On June 1, 2021, Governor Brown signed HB 2009 into law, extending the residential foreclosure moratorium, most recently extended by HB 4204 during the 2020 Special Legislative Session.
The moratorium applies to real property consisting of four or fewer dwelling units used primarily and designed solely for residential use, and it only applies to borrowers who directly, or indirectly through an entity, own five or fewer such properties.
The moratorium runs retroactively from December 31, 2020 (the expiration of the moratorium under HB 4204), to June 30, 2021, but it allows extensions by the Governor by executive order up to two times, for periods ending September 30, 2021 and December 31, 2021. On June 11, 2021, Governor Brown announced she would exercise the first extension.
In order to avail themselves of the moratorium, a borrower must send notice to its lender that the borrower cannot make timely payments due to a loss of income related to the COVID-19 pandemic.
Importantly, because the law applies retroactively, any trustee’s sale or execution sale occurring between January 1, 2021 and the effective date of the law is void.
This last point was troubling to the Oregon Land Title Association (OLTA), the professional association for the title insurance industry in Oregon. OLTA submitted testimony advocating for an amendment to the bill to clarify that any foreclosures that were completed between January 1, 2021 and the effective date of HB 2009 are valid. No such amendment was introduced. As it stands, uncertainty exists about the title to such properties, and such a cloud on title may make it difficult to obtain title insurance for subsequent sale or financing transactions.
As Mick Harris, Danny Newman, and Michael Willes previously discussed, there have been legal challenges to HB 4204. With the passage of HB 2009, we will likely see additional challenges.