Foreclosure mess needs a better fix

John Costa / The Bulletin /


Any story about the upcoming session of the Oregon Legislature quickly focuses on a few high-profile issues.

Education, jobs, criminal sentencing and reform of the Public Employees Retirement System come to mind.

To be sure, these are all critical issues, but there is another at least as important, and it needs to be addressed effectively and quickly.

It is the continuing nightmare of home foreclosures.

Even in the economic downturn, one of the biggest assets that American families possess is their home.

Even with a depleted value, a home is the nest egg underlying the confidence of Americans to be buyers.

Like it or not, we live in a consumer society.

It's too easy to sneer at the more superficial and excessive aspects of what some people spend money on.

What's forgotten is that people also buy health care plans, stocks and bonds, retirement plans and college educations, etc.

They also contribute to charitable and public causes.

And there is nothing so threatening to these decisions as a home in distress.

Like the nation, Oregon, and particularly Central Oregon, have been greatly affected by the ongoing economic downturn.

Many causes have been identified, but none are so central as the collapse of the real estate-mortgage market.

And until we get back to a sounder, safer real estate market, the fortunes of the nation, region and state will suffer.

That means dealing effectively with the mountain of foreclosures across the state and nation.

Oregon can't solve the nation's problems, but if we want the state to progress, if we want to fulfill so many of the dreams we have, then we have to move through the foreclosure challenge as quickly as we can.

And right now, we are on the wrong course.

People lose homes for a lot of reasons, none of them attractive.

It would be wonderful if all homeowners could pay their mortgages, but many simply can't.

Oregon is one of the dozen or so states that has a nonjudicial foreclosure option, as well as a judicial — or court-supervised — one.

Nonjudicial is comparatively fast and efficient, but has been tarnished by just that rapidity and stories of the callousness toward the dispossessed by the banks and trustee services that handle the process.

In response, the Legislature in 2012 required a mediation process for nonjudicial foreclosures. It was a well-intentioned attempt to get the banks to talk with folks losing their homes.

There may be many other reasons, but the banks switched to the judicial process, which requires no such mediation.

There may be no better proof of the law of unintended consequences.

It is more expensive, more time- consuming, has greater risks for those getting tossed out on their ears, and dumps the burden of process on a civil court system already bursting at the seams.

And there is another issue.

Before the Oregon Supreme Court is the very valid question of the standing of the registration service used by the banks to record the multiple investment transactions that constitute the history of each mortgage.

All that said, the very best path is to find a way back to the more efficient nonjudicial process, while amending the mediation requirement so that it doesn't do exactly the reverse of its intention.

There have been suggestions that adding mediation to the judicial process is the answer.

But that doesn't answer the other downside of added time and expense and burden to the state courts.

Nor does it, as The Wall Street Journal recently reported, return us to a path that is the fastest way out of the mess we are in.