Oregon bill would let mortgages stay in forbearance through end of June


Oregon homeowners would have until June to catch up on their mortgage payments under a bill working its way through the state legislature.

State lawmakers passed temporary mortgage payment deferrals and protections from foreclosure for residential and commercial borrowers through Sept. 30, 2020 during a special session last summer. Gov. Kate Brown extended those protections through Dec. 31, 2020.

House Bill 2009 cleared the Senate on Monday by a vote of 19-9 and would let homeowners put their mortgage in forbearance through June 30. The bill passed the House in April. That chamber will hold a concurrence vote on the legislation before Brown is expected to sign it into law.

Under the bill, the moratorium would apply to payments dating back to Dec. 31, 2020. It could be extended further if Brown chooses to extend Oregon's state of emergency for COVID-19 through Sept. 30 at the very latest.

As amended, HB 2009 requires that borrowers submit proof of financial hardship or reductions in income to qualify for the extended forbearance period, including references.

Supporters of the moratorium extension include housing advocacy groups Habitat for Humanity and the Oregon Housing Alliance. They argue that the foreclosure moratorium will give homeowners the time they need to wait on payouts from federal mortgage relief programs.

A U.S. Census Bureau Household Pulse Survey from March showed around 65,000 Oregon households were behind on their mortgage payments.

“Many for profit lenders work diligently to help Oregon families remain stable,” said Shannon Vilhauer, executive director for Habitat for Humanity of Oregon. “Unfortunately, as we saw during the mortgage crisis in 2007 to 2009, our nation's lending system isn't structured to ensure maximum household stability.”

Around 70% of Oregon's residential mortgages are owned by federally controlled agencies like Fannie Mae, Freddie Mac, and Ginnie Mae. All are under foreclosure moratoriums through June 30.

Oregon Bankers Association President and CEO Linda Navarro points out that existing federal foreclosure moratoriums cover most Oregonian households. The best option for the state, Navarro says, is to put the federal dollars it was given by Congress to good use.

“The truth is, most homeowners are current on their mortgage, and those that have required assistance and payment forbearance due to COVID have been getting it,” Navarro said in a statement to The Center Square. “For those that are hardest hit by COVID and truly at risk of losing their home in the future, the best option is the payment assistance program that Oregon is getting ready to deploy with federal funds we have received.”

The Mortgage Bankers Association reported in February that the total number of loans in forbearance dropped to 5.22%. That month, Oregon ranked 48 among all 50 states and the District of Columbia in mortgage delinquencies.

The Oregon Banking Association was among four Oregon banking groups to sue the state over the foreclosure moratorium in August, claiming it infringed on the Contracts Clause of the U.S. Constitution.

Oregon received around $4.1 billion from the American Rescue Plan passed by Congress in March, which included some $2.6 billion for state projects. The state set up a $150 million landlord compensation fund last year, leaving landlords on the hook for forgiving 20% of back rent out of pocket.

A report by the National Council of State Housing Agencies from last September found Oregonians could owe as much as $378 million in back rent statewide.

The state's housing crisis has taken center stage in the Oregon Legislature this session. Last week, state lawmakers gave tenants until the end of February, 2022 to catch up on back rent under a bill presently on Brown's desk.

A group of Oregon landlords sued Brown over the state's eviction moratorium in December. The lawsuit is still pending in U.S. District Court.

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