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Oregon Lawmakers Weigh Possible Response to Impending Return of Foreclosures

Chris Lehman

For Oregonians that have been struggling to make ends meet during the COVID-19 crisis, the next few weeks could be dire.

An estimated 70,000 Oregonians are poised to lose their unemployment benefits by the end of the month as federal help expires. At the same time, statewide protections against evictions and foreclosures are also set to lapse at the end of the month.

For thousands of Oregonians, those programs could be the difference between barely hanging on and financial ruin.

There are proposals in the state House to extend the eviction and foreclosure moratoriums beyond their current December 31st expiration date. But for that to happen, legislators need to hammer out a plan for a one-day legislative session.

So far, after weeks of negotiations, no plan has materialized.

Oregon Rep. Paul Holvey, D-Eugene, has been leading the push to extend the foreclosure moratorium in the state. He says it’s hard to know exactly how many Oregonians are currently at risk of foreclosure: that’s a question for the banks, and since they haven’t been sending out notices of default, the state lacks the raw data.

But he says there’s evidence that a lot of people are struggling to make both mortgage and rent payments across the state. If that continues without a moratorium, owners of homes or other properties face a growing risk of foreclosure.

“Of course, when people don’t make their rent payments,” Holvey says, “that means the landlord is short income, and if they have mortgages, many times some of them will have trouble making their mortgage payments.”

The proposed foreclosure moratorium extension does contain one major change from the bill that the legislature passed back in June though: this time, commercial property owners aren’t included.

Holvey says part of this is to lessen the impact on lenders. When a mortgage isn’t paid, that reduces the capital that banks have on hand, which limits their ability to reinvest in other loans: a classic liquidity crisis.

But he also says most commercial owners are more sophisticated than residential borrowers. They tend to have more complicated contracts and more ability to adjust their assets to make the changes.

And perhaps most importantly: there’s less of an immediate risk of a commercial default resulting in homelessness.

“What we really found was critical in terms of this pandemic was to keep people housed,” Holvey says. “That led us to believe we should focus on the housing stock primarily and largely to the smaller residential borrowers.”

Theoretically, the Oregon Legislature could fix this — and a multitude of other problems — in a single day session. So why hasn’t that happened yet?

“Well that’s a million-dollar question,” Holvey says.

In recent weeks we’ve seen a lot of finger-pointing but no clear answers.

Some Senators like Portland Democrat Ginny Burdick have expressed skepticism recently about extending the eviction moratorium. Last week, Senate President Peter Courtney seemed to suggest the ball is in Gov. Kate Brown’s court.

Holvey says that the state’s Republican minority in the legislature could also derail a special session if they refuse to show up, denying Democrats the two-thirds quorum needed to conduct business, a move they’ve pulled several times in recent years.

For that reason, Holvey says behind-the-scenes negotiations currently underway are as critical to the success of an emergency legislative session as the session itself.

“When there isn’t an agreement on what needs to be considered,” Holvey says, “that requires some negotiation and some self reflection on what is important for Oregon and how much should we do and what should it be?”

The overall uncertainty of a special session extends to Holvey’s pursuit of a foreclosure moratorium. Would that bill even be on the agenda? The answer is unclear. Holvey acknowledges he’s unsure whether his proposal has the votes necessary to pass.

“I can’t speak for the Senate side,” he says. “I think we have good support in the House for passing a foreclosure moratorium or extending this modified foreclosure moratorium.

“Sometimes that’s the nature of bringing these questions for consideration to the floor,” he says. “Without having an opportunity to take that vote, it leaves that question not answered.”

Even if Oregon’s foreclosure moratorium ends on Dec. 31, it could theoretically be reinstated by the legislature in 2021. Holvey says it’s hard to anticipate what that would mean for homeowners in the meantime.

For instance: what happens if a foreclosure is initiated in the early months of next year, but then a new moratorium is implemented in the spring?

“The foreclosure process is a slow process, it really unwinds very slowly,” Holvey says, “but it’s also one that gets set in motion and marches forward.”

In the meantime, Holvey says Oregon does have a foreclosure avoidance program and state housing counselors that can help anyone who’s afraid they’ll be at risk of foreclosure on Jan. 1.

He says the program has been extremely successful in helping people stay in their homes, and his foreclosure moratorium extension contains provisions to extend the reach of these programs in Oregon.

Still, it’s unclear whether the legislature will have a chance to vote on those increased protections in the waning weeks of 2020. In the meantime, Holvey recommends that anyone who’s facing the end of the foreclosure moratorium with trepidation be proactive — and reach out for help.

“I highly recommend to anyone that has these questions that they contact the foreclosure avoidance program,” Holvey says, “that they contact housing counselors and of course, contacting their lenders and letting them know what’s going on.”

Copyright 2020, OPB