Oregon’s legislature typically only convenes once every two years.  This year was supposed to be an off-year.  But, with foreclosure winds in the air and the headlines, the legislature convened a special session to address, among other things, foreclosure rescue and equity skimming scams. 

HB 3630, which has flown through both the House and Senate with overwhelming approval, primarily addresses foreclosure rescue schemes and seeks to regulate them.  But at the end of the bill, the legislature added some new procedural and practical requirements for trustees handling nonjudicial foreclosures in Oregon.  Those changes include: 

• After recording the notice of default and prior to or on the day the trustee mails the notice of sale, the trust must also mail to the “grantor” (and -- if the trustee has knowledge that the “grantor” does not live at the subject property -- the occupant) an additional, separate notice “substantially in the form” set forth in the bill.
• The notice must be mailed by first class, return receipt requested.
• The notice must be in at least 14 point type.
  
  
• The notice requires the trustee to provide a reinstatement quote.
  
  
• The notice requires the trustee to provide names and toll-free telephone numbers (presumably at the trustee’s office or the lender’s office) for borrowers to contact to discuss foreclosure alternatives.
  
  
• The notice requires the notice to provide the borrower various statewide telephone numbers for legal referral sources, including the Oregon Bar Association.
  
  
• The Department of Consumer and Business Services will be responsible for the format, font size “and other physical characteristics” of the notice.  The Department will also be responsible for providing the statewide telephone numbers for legal referral sources.

The most problematic aspect of this bill is that it requires the toll-free trustee or the lender telephone numbers to “allow the grantor access during regular business hours to person-to-person consultation with an individual authorized by the grantee to discuss the grantor's payment and loan term negotiation and modification options.”  It is not clear, for instance, whether answering these lines with voicemail will adequately meet this requirement.

A secondary concern is the apparent need to monitor any updates to the form of notice that the Department of Consumer and Business Services will issue from time to time.  Trustees should not assume that the Department of Consumer and Business Services will communicate its changes to the form with any degree of fair notice – if at all.

Under the bill, the late mailing of the additional notice appears to be excusable if the trustee can prove that the grantor actually received the notice at least 25 days prior to the date the trustee conducts the sale.   If the new notice is not timely mailed, the foreclosure is not effective as to the grantor.

The new notice will have to be sent in every foreclosure for which a notice of sale is mailed ninety days or more after the bill becomes law.  As mentioned above, the governor has not yet signed the bill, but there is nothing to indicate that he will veto it.  Trustees should watch for the effective date of this bill.

If you have any questions concerning the effect of this new law, please call David Fennell at 425-586-1929 or contact him by e-mail at dfennell@rcflegal.com.

For previous Oregon articles, click here.