The Oregon State Legislature passed new reforms of the foreclosure process, including a financial incentive for fewer filings.
The bill, S.B. 1552, ends dual tracking by prohibiting foreclosures on borrowers being considered for a modification and sets up a mediation program for borrowers. The bill charges banks or trustees a $100 fee for every default notice filed to fund the mediation program.
Mortgage servicers in Oregon filed roughly 1,000 default notices in January, down nearly 50% from one year ago, according to Foreclosure Radar. Notices spiked as high as 4,300 in April.
The bill, however, has an exception to the fee. If a servicer shows it filed 250 or fewer foreclosures in the prior year, it could avoid the $100 fee for future filings over the next year.
Gov. John Kitzhaber is expected to sign the bill soon.
Oregon held the 20th highest foreclosure rate in the country as of January.
Oregon Attorney General John Kroger, who will manage funding for the mediation program under the bill, was one of the first AGs to sign the $25 billion settlement with the nation's big mortgage servicers.
Details on that deal are expected to be filed Monday. They include new servicing standards in 49 states, ending the dual-track foreclosure process and other practices of the past.