal business address outside Oregon, if any;
(b) Name and list the residence addresses and business
addresses for the applicant's officers and directors, if the
applicant is a corporation, or the applicant's members, if the
applicant is a partnership, limited liability company or other
association;
(c) Identify the applicant's registered agent in Oregon and
provide the registered agent's address, telephone number or other
contact information; and
(d) Provide other information the director specifies by rule.
(3) At the time the applicant submits an application under this
section, and each year thereafter, the applicant shall pay a fee
in an amount the director prescribes by rule. The director shall
set the fee at an amount that will enable the director to pay the
annual expenses of administering sections 1 to 13 of this 2012
Act from the aggregated amount of fees the director collects
under this section.
(4) Within 30 days after receiving an application under this
section, the director shall issue and deliver to the applicant a
certificate of registration that enables the registrant to
conduct business as a servicer in this state if the director
finds that the applicant has complied with the provisions of
subsection (2) of this section and has paid the fee required
under subsection (3) of this section.
(5) Each year a registrant shall apply to renew a certificate
of registration under this section. In the application, the
registrant shall update, supplement or otherwise correct the
information the registrant provided in the previous application
for registration. Unless the director finds that a registrant has
failed to comply with the provisions of sections 1 to 13 of this
2012 Act, or has failed to pay a fee required under subsection
(3) of this section, the director shall renew the registrant's
certificate of registration. + }
SECTION 3. { + (1) Notwithstanding the terms set forth in a
lender's authorization to service a mortgage loan, a servicer
engaged in business in this state has a duty of good faith and
fair dealing toward a borrower. The duty arises in the servicer's
communications, transactions and other dealings with the borrower
and includes, but is not limited to:
(a) Safeguarding and accounting for moneys the servicer
receives from or handles on behalf of the borrower;
(b) Following the borrower's reasonable and lawful
instructions;
(c) Providing adequate trained personnel, telephone facilities
and other resources necessary to respond promptly to the
borrower's inquiries about the mortgage loan or mortgage loan
agreement;
(d) Acting with reasonable skill, care and diligence;
(e) Providing an accurate statement of account in accordance
with section 7 of this 2012 Act;
(f) Providing a description of options available from the
servicer for mortgage loan modification or other alternatives
that enable a borrower who has defaulted on a payment to avoid
foreclosure and otherwise continue with the mortgage loan
agreement; and
(g) Evaluating, subject to the provisions of section 9 of this
2012 Act, options for a mortgage loan modification or other
assistance to a borrower who has defaulted on a payment due if
the mortgage loan modification or other assistance would enable
the borrower to avoid foreclosure and otherwise continue with the
mortgage loan agreement.
(2) In addition to the duties specified in subsection (1) of
this section, a servicer has a duty to comply with the provisions
of 15 U.S.C. 1601 et seq., 12 C.F.R. part 226 and the provisions
of ORS 86.705 to 86.795, 86A.095 to 86A.198, ORS chapter 88 and
the Bank Act that relate to mortgage loan servicing or that
govern duties or functions of a lender, mortgagee or beneficiary
or a trustee under a trust deed that the lender, mortgagee,
beneficiary or trustee has authorized or delegated to a servicer
to perform. + }
SECTION 4. { + (1) Within 20 business days after receiving
qualified correspondence from a borrower, a servicer shall
acknowledge in writing that the servicer received the qualified
correspondence, unless the servicer takes action related to the
qualified correspondence and communicates the results of the
action to the borrower within the 20-day period.
(2) Within 60 business days after receiving qualified
correspondence from a borrower and before taking action related
to the qualified correspondence, a servicer shall, if
appropriate:
(a) Correct errors in the borrower's account, credit the
account for late charges or penalties and notify the borrower in
writing of the corrections and credits; or
(b) Investigate the matter identified in the qualified
correspondence and:
(A) Notify the borrower of the servicer's reasons for believing
the account is correct and provide the borrower with the name of
and contact information for an employee, office or department of
the servicer that can assist the borrower;
(B) Provide the borrower with the information the borrower
requests in the qualified correspondence; or
(C) Explain to the borrower why the servicer cannot provide the
information the borrower requests in the qualified correspondence
and provide the borrower with the name and contact information of
an employee, office or department of the servicer that can assist
the borrower.
(3)(a) During the 60-day period described in subsection (2) of
this section, the servicer may not provide to a consumer
reporting agency, as defined in 15 U.S.C. 1681a, adverse
information about a payment that is the subject of qualified
correspondence.
(b) The prohibition set forth in paragraph (a) of this
subsection does not affect the servicer's ability to pursue a
remedy that the lender or the mortgage loan agreement authorizes
the servicer to pursue.
(4)(a) In addition to the requirements set forth in subsections
(1) to (3) of this section, a servicer shall develop, implement
and maintain policies and procedures for responding to a
borrower's qualified correspondence, inquiries and complaints
promptly and appropriately.
(b) In order to meet the requirement set forth in paragraph (a)
of this subsection, the servicer shall provide at a minimum:
(A) Trained personnel sufficient to respond to a reasonable and
expected amount of correspondence from borrowers;
(B) A designated employee to whom a borrower may direct
correspondence, an inquiry or a complaint;
(C) A designated telephone number that a borrower can call
toll-free or collect to make inquiries or communicate a complaint
related to the borrower's mortgage loan to the employee specified
in subparagraph (B) of this paragraph during regular business
hours at the servicer's location; and
(D) A designated electronic method, or means other than a
telephone, by which a borrower may make an inquiry or communicate
a complaint related to the borrower's mortgage loan.
(5) A servicer shall provide on each statement of account the
servicer sends to the borrower at the borrower's request or in
accordance with section 7 of this 2012 Act:
(a) An address to which the borrower can direct qualified
correspondence;
(b) The name of the employee, the telephone number and a
description of the electronic method or means for communicating
with the servicer that is required under subsection (4)(b) of
this section; and
(c) Contact information for the Department of Consumer and
Business Services by means of which the borrower may file a
complaint about the servicer, together with the servicer's
certification or license number or other identification, if any,
of an authorization from an agency of this state under which the
servicer may service mortgage loans in this state.
(6) Within 15 days after receiving a written request from the
borrower or the authorized representative, a servicer shall
provide the borrower or the authorized representative with the
name, address and contact information for the person that, as of
the date on which the borrower or the authorized representative
made the request, is the lender, the mortgagee, the beneficiary,
the trustee under the trust deed or another person to which all
or a portion of the payment is due under the mortgage loan
agreement. + }
SECTION 5. { + (1) A servicer that receives moneys from a
borrower for the servicer to hold in escrow to pay insurance
premiums, property taxes or other fees or expenses that are
necessary to protect the lender's security interest in the
residential real property that secures the mortgage loan shall
make the payments in accordance with 24 C.F.R. 3500.17. The
servicer's failure to make a payment as required under this
subsection, in addition to any liability or penalty provided
under 24 C.F.R. 3500.17, is an unlawful practice under ORS
646.608 that is subject to enforcement under ORS 646.638.
(2) A servicer shall disclose payments the servicer made under
subsection (1) of this section clearly and conspicuously on the
next periodic statement of account the servicer provides to the
borrower.
(3) If a servicer advances the servicer's own funds to pay an
insurance premium, tax or other fee or expense described in
subsection (1) of this section because of a deficiency in the
borrower's escrow account that does not result from a default on
a payment for the mortgage loan, the servicer shall analyze the
escrow account to determine the reason for and extent of the
deficiency in the escrow account before seeking repayment from
the borrower of the amount the servicer advanced. + }
SECTION 6. { + (1)(a) Except as provided in subsection (5) of
this section, a servicer shall accept all payments the servicer
receives for a mortgage loan from the borrower at the address to
which the servicer instructed the borrower to send payments. The
servicer shall credit the payments to the borrower's account, or
treat the payments as credited, on the business day on which the
servicer received the payment if the borrower provides sufficient
information to credit the account.
(b) Except as provided in paragraph (c) of this subsection, the
servicer shall credit a payment the servicer receives toward the
principal and interest due on the mortgage loan before crediting
the payment toward insurance premiums, taxes or fees.
(c) If failing to credit a payment or a portion of a payment
toward property taxes may result in an imposition or foreclosure
of a tax lien on the residential real property that secures the
mortgage loan, the servicer shall credit the payment or a portion
of the payment toward the property taxes in an amount sufficient
to avoid the lien or the foreclosure. The servicer shall notify
the borrower of the servicer's action within five days after
taking the action and shall request that the borrower pay an
additional amount sufficient to keep the borrower's mortgage loan
account current.
(2) If a servicer specifies in writing requirements for the
borrower to follow in making a payment but the servicer accepts a
payment that does not conform to the servicer's requirements, the
servicer shall credit the payment to the borrower's account as
soon as is commercially practicable, but not later than five days
after the servicer receives the payment.
(3) If a regular periodic payment remains unpaid after the date
on which the payment is due under the terms of the mortgage loan
agreement, the servicer shall send, not later than 17 days after
the date on which the payment is due, a written reminder to the
borrower that the payment is due.
(4)(a) A servicer may not impose a late fee for a payment a
borrower makes after the date on which the payment is due if the
servicer receives the payment within 15 calendar days after the
payment is due. If the 15-day period ends on a Saturday, Sunday
or holiday, the servicer shall extend the period until the next
regular business day.
(b) A servicer shall credit a payment that a borrower makes
after the date on which the payment is due to the borrower's
account before the servicer charges a late fee for the payment.
(c) A servicer may not charge a late fee that exceeds the
lesser of:
(A) The amount set forth as a late fee in the mortgage loan
agreement; or
(B) Two percent of the amount that is due in a single, regular
periodic payment under the terms of the mortgage loan agreement.
(d) The servicer may not deduct a late fee from:
(A) The borrower's escrow account or a surplus deposit to an
escrow account, unless the borrower authorizes the servicer to do
so; or
(B) A regular periodic payment the borrower makes under the
terms of the mortgage loan agreement.
(e) A servicer may not impose a late fee for a borrower's
failure to pay a previous late fee by the due date set for the
previous late fee if the borrower pays the full amount of a
regular periodic payment due under the terms of the mortgage loan
agreement. The servicer may not charge more than one late fee for
any single periodic payment that a borrower makes after the due
date.
(5) If a servicer credits payments that the servicer receives
to a borrower's account only on a specific date within each month
or other period, the servicer shall credit a payment the servicer
receives earlier to the borrower's account not later than the due
date for the payment or 30 days after receiving the payment,
whichever date is earlier.
(6) If the servicer receives a payment that the servicer does
not credit to the borrower's account or treat as credited to the
borrower's account, the servicer shall notify the borrower in
writing within 10 days after receiving the payment of the reasons
why the servicer did not credit the payment or treat the payment
as credited and the actions the borrower must take to make the
mortgage loan current. The sender shall send the notice by mail
to the borrower's last known address.
(7) A servicer shall establish written policies and procedures
to guide how the servicer processes payments that exceed or are
less than the amount due for regular periodic payments on the
mortgage loan. + }
SECTION 7. { + (1)(a) At least once each year and not later
than 30 days after the end of the computation year, a servicer
shall provide a plain language statement of account to the
borrower that shows, at a minimum:
(A) The balance of the unpaid principal on the mortgage loan as
of the date of the statement of account;
(B) The amount of interest the borrower paid during the
preceding 12 months; and
(C) The amounts the borrower deposited into the escrow account
created under the terms of the mortgage loan agreement, if any,
and the amounts the servicer disbursed from the escrow account.
(b) The portions of the statement of account that describe
transactions related to the escrow account must comply with the
provisions of 24 C.F.R. 3500.17(i).
(2) A servicer shall provide a borrower or the authorized
representative with an accurate statement of account within 30
days after receiving a written request for a statement of account
from the borrower or the authorized representative. In addition
to the information required under subsection (1) of this section,
the statement of account must show the date and amount of each
payment made on the mortgage loan account for the previous 36
months or for a different period if the borrower or authorized
representative specifies a different period.
(3) Not more than five days after receiving a request from a
borrower or the authorized representative, a servicer shall
provide the borrower or the authorized representative with a
clear and accurate statement of the amount the borrower must pay
as of the statement date in order to repay the entire outstanding
balance of the mortgage loan.
(4) A servicer may not charge a borrower or the authorized
representative a fee for providing a statement under this
section, except that the servicer may charge a reasonable fee for
providing more than one statement of account under subsection (2)
of this section, or more than five statements under subsection
(3) of this section, during a 12-month period.
(5) A servicer shall comply with the provisions of 24 C.F.R.
3500.17(f) if the servicer finds a surplus or deficiency in the
borrower's escrow account. The servicer may apply a surplus in
the escrow account to the principal balance if the borrower
authorizes the servicer to do so. + }
SECTION 8. { + (1) A servicer shall establish, maintain and
update at least every six months a schedule of common fees that
the servicer charges or may charge in connection with a
borrower's mortgage loan. The servicer shall provide a copy of
the schedule of fees to the borrower or the authorized
representative upon request.
(2) Fees that the servicer collects must be:
(a) Reasonable;
(b) For bona fide services that the servicer renders or for
costs the servicer incurs;
(c) Expressly authorized in the mortgage loan agreement; and
(d) In accordance with applicable law. + }
SECTION 9. { + (1) A servicer's obligations under this section
are subject to the servicer's duties as set forth in section 3 of
this 2012 Act, to the servicer's obligations to the lender under
any authorization the lender gave to service the mortgage loan
and to practices and procedures required by law or common among
mortgage loan servicers.
(2)(a) If a borrower has failed to make a regular periodic
payment on a mortgage loan for 60 days or longer or if a borrower
requests a mortgage loan modification or other assistance with a
mortgage loan, the servicer shall, within 10 days after the
60-day period has expired or the servicer receives the request
from the borrower:
(A) Provide the borrower with a statement of the amount due on
the mortgage loan as of the statement date;
(B) Describe the servicer's program for mortgage loan
modification or other assistance the servicer offers that would
enable the borrower to avoid foreclosure and otherwise continue
with the mortgage loan agreement;
(C) Describe the procedures the borrower must follow to apply
for the program or the assistance; and
(D) Offer to negotiate in good faith with the borrower under
the terms of the program or assistance in an attempt to avoid
foreclosure.
(b) A description under paragraph (a)(B) or (C) of this
subsection must:
(A) List the information the servicer will require the borrower
to provide and specify that the borrower must provide the
information within 30 days after the date of the servicer's
communication under this subsection;
(B) List the consents, waivers, forbearances or approvals from
third parties that the servicer must obtain before proceeding
with the program or other assistance;
(C) State the average length of time the servicer takes to
decide whether a borrower is eligible for the program or
assistance; and
(D) List the actions the servicer, lender, mortgagee,
beneficiary or trustee may take during the period in which the
servicer is evaluating whether the borrower is eligible for the
program or assistance, such as whether the borrower will continue
to receive collection letters or foreclosure notices and whether
collection efforts or the foreclosure process will continue or be
suspended.
(3)(a) A servicer shall offer the borrower a mortgage loan
modification if the servicer determines that:
(A) The borrower's financial condition does not permit the
borrower to continue to make regular periodic payments in the
amount specified in the mortgage loan agreement or to make up the
amount of a deficiency in the payments due for the mortgage loan;
and
(B) The net present value of the income stream that the
servicer can expect from agreeing to a mortgage loan modification
is more than the net present value of the income stream the
servicer could expect if the servicer foreclosed the mortgage
loan and sold the residential real property that secures the
mortgage loan.
(b) The servicer shall retain in the servicer's records for the
mortgage loan the policies and standards, formulae and
calculations the servicer used to make a determination under
paragraph (a) of this subsection. The information the servicer
must retain under this paragraph is subject to the provisions of
section 11 of this 2012 Act. To the extent that the information
may be considered a public record as defined in ORS 192.410, the
information is confidential and is exempt from public disclosure
under ORS 192.502.
(c) A servicer that agrees to a mortgage loan modification
shall attempt in good faith to structure the terms of the
modified mortgage loan so that the borrower can afford to make
regular periodic payments for a specified period or for the
remaining term of the mortgage loan.
(4)(a) A servicer shall decide, within 45 days after receiving
information the servicer needs from the borrower and the
consents, waivers, forbearances or approvals the servicer needs
from third parties, whether a borrower is eligible for a mortgage
loan modification or other assistance that would avoid
foreclosure.
(b) The servicer shall notify the borrower or the authorized
representative in writing of the servicer's decision under
paragraph (a) of this subsection. If the servicer agrees to a
mortgage loan modification or other assistance, the notice shall
describe in clear and plain language the material terms, costs
and risks of the mortgage loan modification or other assistance.
If the servicer does not agree to a mortgage loan modification or
other assistance, the notice must:
(A) Describe the servicer's reasons and basis for the decision;
(B) Explain how the servicer calculated that the borrower was
not eligible; and
(C) Specify other options, if any, that the servicer may
consider to avoid foreclosure.
(c) A servicer complies with the requirement set forth in
paragraph (b) of this subsection if the servicer provides the
information specified for a borrower notice in Supplemental
Directive 09-08, as in effect on the effective date of this 2012
Act, that the United States Department of the Treasury issued
under the Helping Families Save Their Homes Act of 2009, P.L.
111-22, as in effect on the effective date of this 2012 Act.
(5) A servicer may not, as a condition of agreeing to a
mortgage loan modification or other assistance with a mortgage
loan, require a borrower to waive a legal claim or defense to
which the borrower is entitled.
(6)(a) A servicer shall take reasonable steps to train the
servicer's staff to provide information about the servicer's
programs for mortgage loan modification or other assistance and
about other programs that may enable a borrower to avoid
foreclosure.
(b) The servicer shall provide a borrower who has failed to
make a regular periodic payment on a mortgage loan for 60 days or
longer, or a borrower who requests a mortgage loan modification
or other assistance, with a list of not-for-profit housing
counselors approved by the United States Department of Housing
and Urban Development or an agency of this state.
(c)(A) The servicer shall provide the borrower or the
authorized representative with:
(i) A current list of the servicer's employees who are
authorized to discuss a program of mortgage loan modification or
other assistance with the borrower or the authorized
representative; and
(ii) A current list of supervisory employees whom a legal
service provider or a representative of a state or federal agency
may contact to review a servicer's performance or to intervene in
a servicer's decision-making process under subsection (4)(a) of
this section.
(B) The servicer shall provide toll-free telephone numbers,
facsimile numbers and electronic mail addresses for direct
communication with the listed employees.
(7) A servicer shall develop and implement policies and
procedures to identify as soon as possible borrowers and mortgage
loans that are at risk of foreclosure. The policies and
procedures must include:
(a) An accounting system that alerts an employee, officer or
department of the servicer that is responsible for initiating
foreclosure proceedings when:
(A) The interest rate for a mortgage loan will reset, or a
material term of a mortgage loan agreement will change, in the
next 60 days; or
(B) A borrower fails to make a regular periodic payment on a
mortgage loan;
(b) A procedure for sending delinquency notices, assessing late
fees, processing partial payments, maintaining collection
histories and reporting to a consumer reporting agency the
borrower's failure to make a payment;
(c) A policy and procedure for analyzing why the borrower
failed to make a regular periodic payment on a mortgage loan; and
(d) A procedure by means of which the servicer's management can
review and evaluate the servicer's decisions to offer a mortgage
loan modification or other assistance or to proceed with
foreclosure.
(8) This section does not preclude a servicer from offering or
accepting other options for avoiding a foreclosure, such as a
short sale of the residential real property that secures the
mortgage loan, a deed in lieu of foreclosure, a forbearance with
respect to a payment due under the terms of the mortgage loan
agreement or other assistance the servicer can provide.
(9) A servicer shall use reasonable efforts to obtain consents,
waivers, forbearances or approvals from third parties that are
required under contract provisions or under law before the
servicer can agree to a mortgage loan modification or other
assistance with a mortgage loan.
(10) If a servicer complies with the regulations and guidelines
set forth for the Home Affordable Modification Program, the
servicer is presumed to have complied with the servicer's duties
under section 3 (1)(f) and (g) of this 2012 Act. + }
SECTION 10. { + (1) A servicer shall compile and submit an
annual report to the Director of the Department of Consumer and
Business Services that contains the information the director
specifies by rule. The servicer shall submit the report in a
format and by a date that the director specifies by rule.
(2) An officer or director of the servicer shall attest under
penalty of perjury to the accuracy of a report the servicer
submits under this section. + }
SECTION 11. { + (1) A servicer shall keep books, records and
other materials that enable the Director of the Department of
Consumer and Business Services to determine during an
investigation or examination whether the servicer is complying
with the requirements set forth in sections 1 to 13 of this 2012
Act. The books, records and other materials must record, at a
minimum:
(a) Payments the servicer received, disbursements the servicer
made and the date of each transaction connected with each
mortgage loan account;
(b) The principal balance of each mortgage loan account;
(c) The amount of the regular periodic payment and the date on
which the regular periodic payment is due for each mortgage loan
account;
(d) The service history for each mortgage loan the servicer is
authorized to service, including mortgage loans the servicer
acquired from another person; and
(e) The service history for mortgage loans for which a borrower
has failed to make a regular periodic payment, including mortgage
loans that are undergoing foreclosure.
(2) A servicer shall maintain a file for each mortgage loan
that contains:
(a) Written correspondence the servicer sends to and receives
from the borrower or the authorized representative, including
qualified correspondence and correspondence sent by electronic
mail or facsimile;
(b) Telephone logs and notes from telephone conversations
between the servicer and the borrower or the authorized
representative; and
(c) Written correspondence and notes of other communications
concerning the mortgage loan between the servicer and:
(A) Another or previous servicer of the mortgage loan;
(B) The lender, mortgagee or beneficiary or the trustee under a
trust deed for the residential real property that secures the
mortgage loan; or
(C) A governmental body.
(3) The servicer shall periodically assess how well the
servicer is performing the duties required under sections 1 to 13
of this 2012 Act. The assessment must include an audit conducted
at least once each year that examines the servicer's payment
processing functions to ensure that the servicer properly credits
payments to mortgage loan accounts. The servicer shall keep a
record of the results of the assessment and the audit and make
the record available to the director at the director's request.
(4) The servicer shall collect, maintain and analyze
information that enables the servicer to evaluate the
effectiveness of the servicer's collection operations and the
overall performance of the servicer's portfolio of mortgage
loans. The information must include data on the rate of
delinquent payments and foreclosures within the servicer's
portfolio and an evaluation of whether the servicer's operations
discriminate against a borrower or class of borrowers. The
servicer shall compare the rates of delinquency and foreclosure
within the servicer's portfolio to similar data available from
other servicers or the general mortgage loan servicing market. To
the extent that the servicer's rates of delinquency or
foreclosure vary from the general rates prevalent in the mortgage
loan servicing market, the servicer shall identify and implement
actions to correct operations of the servicer that vary
significantly from operations common among other servicers with
delinquency and foreclosure rates closer to the prevalent rates.
(5) The servicer shall submit to the director within 45 days
after the end of each of the servicer's fiscal quarters a
quarterly financial report and certification of net worth in a
format prescribed by the director. Within 90 days after the
servicer's fiscal year ends, the servicer shall submit a
financial statement that is prepared in accordance with generally
accepted accounting principles and is audited by an independent
certified public accountant in accordance with generally accepted
auditing standards.
(6) The servicer shall file other reports as the director
prescribes by rule.
(7) At the director's request, an officer or director of the
servicer shall attest under penalty of perjury to the accuracy of
the materials the servicer maintains under this section. + }
SECTION 12. { + (1) A servicer may not:
(a) Fail to take timely action to respond to a borrower's
qualified correspondence in accordance with section 4 of this
2012 Act.
(b) Fail to accept and credit a payment as provided in section
6 of this 2012 Act or to correct an error related to an
allocation of a payment, a statement of account or other records
related to a borrower's mortgage loan.
(c) Fail to respond to a request the servicer receives under
section 4 (6) of this 2012 Act.
(d) Impose or collect a fee that violates the provisions of
section 8 (2) of this 2012 Act.
(e) Misrepresent or omit material information in communications
with a borrower, such as the amount, reason for or terms of a
payment or fee due under the mortgage loan agreement or as a
result of a policy or practice of the servicer, the terms and
conditions of the servicer's authorization to service the loan or
the terms of the borrower's obligations under the mortgage loan
agreement.
(f) Misrepresent or omit data or material information required
under section 10 or 11 of this 2012 Act.
(g) Fail to notify a borrower if the servicer purchases
insurance for residential real property that secures the
borrower's mortgage loan.
(h) Purchase insurance for residential real property that
secures a mortgage loan if the servicer has reason to know that
the borrower has an effective homeowner's, hazard or flood
insurance policy for the residential real property.
(i) Purchase or require a borrower to purchase insurance for
residential real property that pays a total claim in an amount
that exceeds the replacement cost for the residential real
property.
(j) Fail to refund to the borrower an amount the servicer
charged the borrower for an insurance premium the servicer
purchased for residential real property that secures the
borrower's mortgage loan after the borrower proves that the
borrower had an effective insurance policy in place for the
residential real property for the period of time covered by the
policy the servicer purchased.
(k) Require a borrower to make a payment in a manner that costs
the borrower more than the cost of a cashier's or certified check
or a check from an attorney's trust account.
(L) Refuse to communicate with an authorized representative
that provides the servicer with written authorization to act as
the authorized representative. This paragraph does not preclude a
servicer from verifying that the authorized representative is
acting on the borrower's behalf.
(2)(a) The Director of the Department of Consumer and Business
Services may investigate a violation of this section and may
impose a penalty or otherwise enforce the provisions of this
section to the same extent as provided for a mortgage banker's
violations of the provisions of ORS 86A.095 to 86A.198.
(b) The director may issue a subpoena or other process to the
servicer to compel the servicer to produce books, records and
other materials the servicer maintains under section 11 of this
2012 Act or to compel the attendance of a witness or other person
from whom the director requires testimony necessary to conduct an
investigation or examination. The director may examine the
witness or other person under oath.
(c) If the director investigates or examines a servicer under
this section, the servicer shall pay the director for the actual
cost of the investigation or examination. The director may bring
an action to recover the cost in a circuit court of this state.
(3) A violation of a provision of this section is an unlawful
practice under ORS 646.608 that is subject to enforcement under
ORS 646.638. + }
SECTION 13. { + The Director of the Department of Consumer and
Business Services may adopt rules that are necessary to implement
the provisions of sections 1 to 13 of this 2012 Act. + }
SECTION 14. ORS 646.608 is amended to read:
646.608. (1) A person engages in an unlawful practice when in
the course of the person's business, vocation or occupation the
person does any of the following:
(a) Passes off real estate, goods or services as those of
another.
(b) Causes likelihood of confusion or of misunderstanding as to
the source, sponsorship, approval, or certification of real
estate, goods or services.
(c) Causes likelihood of confusion or of misunderstanding as to
affiliation, connection, or association with, or certification
by, another.
(d) Uses deceptive representations or designations of
geographic origin in connection with real estate, goods or
services.
(e) Represents that real estate, goods or services have
sponsorship, approval, characteristics, ingredients, uses,
benefits, quantities or qualities that they do not have or that a
person has a sponsorship, approval, status, qualification,
affiliation, or connection that the person does not have.
(f) Represents that real estate or goods are original or new if
they are deteriorated, altered, reconditioned, reclaimed, used or
secondhand.
(g) Represents that real estate, goods or services are of a
particular standard, quality, or grade, or that real estate or
goods are of a particular style or model, if they are of another.
(h) Disparages the real estate, goods, services, property or
business of a customer or another by false or misleading
representations of fact.
(i) Advertises real estate, goods or services with intent not
to provide them as advertised, or with intent not to supply
reasonably expectable public demand, unless the advertisement
discloses a limitation of quantity.
(j) Makes false or misleading representations of fact
concerning the reasons for, existence of, or amounts of price
reductions.
(k) Makes false or misleading representations concerning credit
availability or the nature of the transaction or obligation
incurred.
(L) Makes false or misleading representations relating to
commissions or other compensation to be paid in exchange for
permitting real estate, goods or services to be used for model or
demonstration purposes or in exchange for submitting names of
potential customers.
(m) Performs service on or dismantles any goods or real estate
when not authorized by the owner or apparent owner thereof.
(n) Solicits potential customers by telephone or door to door
as a seller unless the person provides the information required
under ORS 646.611.
(o) In a sale, rental or other disposition of real estate,
goods or services, gives or offers to give a rebate or discount
or otherwise pays or offers to pay value to the customer in
consideration of the customer giving to the person the names of
prospective purchasers, lessees, or borrowers, or otherwise
aiding the person in making a sale, lease, or loan to another
person, if earning the rebate, discount or other value is
contingent upon occurrence of an event subsequent to the time the
customer enters into the transaction.
(p) Makes any false or misleading statement about a prize,
contest or promotion used to publicize a product, business or
service.
(q) Promises to deliver real estate, goods or services within a
certain period of time with intent not to deliver them as
promised.
(r) Organizes or induces or attempts to induce membership in a
pyramid club.
(s) Makes false or misleading representations of fact
concerning the offering price of, or the person's cost for real
estate, goods or services.
(t) Concurrent with tender or delivery of any real estate,
goods or services fails to disclose any known material defect or
material nonconformity.
(u) Engages in any other unfair or deceptive conduct in trade
or commerce.
(v) Violates any of the provisions relating to auction sales,
auctioneers or auction marts under ORS 698.640, whether in a
commercial or noncommercial situation.
(w) Manufactures mercury fever thermometers.
(x) Sells or supplies mercury fever thermometers unless the
thermometer is required by federal law, or is:
(A) Prescribed by a person licensed under ORS chapter 677; and
(B) Supplied with instructions on the careful handling of the
thermometer to avoid breakage and on the proper cleanup of
mercury should breakage occur.
(y) Sells a thermostat that contains mercury unless the
thermostat is labeled in a manner to inform the purchaser that
mercury is present in the thermostat and that the thermostat may
not be disposed of until the mercury is removed, reused, recycled
or otherwise managed to ensure that the mercury does not become
part of the solid waste stream or wastewater. For purposes of
this paragraph, 'thermostat' means a device commonly used to
sense and, through electrical communication with heating, cooling
or ventilation equipment, control room temperature.
(z) Sells or offers for sale a motor vehicle manufactured after
January 1, 2006, that contains mercury light switches.
(aa) Violates the provisions of ORS 803.375, 803.385 or 815.410
to 815.430.
(bb) Violates ORS 646A.070 (1).
(cc) Violates any requirement of ORS 646A.030 to 646A.040.
(dd) Violates the provisions of ORS 128.801 to 128.898.
(ee) Violates ORS 646.883 or 646.885.
(ff) Violates ORS 646.569.
(gg) Violates the provisions of ORS 646A.142.
(hh) Violates ORS 646A.360.
(ii) Violates ORS 646.553 or 646.557 or any rule adopted
pursuant thereto.
(jj) Violates ORS 646.563.
(kk) Violates ORS 759.690 or any rule adopted pursuant thereto.
(LL) Violates the provisions of ORS 759.705, 759.710 and
759.720 or any rule adopted pursuant thereto.
(mm) Violates ORS 646A.210 or 646A.214.
(nn) Violates any provision of ORS 646A.124 to 646A.134.
(oo) Violates ORS 646A.095.
(pp) Violates ORS 822.046.
(qq) Violates ORS 128.001.
(rr) Violates ORS 646.649 (2) to (4).
(ss) Violates ORS 646A.090 (2) to (4).
(tt) Violates ORS 87.686.
(uu) Violates ORS 646.651.
(vv) Violates ORS 646A.362.
(ww) Violates ORS 646A.052 or any rule adopted under ORS
646A.052 or 646A.054.
(xx) Violates ORS 180.440 (1) or 180.486 (1).
(yy) Commits the offense of acting as a vehicle dealer without
a certificate under ORS 822.005.
(zz) Violates ORS 87.007 (2) or (3).
(aaa) Violates ORS 92.405 (1), (2) or (3).
(bbb) Engages in an unlawful practice under ORS 646.648.
(ccc) Violates ORS 646A.365.
(ddd) Violates ORS 98.854 or 98.858 or a rule adopted under ORS
98.864.
(eee) Sells a gift card in violation of ORS 646A.276.
(fff) Violates ORS 646A.102, 646A.106 or 646A.108.
(ggg) Violates ORS 646A.430 to 646A.450.
(hhh) Violates a provision of ORS 744.318 to 744.384, 744.991
and 744.992.
(iii) Violates a provision of ORS 646A.702 to 646A.720.
(jjj) Violates ORS 646A.530 30 or more days after a recall
notice, warning or declaration described in ORS 646A.530 is
issued for the children's product, as defined in ORS 646A.525,
that is the subject of the violation.
(kkk) Violates a provision of ORS 697.612, 697.642, 697.652,
697.662, 697.682, 697.692 or 697.707.
(LLL) Violates the consumer protection provisions of the
Servicemembers Civil Relief Act, 50 U.S.C. App. 501 et seq., as
in effect on January 1, 2010.
(mmm) Violates a provision of ORS 646A.480 to 646A.495.
(nnn) Violates ORS 646A.082.
(ooo) Violates ORS 646.647.
(ppp) Violates ORS 646A.115.
(qqq) Violates a provision of ORS 646A.405.
(rrr) Violates ORS 646A.092.
(sss) Violates a provision of ORS 646.644.
(ttt) Violates a provision of ORS 646A.295.
{ + (uuu) Violates a provision of section 5 or 12 of this
2012 Act. + }
(2) A representation under subsection (1) of this section or
ORS 646.607 may be any manifestation of any assertion by words or
conduct, including, but not limited to, a failure to disclose a
fact.
(3) In order to prevail in an action or suit under ORS 646.605
to 646.652, a prosecuting attorney need not prove competition
between the parties or actual confusion or misunderstanding.
(4) An action or suit may not be brought under subsection
(1)(u) of this section unless the Attorney General has first
established a rule in accordance with the provisions of ORS
chapter 183 declaring the conduct to be unfair or deceptive in
trade or commerce.
(5) Notwithstanding any other provision of ORS 646.605 to
646.652, if an action or suit is brought under subsection (1)(xx)
of this section by a person other than a prosecuting attorney,
relief is limited to an injunction and the prevailing party may
be awarded reasonable attorney fees.
SECTION 15. { + (1) Sections 1 to 13 of this 2012 Act and the
amendments to ORS 646.608 by section 14 of this 2012 Act become
operative on January 1, 2013.
(2) The Director of the Department of Consumer and Business
Services may take any action before the operative date specified
in subsection (1) of this section that is necessary to enable the
director to exercise, on and after the operative date specified
in subsection (1) of this section, all of the duties, functions
and powers conferred on the director by sections 1 to 13 of this
2012 Act and the amendments to ORS 646.608 by section 14 of this
2012 Act. + }
SECTION 16. { + This 2012 Act being necessary for the
immediate preservation of the public peace, health and safety, an
emergency is declared to exist, and this 2012 Act takes effect on
its passage. + }
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