Editorial: Mediation bill a significant improvement


Published May 24, 2013 at 05:00AM / Updated Nov 19, 2013 at 12:31AM

Oregon’s foreclosure crisis took a step toward resolution Wednesday when the state House of Representatives voted overwhelmingly to approve SB 558, the bill requiring the opportunity for mediation in judicial as well as nonjudicial foreclosures. The bill itself is not perfect, but it is far better than current law, and it now goes to the governor.

Last year, lawmakers, with the best of intentions, approved a measure requiring an opportunity for mediation in nonjudicial foreclosures, at the time the bulk of all foreclosures in the state. The law was written in response to some very real problems in the process and was designed to give homeowners the chance to try to work out a deal with whatever institution currently held their mortgages.

The results were not what lawmakers had hoped, to put it mildly. The first week the law was in effect in mid-July of last year, only three default notices were filed in the state’s biggest seven counties, according to The Oregonian newspaper. That compares with 256 filings the previous week and more than 1,000 in June of that year.

Since then, according to testimony before a House committee last month, some 93 percent of requests for mediation have simply been ignored by banks, and virtually all foreclosure action has moved to the state’s courts.

That should change, once SB 558 goes into effect. While mediation is not free, even with its cost, a nonjudicial foreclosure is quicker and less expensive than one handled by the courts. That’s good for defaulting homeowners, most of whom are already at the end of their financial rope. And it’s good for banks because it saves them time and money dealing with problem loans.

The new law won’t end all the state’s foreclosure problems, to be sure. Banks and homeowners await a Supreme Court ruling on issues involving mortgage ownership records. The decision could speed or slow the process.

Meanwhile, SB 558 is an improvement, and a big one. Some experts say Oregon is only about halfway through its mortgage problems, and the longer they last, the longer it will take the state’s economy to recover. The mediation bill will help.