Hundreds of people waited in line to apply for a one-time economic relief payment at the OnPoint Community Credit Union in West Salem in August 2020. Oregonians spared mortgage payments due to pandemic impacts over the past two years may now face foreclosure as bills come due (Amanda Loman/Salem Reporter)
Thousands of Marion County homeowners behind on their mortgage may soon face foreclosure proceedings from their lenders after Oregon’s moratorium on foreclosures expired at the end of December.
The state has had moratoriums in place since the start of the pandemic that paused all foreclosure proceedings and allowed homeowners to stop making mortgage payments if they lost income due to Covid.
Both of those protections are now gone, as the second foreclosure moratorium passed during the 2021 Legislative Session expired Dec. 31. That law allowed two three-month extensions past the original June 30 deadline.
Meanwhile, nearly 3,000 homeowners in Marion County are behind on their mortgage payments, and there are just over 800 in Polk County, said Emily Reiman, CEO of housing developer DevNW. The nonprofit is the official state-designated group to help with foreclosures in Marion and Polk counties.
Unless those homeowners begin making their mortgage payments and catching up on those past due, they’re now at risk of their lenders moving forward with foreclosure proceedings.
“Right now, homeowners will start to get letters, emails from their servicer talking about these next steps of what happens when they’re in (mortgage) default, the early stages of the foreclosure process, and that can be a really scary time for homeowners,” Reiman said.
Foreclosures can now proceed for homes previously in foreclosure before the pandemic. Reiman said it’s too soon to measure the number of impending foreclosures but she said she’s “very afraid” that there are an overwhelming number of proceedings to come.
According to the Oregon Division of Financial Regulation website, $90 million in federal funding will be available “in the coming months” and run through Oregon Housing and Community Services to help homeowners struggling to make their mortgage payments due to Covid.
The U.S. Department of the Treasury allocated for Oregon $72 million for mortgage assistance and $18 million for administrative funds. Of that total, Oregon Housing and Community Services has gotten 10% at $9 million, said Delia Hernández, a spokeswoman for the agency.
They are currently accepting applications from homeowners most at-risk of foreclosure or displacement, according to its website, and the program will expand in phases to include more homeowners.
Oregon will get the remaining 90% when the U.S. Treasury approves the plan, which Hernández said state officials expect will be this month.
But Reiman said that isn’t nearly enough to help the number of homeowners across the state who fell behind on mortgage payments. “It’s just a drop in the bucket compared to the overall need,” she said.
Hernández said the program can only serve around 1,200 households – up to 20% of households statewide who need it, or 12% if each gets the maximum $60,000 in assistance that’s available.
“Once funding is gone, the program will close. Even if people are eligible, there is no guarantee their application will be funded,” Hernández said in an email.
Another red flag, Reiman said, is that those applying for assistance may find their lender starts the foreclosure process before they can get help. “It’s going to be a race to see if the state can get those dollars out before the foreclosures are completed,” she said.
Typically, a lender can start foreclosure proceedings when a mortgage payment is 90 days past due. Reiman said it’s likely those proceedings could start immediately for homeowners not on a forbearance plan, which is a temporary pause or reduction in mortgage payments, according to the Consumer Financial Protection Bureau.
How long the proceedings last, she said, depends on whether it’s a judicial or non-judicial foreclosure. The former involves a lawsuit filed against a homeowner to take their house and the latter taking place outside of the court system, according to the Division of Financial Regulation’s website.
“I’m concerned that by May (or) June, some of these foreclosures will be coming to the end of the process,” Reiman said. “I don’t know whether the state will have assistance out by then, and I don’t know how far that assistance will stretch and what percentage of homeowners who need it will actually be able to get it, versus how quickly we’ll run out of money and people won’t be able to get that help.”
Oregon Housing and Community Services said in a Dec. 28 news release that the state needs long-term solutions to stabilize homeowners impacted by Covid.
Delia Hernández, a spokeswoman for the agency, said in an email that funding for mortgage relief is “one long-term solution we can quickly point to.” She said data provided to the agency showed about 10,000 homeowners across the state are currently at risk of foreclosure.
“There is not enough local, state and federal funding to help all in need. However, it’s important for homeowners to know that the foreclosures do not happen overnight, and most homeowners have ongoing workout resolution options through their mortgage services,” she said in an email. “It can take months before a homeowner enters into active foreclosure. In the meantime, there are options for those in active foreclosure or for the thousands of at-risk homeowners in need of assistance, so they don’t lose their homes.”
Reiman said depending on the mortgage, those options include making past due payments in one lump sum, adding extra payments to regular bills to catch up on what’s past due, or renegotiating the mortgage altogether.
“What we’re worried about is that sometimes it can be difficult for homeowners to navigate their lender’s process for requesting these different workout options,” Reiman said.
Hernández and Reiman both encouraged homeowners facing foreclosure to contact a housing counselor. DevNW has certified housing counselors that serve Marion, Polk, Benton, Clackamas Lane and Linn counties.
“We can help them understand the options that are available. We can help them talk to their servicer or their lender. We can help push back if we feel like their lender is giving them the wrong information or not offering them the workout options that we think they should be eligible for,” Reiman said. “We can really be an ally in that process, and without somebody like that on your side, it can be really hard as a homeowner to actually get to actually get the workout option that should be available to you.”
About one-third of mortgages nationwide are federally backed. That includes any loan owned or guaranteed by a federally controlled entity such as the Federal Housing Administration, United States Department of Agriculture, Veterans’ Affairs, Fannie Mae or Freddie Mac.
Depending on each federal program, some homeowners with federally backed mortgages may still have access to forbearance.
Before the moratorium expired, landlords of rental homes with mortgages could also ask for forbearance if their tenants weren’t able to pay rent.
“Definitely don’t ignore the calls from the mortgage servicers or lenders, because they also have options that could help people stay in their home,” Hernández said. “The most important thing someone could do is try to get help, and it’s free help.”
Reiman said she expects DevNW will be hearing from many more homeowners as they are contacted by their lenders about potential foreclosure. “It ups the time pressure, it means that we have to move faster to try to help people because the clock is ticking now,” she said.
In the last quarter of 2021, DevNW hired and trained two new foreclosure counselors “because we saw this coming,” she said, “so we have staff that are ready and able to assist homeowners from Salem and Marion County.”
Reiman said DevNW has around 12 housing counselors.
“It’s just so important for homeowners when they start to get communication from their lender or even before they get communication from their lender, to reach out,” she said. “Reach out to their lender, reach out to a housing counselor, be talking with somebody because once the process starts, it keeps rolling forward. And then the earlier you start to work on an option, the more options you’re going to have.”
Contact reporter Ardeshir Tabrizian: [email protected] or 503-929-3053.
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