House extends narrower foreclosure moratorium in Oregon
A moratorium on residential foreclosures would continue through June 30, and possibly to the end of this year, under a bill that is halfway through the Oregon Legislature.
Two Republicans joined 36 Democrats in the House to pass House Bill 2009, which narrows the scope of the moratorium that had been in effect until the end of last year. The 38-21 vote on Tuesday, April 6, sent the bill to the Senate.
The state extension coincides with a longer moratorium announced Feb. 25 by the Federal Housing Finance Agency, which regulates the federally backed mortgages that account for about 70% of the total. Congress does not need to approve federal extensions.
But the Legislature must approve a state extension, which now would apply only to a total of five residential properties per owner — each property can contain no more than four units — and no commercial property.
The new bill empowers Gov. Kate Brown to extend the state moratorium by executive order to cover the final two quarters of this year. But she must give notice by June 14 for the third quarter, and by Aug. 16 for the fourth quarter.
The moratorium has been in effect since the start of the coronavirus pandemic a year ago. The Legislature wrote Brown's executive order into law on June 26, but that law ended on Dec. 31.
Rep. Paul Holvey, a Democrat from Eugene and the bill's floor manager, said federal aid is on the way. Congress approved mortgage assistance in December that will result in an estimated $40 million for Oregon, and its approval of President Joe Biden's pandemic recovery plan last month will make available up to $100 million more for Oregon.
"We need time to make sure that assistance from the federal government will enable homeowners to have deficiencies in their payments and their mortgages to be cured," Holvey said, "without impacting their future their ability to have credit and return to our normal way of life.
"It is imperative that we as a legislature do everything we can to keep people safe during this pandemic, to keep them from becoming homeless, to keep them from losing the major asset of their lives because of their inability to make payments through no fault of their own."
According to a Household Pulse survey conducted in January by the U.S. Census Bureau, Holvey said, 7.2% of Oregon homeowners (133,355) reported they were not caught up on their mortgage payments and 7.5% (140,319) said they had little or no confidence in paying the next month's mortgage.
Republicans Cedric Hayden of Lowell and Ron Noble of McMinnville joined 36 Democrats to vote for the bill.
All the votes against the main bill were cast by Republicans, who sided with arguments by banks and credit unions during a March 3 hearing that the bill was unnecessary. A Republican substitute, which was rejected on a party-line vote, would have limited the moratorium extension to the 30% of mortgages not backed by federal agencies — but also would not have limited what lenders could do.
"Banks and credit unions are continuing to work individually with their borrowers to continue to ensure they can avoid foreclosure," Rep, Daniel Bonham, a Republican from The Dalles, said in promoting the substitute. "The share of mortgage loans that are delinquent or in forbearance continues to decline as the economy improves."
According to the Mortgage Bankers Association, he said, Oregon's foreclosure rate was 4.96%, putting it 48th among the 50 states and Washington, D.C.
"If federal financial assistance is disbursed properly, a foreclosure moratorium longer than June 30 will not be needed," Bonham said. "We will move away from disputes about foreclosures and toward real solutions that are finally available to us."
He and half a dozen Republicans also objected to the main bill on grounds that it was an unconstitutional breach of contracts. Some of them likened it to the Legislature's attempts to change Oregon's public-pension system, which the Oregon Supreme Court has held cannot be changed retroactively.
Holvey said the bill does not allow borrowers to forgo mortgage payments. He said if the bill were unconstitutional, so are federal programs aimed at avoidance of foreclosures.
"The risk of not passing this bill is a risk to Oregonians, not a risk to the constitutional rights of a lender on Wall Street," he said. "We have not impaired their ability to collect what is owed to them. It's just a matter of timing in relationship to the foreclosure process."
Though the bill went through the House Business and Labor Committee, which Holvey leads, it got an endorsement from Rep. Julie Fahey, a Democrat from Eugene who chairs the Housing Committee. She said Blacks and Hispanics, who already trail whites in their rates of homeownership in Oregon, are also more likely to be behind in or in danger of failing to make mortgage payments.
"We lost a lot of ground in homeownership during the Great Recession, particularly for families of color," Fahey said. "We cannot let that happen again."
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