SALEM — More than 1,000 Oregon homeowners per month will qualify for mediation sessions with their mortgage lenders to explore ways to avoid foreclosure under a new state law that took effect Wednesday, state officials said.
It’s still a mystery how many people will actually request mediation, but officials working on the program said they’re hopeful Oregon’s mediation law will reach more homeowners than similar laws that have been sparsely used in other states.
The Legislature created the mediation process this year in hopes of helping homeowners avoid foreclosure. Advocates for struggling homeowners say the new law will make it easier for borrowers to communicate with their lenders and reach a settlement that’s acceptable for both parties.
The state has contracted with the Florida-based Collins Center for Public Policy to run the mediation program.
An ideal settlement would be a loan modification that reduces a homeowner’s payments to affordable levels and allows them to keep the house, said Ned Pope, vice president of alternative dispute resolution at the Collins Center. If that doesn’t work, mediators would search for a “graceful exit,” he said, such as a short sale or an agreement for the homeowner to turn over the keys and be released from the debt without foreclosure proceedings. Other cases will continue to foreclosure.
Mediators will not have the power to force lenders or borrowers into any particular resolution.
The success of the program will depend on the willingness of lenders and borrowers to meet in the middle, said Keith Dubanevich, an associate attorney general who has worked on developing administrative rules for the program.
The first mediation sessions are at least a month away, officials said, because homeowners are required to meet with foreclosure counselors before their mediation session, unless an appointment isn’t available within 30 days.
“We’re going to strongly encourage people to sit down and try to work out something,” Dubanevich said. “Because if we can prevent somebody from going into default, we can substantially increase the probability that they can stay in their home.”