Last summer, Oregon launched a foreclosure mediation program after many other states had developed similar programs with great success.  Unfortunately in Oregon, their program had very little participation from the outset as a result of a major loophole in the law creating the program.  Since the loophole allowed many banks to circumvent the law, homeowners were not assisted as planned. 

Foreclosure mediation has picked up steam across the country as a way for homeowners and their lenders to sit down and discuss options before moving ahead with foreclosure.  After years of bad news press about rising foreclosures and the many families losing their homes around the U.S., politicians hoped that mediation would help to reduce the number of foreclosures and allow parties to work together to generate solutions.  The law put into effect in Oregon last year didn’t include foreclosures that lenders filed in court, so the revision requires lenders to sit down and discuss options with homeowners regardless of the foreclosure method.

Previously, the program had failed to reach the large numbers for which it was created to help, so many homeowners around the state never even made it to the mediation program.  It is hoped that closing the loophole will create more options for struggling homeowners and cut down the number of homes being foreclosed in Oregon. 

Before lenders can initiate the foreclosure process, they need to set up a resolution conference with the homeowners to walk through other options outside of straight foreclosure.  Banks will be required to have a certificate of compliance indicating a resolution conference was offered to homeowners before the banks can start foreclosure.  Homeowners who have fallen behind, too, can request a resolution conference.  Alternative dispute resolution methods have gained some momentum lately as a valuable way to achieve solutions without the traditional downfalls of litigation.