Bill in Oregon Would Involve Trustees in Mediation of Foreclosures

Legislation has been introduced in the Oregon Senate that would impose mandatory mediation process that must be exhausted before a nonjudicial foreclosure of a residential trust deed can be completed. Curiously, the legislation would make the foreclosure trustee -- and not the lender -- the primary funder of and participant in the mediation process. “The trustee’s involvement should be completely expunged from this bill and be fully replaced by the ‘beneficiary or its agent’” said David Fennell, Senior Counsel with Routh Crabtree Olsen, P.S., in a communication to the Oregon Senate. While “the trustee should be bound by the outcome of mediation and any state law imposed by law during mediation, it should not be a participant in the mediation” he said. The net result of this legislation could very well be that judicial foreclosures would become an attractive alternative to nonjudicial foreclosures in Oregon.

The bill, SB 628, introduced by Senator Bonamici, is scheduled for a hearing by the Consumer Protection and Public Affairs committee on March 31st. David Fennell testified at that hearing on behalf of UTA.