SALEM — Oregon’s newly expanded foreclosure mediation program is still ramping up, but the first 100 meetings between lenders and borrowers are booked.
The mediation program — created by the legislature in 2012 but largely ineffective until lawmakers revamped it this year — requires the state’s large lenders to offer a meeting with homeowners before they can foreclose. Lenders are scheduled to meet face-to-face with 76 homeowners in November, and 34 more so far in December, the program’s administrator told an advisory committee Tuesday.
Chase Bank is the largest mortgage servicer participating so far. It submitted more than 600 pending foreclosures in a single week toMediation Case Manager, the contractor running the program for the state. Nationstar Mortgage has submitted more than 500 cases, and Mediation Case Manager officials said Wells Fargo, the state’s largest mortgage lender, is expected to submit a large batch of cases soon.
“We feel really good about working with the servicers,” said Jay Foster, president of Mediation Case Manager. “And they seem to be embracing the program, which is good.”
In all, lenders have referred more than 1,700 pending foreclosures to the program. The majority — more than 1,300 — were either just received by the program administrator or are in the 25-day period the homeowner has to respond.
Now Mediation Case Manager and the state turn to reaching homeowners who want to participate.
The program has struggled to reach some borrowers who left their homes and disconnected their phones. Others have simply declined to take part.
Of those reached by program administrators in August and September, 25-30 percent agreed to participate and submitted their part of a fee — $175, or $50 with an income-based waiver — to cover the program’s cost. They’re awaiting their meetings.
It’s too early to see whether the program has been successful in avoiding foreclosures or otherwise helping homeowners. Only four meetings had been held as of Oct. 23, and in each case the parties agreed to meet a second time.
“We’re just starting to see the volume of cases that we’re seeing the patterns and learning the lessons,” said Emily Reiman, who runs housing counseling programs for the Springfield-based Neighborhood Economic Development Corp. “It’s hard to draw a whole lot of conclusions right now.”
The program, meanwhile, has created a temporary bottleneck in the foreclosure process, leading to a steep decline in filings while lenders work through the first batch of cases under the new laws.
Under the program, large banks are required to offer homeowners the chance to meet before starting the foreclosure process. If the homeowner chooses to participate, they need to first meet with a housing counselor. Both the bank and the homeowner pay a fee to cover the cost of the session. The goal is avoid foreclosures where an alternative — like a mortgage modification, a sale, or handing over the keys without the credit hit of a foreclosure — is possible.
A year ago, the program only covered foreclosures initiated outside the courts under an administrative system created in the 1950s. But when it took effect, other legal changes at the same time sent most foreclosures to the courts, rendering the program moot.
The Legislature tweaked the program to include in-court foreclosures under an expansion that took effect in August.