Foreclosure Mess

Federal Bank Punishment Inconsequential; Will Pending Case Make Difference in Oregon?
January 5, 2012 | By: Alicia Vial Beesley

Recently, Nevada has taken action to remedy their state’s foreclosure mess; will Oregon step up to the challenge? Despite the fact that [earlier this year] the federal government attempted to punish large banks for continuing the practice of robo-signing, it had little effect on their practices. The law Nevada passed now makes it a felony to carryout robo-signing, forcing banks to get the proper documentation together before going through a foreclosure. Since this law went into effect, Nevada foreclosures have slowed dramatically. Will this example be able to influence other areas of the country?

Oregon has been one of the states hit hardest with foreclosures. There are still thousands of homes in default, where foreclosure processes have not even begun. The inability of the banks to handle these mass amount of defaults is clear as they continue to make the mess worse by foreclosing on those legitimately trying pay and hold onto their homes, while simultaneously ignoring their ability to take foreclosure action on the numerous abandoned homes (sometimes left unattended for years). The entire situation is complicated by the fact that the Oregon Courts have failed to implement a clear interpretation of the Oregon Trust Deed Act, leaving banks and title companies uncertain on how to proceed with foreclosures.

In Oregon, it appears legislation will not solve the foreclosure problems any time soon. All eyes now look toward the case Rebecca Niday v. GMAC Mortgage, LLC, which the appellate court of Oregon has agreed to hear on January 17th, 2012. The decision of the court will dramatically affect the banks’ procedures for foreclosure in the future.

In addition to the sheer number of foreclosures, those that held onto their homes are also undergoing hardship, with home prices continually driven down across the country and Oregon among the leaders of this trend. How does this affect homeowner associations? In this situation, those among HOAs are seeing more and more abandoned properties sitting for years without any action to foreclose by the banks. When the banks fail to foreclose, the remaining association members are forced to pay more in order to make up for those owners that have abandoned their property; they are responsible for the assessments until a foreclosure sale is held. The longer the banks wait to foreclose, the more the property values are driven down, and the higher the HOA dues become for those remaining. It is advised associations in this situation not wait to take action in an attempt to collect; there is often a solution, so all avenues should be explored. There may even be a chance to collect dues from the ones who have caused a lot of the mess: the banks themselves.

While the Oregon courts and legislature work to sort out the process of foreclosures and find a solution to decreasing home values, remember to speak with an attorney regarding any foreclosure questions or assistance you may need help with, including collections tactics if you are part of an HOA with foreclosed homes.