On June 1, 2021, Governor Brown signed Oregon’s newest foreclosure moratorium bill (HB 2009) into law. As detailed in our prior write-up, HB 2009 imposes a moratorium on foreclosures in Oregon for loans secured by real property “upon which is situated four or fewer dwelling units, as defined in ORS 90.100, used primarily and designed solely for residential use.” The moratorium runs retroactively from December 31, 2020 to June 31, 2021, and is extendable by the Governor through December 31, 2021.
In addition to imposing a moratorium on foreclosures, for loans subject to the moratorium, HB 2009 also:
- Prohibits lenders from treating as a default a borrower’s failure to make a periodic payment on the loan or failure to pay any other amount that is due if the borrower notifies the lender that the borrower cannot make such payment because of a loss of income that is related to the COVID-19 pandemic.
- Requires the lender to defer collecting payments during the moratorium period and to permit the borrower to make such deferred payments at maturity.
- Limits a lender’s right to charge default interest, impose late fees and other penalties, charge attorneys’ fees and costs, appraisals, inspection fees, and BPOs.
- Retroactively voids trustee’s and execution sales that occurred between December 31, 2020 and the date HB 2009 was signed into law.
- Provides borrowers with a private right of action, including recovery of attorneys’ fees, against lenders found to have violated HB 2009.
Importantly, many of the protections under HB 2009 do not kick in until a borrower has provided notice to the lender that it is unable to make a payment because of loss of income due to COVID-19. And, HB 2009 includes a safe harbor for acts taken by a lender prior to receiving notice. There is no requirement that borrowers provide the required notice in writing. Lenders, however, may request written confirmation that the loan qualifies for the protections of HB 2009.
Similar to HB 4204, lenders are required to provide notice to borrowers of the protections available under HB 2009. In two important departures from the prior moratorium, HB 2009 (i) includes form notice language for lenders to use in their notices and (ii) provides lenders with the option of either (A) providing notice to all borrowers within 60 days of the effective date of HB 2009 or (B) providing notice only to borrowers who have failed to make a payment within 30 days of the missed payment. Notably, HB 2009 is not clear on whether, for lenders opting to provide notice only to borrowers with missed payments, how the lender is to provide timely notice for missed payment prior to HB 2009 becoming law. Accordingly, lenders concerned with potential liability may elect to provide notice to all borrowers.
A number of challenges to HB 4204 (the prior foreclosure moratorium) are currently pending in state and federal courts in Oregon, including federal and state constitutional challenges. With the enactment of HB 2009, we expect a new round of challenges to emerge.