The CT Connection

Chapter 19, Oregon Laws 2008

The Oregon legislature passed a bill in the February 2008 special session that is now in effect in all sections. There were three separate sections in the bill. The first two sections are called the Mortgage Rescue Fraud Protection Act. The third section creates a new notice required on all residential (1 to 4) trust deed foreclosures.

Sections 2 to 6: Foreclosure Consultants

            Anyone who assists a homeowner who is in default to prevent, postpone or stop a foreclosure sale, or assists with redemption rights, extensions, waivers or assists in obtaining a loan or advance of funds or helps protect the owner’s credit rating may be covered by this section. Certain parties, including a real estate broker licensed in Oregon and acting within the scope of their license are exempt. Under the new law a written contract is required for any of the described services unless the assisting party is exempt. The contract must be presented to the homeowner at least 24 hours before it is signed. It must be in a language that is spoken by the homeowner and contain certain information required by law. Rights of the homeowner under this law cannot be waived. The contract must contain a statutory right to cancel at any time and contains provisions for cancellation. The foreclosure consultant may not act under a power of attorney for the homeowner.

Sections 9 to 14: Equity Conveyances

            Anyone who obtains a transfer of the seller’s equity where the equity seller is in foreclosure and is allowed to remain in possession or retain further rights after the conveyance is subject to this section of the statute. It requires a written equity conveyance contract and at that least a memorandum of the contract be recorded no later than the time of the equity conveyance being recorded. It identifies the funds to be included in an equity recapture payment. The contract must be presented to the homeowner at least 24 hours prior to signing and contain certain statutory provisions. It prohibits a power of attorney from the equity seller to the purchaser. It must contain a three-day rescission period and provide that the seller may cancel upon sale in foreclosure. The purchaser is required to provide the seller with a statutory cancellation form upon both of them signing. If the property is resold within 24 months after entering into the contract, the equity purchaser must pay the equity seller at least 82% of the equity recapture payment from the sale.

Section 20: Notice of Danger of Losing Property

            If a notice of default is recorded, the sender of the notice must give a newly required notice (in addition to all other notices previously required) on or before the date the notice of sale is served or mailed. The new notice is specifically set forth in the statute and is required to go to the grantor of the trust deed. It is entitled: NOTICE; YOU ARE IN DANGER OF LOSING YOUR PROPERTY IF YO DO NOT TAKE ACTION IMMEDIATELY. It requires contact information for the lender and for legal and other assistance. If the occupant is not the grantor, a copy must also be sent to the occupant. This notice must be actually received by the grantor at least 25 days prior to the date the sale is conducted, or the grantor has the rights of a junior lienholder in a judicial sale. That right could extend to a right to recover the property up to five years after the date of the sale.

Title companies are requiring proof that all grantors have been actually notified where the notice of sale was sent June 9, 2008 or later. They may require an affidavit of notice to be recorded, and they may require affirmation that the statute has been complied with in the trustee’s deed. Proposed legislation for the 2009 session would statutorily require the recording of an affidavit and shorten the period of time in which an objecting owner may assert his/her rights.

Some attorneys have asked for the ORS statute number containing this new law. The law has not been incorporated into the statutes since it was passed in a special session and will not be until the statutes are updated with the 2009 laws. Until that time, the proper reference is the chapter of the 2008 laws shown in the title of this article.