In an effort to remediate the state’s excessive number of foreclosures following the housing market collapse of 2008, the Oregon House has passed an expansion of its current foreclosure mediation program that has run into several legal snags along its way.  The legislation has already been passed by the Oregon Senate but became stalled in the House.  Passing with a 45-12 vote, the bill is now heading to Governor John Kitzhaber’s office to be signed into law.  Governor Kitzhaber has already stated publically that he fully supports the expansion bill.

While the bill was approved last year by the state’s legislature, the approved expansion had been stalled until recently.  According to Senate Bill 558A, the foreclosure mediation program would widely apply to all of the state’s intended foreclosures that are filed in the courts.  Before the expansion, while a majority of the state’s foreclosures and foreclosure negotiations between lenders and homeowners occurred outside the court system, some mediation proceedings had to be shifted back to the courts due to the failure on behalf of lenders to provide adequate documentation.

Upon learning of the vast numbers of mediation cases in which lenders could not provide the proper documentation, the Oregon Court of Appeals ruled that any foreclosure without proper documentation must be handled by the courts rather than through foreclosure mediation.  This ruling is what sent so many foreclosure mediation proceedings back to court documents, despite the state’s legislated foreclosure mediation program.  This most recent expansion is aimed at pulling those cases back into mediation—with or without the required documentation.