New Law Prohibits Foreclosures in Oregon Until September 30, 2020

During the special session held between June 24 and June 26, the Oregon legislature passed, and Governor Brown signed into law, HB 4204, which prohibits foreclosures in Oregon from March 8, 2020 until September 30, 2020. It applies to both residential and commercial real estate (and any personal property constituting a residence, such as a mobile home).

A lender is prohibited from calling a default for non-payment during the moratorium period, so long as the borrower has notified the lender during the moratorium period that it is unable to pay; in the case of loans secured by commercial real estate, or residential real estate with more than four units, the borrower’s notice must include financial statements or other evidence showing loss of income during the COVID-19 pandemic, and disclose any funds received from a PPP loan or other pandemic relief programs. The borrower only needs to give one such notice during the moratorium period.

Unless the borrower and lender agree to another arrangement for repayment, the amount deferred during the moratorium will be due upon the maturity date of the loan.

In connection with deferred payments under this statute, a lender may not impose charges, penalties, fees, or default rates of interest, initiate cash management or lock box provisions, or declare a default based on inability to maintain financial covenants.

For foreclosures which were started during the moratorium period, but before the effective date of the statute, the period of time between when the foreclosure was commenced, and when it may be consummated, is tolled for the duration of the moratorium period.

If a lender violates the statute, the borrower may be entitled to recover its monetary damages, court costs, and attorney fees.

Although this law is not specific to real property that is leased to others, it is especially important to both residential and commercial landlords as a companion to the eviction moratorium, and will give much needed relief to landlords who are having trouble making their mortgage payments because their tenants have stopped paying rent.