The following are summaries of some of the bills passed during the 2013 legislative session of interest to the title insurance industry:
HB 2417 - Document Recording Fees for Veterans Housing
Summary: HB 2417 increases the fees, from $15 to $20, charged and collected by county clerks to record or file certain real property documents. The fees are deposited into the County Assessment and Taxation Fund (CATF). From the CATF, funds are deposited into the General Housing, Emergency Housing, and Home Owner Assistance Accounts at the Housing and Community Services Department (Department) for housing-related programs.
According to the statute, the amount is split 10 percent to the Emergency Housing Account, 14 percent to the Home Owner Assistance Account, and the remaining 76 percent to the General Housing Account. The Department currently receives approximately $20 million per biennium from fees collected under this statute. Increasing the fee from $15 to $20 would increase revenues by an estimated $6.67 million per (full) biennium to be used for services to veterans. For the 2013-15 biennium, the Department projects additional revenues of $5.83 million, based on collections beginning January 1, 2014.
In addition, HB 2417 requires the Department to expend: (1) an amount equal to 25 percent of document recording fee funds deposited into the Emergency Housing account to assist veterans who are homeless or at risk of becoming homeless, (2) an amount equal to 25 percent of moneys deposited in the General Housing account to meet the critical housing needs of veterans in Oregon, and (3) an amount equal to 25 percent of moneys deposited in the Home Owner Assistance account to expand Oregon’s supply of homeownership housing for low and very low income veterans and families of veterans.
HB 2528 - Lender Collections
Summary: Removes cap on amount in real estate loan agreement that is subject to requirement to pay interest to borrower on funds that lender collects for lender's security protection provision.
HB 2568 – Amended Notice of Sale Requirements
Summary: Provides that in amended notice of sale following release from stay on foreclosure proceedings, the trustee must describe only defaults that existed on date stay was terminated if portion of defaults specified in original notice of sale was cured during stay or if additional defaults have occurred during stay.
HB 2569 – Trustee’s Signatures
Summary: Adds law practice to list of entities eligible for appointment as trustee of trust deed. Authorizes attorneys who are part of trustee law practice, or who share law practice with trustee attorney, to sign documents. Specifies statement attorney signing on behalf of trustee must make on signed document. Clarifies definition of law practice.
HB 2662 – Foreclosure Neglect, Good Neighbor Bill
Summary: HB 2662 prohibits property owners from neglecting property in foreclosure. The measure requires the owner of the property to post contact information on the house, and to give such information to the local government or neighborhood association. Additionally, should neglect or nuisance arise on the property, the local government may require the owner to remedy the situation. If the owner does not provide a timely remedy, the local government is authorized to address the nuisance and attach a lien against the property for costs incurred.
HB 2822 – Judicial Foreclosure Posting
Summary: Requires sheriff to post notice of execution sale of real property on website for at least 28 days, and publish notice in newspaper in county where real property is located weekly for four consecutive weeks. Requires that both newspaper and website notices include names of parties subject to writ of execution, street address or tax lot number of property, and date, time and place of sale. Requires website notice to include legal description of property. Provides that sheriff is not required to post notice of sale until sheriff receives required information from judgment creditor. Applies to execution sales on or after August 1, 2013.
HB 2856 – Mortgage Loan Originator Licensing Exemption
Summary: Allows exemption from mortgage loan originator’s licensing requirement for individual who acts as seller on no more than three residential mortgage loans during any twelve-month period, unless specified as mortgage loan originator by federal law. Specifies person may not claim exemption if person holds more than eight residential mortgage loans.
HB 2929 – Trustee Rescission of Sale
Summary: Permits trustee to rescind trustee’s sale within 10 calendar days if trustee asserts that bona fide error occurred in setting, advertising or otherwise specifying opening bid amount during trustee’s sale, in providing correct legal description of property or in complying with requirement or procedure imposed by law, if grantor and beneficiary agreed to foreclosure avoidance measure that would postpone or discontinue trustee’s sale or if beneficiary accepted funds to reinstate trust deed and obligation. Requires trustee to provide notice of rescission within 10 calendar days after date of trustee’s sale. Specifies contents of notice. Requires trustee to record affidavit that trustee provided required notice of rescission. Requires trustee to refund purchase price to purchaser within three calendar days after date of notice. Provides that trustee must maintain registered agent and registered office continuously in this state and file statement that identifies registered agent and shows address of registered office.
HB 3172 – Residential Septic System Disclosure
Summary: Modifies provisions relating to septic systems within seller’s required disclosure statement for sale of real property. HB 3172 revises the disclosure statement as it relates to sewage systems and includes inquiries into the repair history of on-site septic systems, septic pumps, sand filters, locations of septic system components, and whether a service contract is required for the system.
HB 3389 – Residential Foreclosures
Summary: Prohibits beneficiary from requiring as condition of short sale, except in certain circumstances, that nonprofit entity that purchases property in short sale, or that purchases note from beneficiary, enter into agreement with beneficiary or grantor that limits or bars grantor from owning or occupying residential property after short sale or sale of note. Specifies that certificate of compliance required to foreclose trust deed must be valid and unexpired at time notice of default is recorded.
Notes: The Loan Refinancing Assistance Pilot Project (LRAPP) in Crook, Deschutes, Jackson, Jefferson and Josephine counties is designed to help homeowners in those counties avoid foreclosure through a different refinancing process. The LRAPP Program is funded by the Oregon Homeownership Stabilization Initiative (OHSI), operated under the Oregon Housing and Community Services. The program works with lenders and servicers to identify homeowners who have fallen behind on their mortgage due to a hardship but are re-employed and could afford their mortgage. It utilizes the services of a real estate contractor to purchase a home at a short sale then resell it to the original homeowner at close to current value. The homeowner can then obtain a new mortgage at a more affordable rate, thereby avoiding foreclosure. House Bill 3389A removes a barrier to the program by prohibiting a beneficiary from requiring a non-profit purchaser at a short sale to sign an “arm’s length affidavit” promising not to sell or rent back to the original owner of the home, facilitating short sales to non-profits who want to re-sell the home, or lease it, back to the borrower at a reduced principal or better mortgage rate. The beneficiary may still require the affidavit if the beneficiary did not receive adequate notice of the non-profit’s intention ahead of time, if the homeowner does not cooperate with the appraisal process, or if the lender’s contractual or other legal obligation requires the lender to have the affidavit. Current law assesses whether or not the trust deed is residential by looking at the time of the default upon which the foreclosure is filed and states that the deed is residential if the borrower was living in the home as a primary residence at the time of default. Under current law, if the borrower is living in the home as a primary residence at the time of the default, the borrower is protected from a deficiency judgment. House Bill 3389 changes the definition of a residential trust deed to provide a more finite point in time for determining who is living in the home. The bill would assess whether or not a trust deed is “residential” by looking at the intent of the parties at the time the deed is recorded. In addition, the measure clarifies that a lender’s certificate of compliance that must be filed prior to a non-judicial foreclosure must be unexpired at the time of the recording of the notice of default. The certificate of compliance does not have to be unexpired for the entire length of the proceeding, just when the foreclosure proceeding begins.
HB 3489 – Escrow Agent Definition
Summary: Limits escrow agent’s exemption from licensing requirements in instances where escrow agent provides debt management services, money transmission services or services to debt management service providers that must be licensed.
Notes: In 2009, the Legislative Assembly enacted House Bill 2191, which brought debt management service providers under Department of Consumer and Business Services (DCBS) regulation and oversight. DCBS reports that some entities that provide collection or debt management services have obtained escrow licenses, as escrow agents are exempted from the requirement to register as a debt collector or debt management service provider. HB 3489 clarifies which actions by an escrow agent are not considered the actions of a collection agency or debt management service provider by specifying that escrow agents acting in closing or collection of escrow accounts, or serving as a trustee of a trust deed, are not considered collection agencies or debt management service providers.
SB 465 – Flood-Related Damage
Summary: Authorizes local government to record notice of substantial damage with county clerk when residential structure sustains substantial flood-related damage and does not comply with hazard area ordinances. Requires local government to void such notice by recording remedy when structure is brought into compliance with applicable ordinances. Exempts section from affecting preexisting common law or statutory rights or remedies, including actions for fraud, negligence or equitable relief. Applies to substantial damage occurring before, on or after effective date of Act.
SB 558 – Resolution Conference Prior to Foreclosure
Summary: Requires residential trust deed beneficiary to request resolution conference prior to foreclosing residential trust deed. Provides exemption. Specifies required contents of request. Allows grantor to request resolution conference in certain circumstances. Allows beneficiary to request resolution conference while maintaining exemption. Specifies timeline and other requirements for resolution conference and participating parties. Requires beneficiary to notify grantor if found ineligible for foreclosure avoidance measure, and Department of Justice, within 10 days of determination with certain information. Makes certain beneficiary violations of measure unlawful trade practices. Establishes maximum fees for beneficiary and grantor. Directs Attorney General to adopt rules and take certain other actions to implement program. Aligns liability and confidentiality of facilitator with current law for mediators. Repeals provisions of existing law superseded by measure. Requires Attorney General to make available draft rules at least 30 days before operative date.
Notes: In 2012, the Legislative Assembly enacted Senate Bill 1552, establishing the residential Foreclosure Avoidance Mediation Program under the direction of the Attorney General. That measure requires the beneficiary of a residential trust deed to enter into mediation with a homeowner who has received notice of foreclosure, but only applies to foreclosures conducted through notice and sale, the “non-judicial” foreclosures. The 2012 law also specifies steps for the homeowner to request mediation with a beneficiary when the homeowner is at risk of foreclosure. Foreclosure data suggests that beneficiaries have largely halted non-judicial foreclosures and have instead opted to file suits to foreclose in court, called “judicial” foreclosures. Senate Bill 558 A expands the existing foreclosure mediation program to include judicial foreclosures and makes changes to the structure of the mediation program.
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