U.S. Bank and Capital One Agree that Foreclosure Mediation in Oregon is Beneficial
Despite the lack of popularity such programs have had for mortgage lenders in the past, two lending companies—U.S. Bank and Capital One—have discovered the benefits of foreclosure mediation in Oregon. With the state legislature nearing its acceptance of a bill that closes loopholes for lenders attempting to escape mediation as a prerequisite for foreclosing on a home, companies like U.S. Bank and Capital One are accepting the inevitable and agreeing to put some effort into working with financially distressed homeowners to help them avoid foreclosure.
In Oregon’s foreclosure mediation program, only eight cases have been completed, although the state hopes the new legislation will increase this number dramatically. However, anything that can help lower the state’s foreclosure rate is looked at as a positive thing for most Oregon lawmakers and lenders. According to Malia Wasson, U.S. Bank's president for Oregon and Southwest Washington, "We see the mediation process as being very effective. We get quick answers and conclusions, which is of course what our borrower wants." Responses from Capital One were similar, showing that Oregon’s foreclosure mediation program has been helpful in resolving disputes that would have otherwise ended badly for homeowners.
While there has been a growing demand for programs such as Oregon’s foreclosure mediation program, lenders across the nation have balked at the idea, particularly small lenders. The reason for this is the potential cost and paperwork burden that undergoing foreclosure mediation would entail. However, the new bill that is going before the Oregon Legislature, Senate Bill 558, was worded to specifically address these concerns.
Senate Bill 558 is sponsored by Senators Brian Boquist, R-Dallas; Diane Rosenbaum, D-Portland; and Lee Beyer, D-Springfield. Its primary purposes are two-fold: first, to streamline the paperwork necessary in order to address concerns of smaller lenders; and second, to close loopholes that some lenders have been using to avoid mediation.
The loophole concerned judicial mediations, in which foreclosures made through the court system were excluded from the mediation requirement. Since the Oregon mediation program has been passed, the courts have seen a significant rise in the number of judicial foreclosures—a move taken by many lenders to avoid mediation in the first place. However, despite the opposition of several lenders and entities, including the Oregon Bankers Association, changes in the new bill would require even judicial foreclosures to go through the mediation program, thus closing the loophole.