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New foreclosure law takes effect


   While the number of foreclosures in Oregon did not change much from July to August, the method of foreclosure filings did take a dramatic new course in rough, unchartered "foreclosure seas," according John Helmick, CEO of Gorilla Capital.
   Officials with Eugene-based Gorilla Capital, say that Oregon's new foreclosure laws may have stemmed the tide of nonjudicial foreclosures, but it will send waves of foreclosed homeowners into a more expensive and swamped civil court system.
   "The decrease in the number of notice to defaults filed in the past month is a deceiving indicator of Oregon's home foreclosure market," said Helmick, whose company operates in 20 Oregon counties, including Jefferson County.
   Jefferson County had no notices of default filed in August, down from seven filed in July, and 14 filed in August 2011.
   "The new law, Oregon SB-1552, is a sneaker wave that wipes out what benefit there is for a homeowner in a nonjudicial foreclosure, drowns the lender and homeowner in unnecessary fees, and offers the homeowner no way to keep their credit rating afloat," he said.
   Oregon SB-1552, which took effect July 11, extends the foreclosure notice period from 120 days to 180 days, and places a number of additional demands on lenders, including requiring lenders to pay for mediation sessions with homeowners who are in the nonjudicial foreclosure process.
   According to Helmick, it's believed that the new law will alter the foreclosure process for thousands of Oregonians, resulting in significant decreases in nonjudicial notices of default, and a corresponding increase in judicial filings.
   In a nonjudicial foreclosure, if the home sells for less than what is owed to the lender, the deficiency is forgiven and the former homeowner owes nothing to the bank. In about two years, many former homeowners can oftentimes repair their credit rating, and may be eligible for a home loan.
   With judicial foreclosure, the lender receives a judgment for the full amount of the debt. If the home sells for less than the full amount of the debt -- which is what occurs in most cases -- the money judgment remains against the homeowner.
   The judgment can be sold and the owner of the judgment can garnish the wages and accounts and place a judgment lien on real and personal property of the former homeowner.
   By modifying the foreclosure statutes, the Legislature has begun a process that will ultimately cause thousands of Oregonians to be subject to judgment liens rather than to have the "underwater" portion of their mortgage forgiven.
   In total, there were 122 notices of default filed during August in Oregon, compared to 926 during the same month in 2011. Gorilla reported August's numbers are roughly the same as July. However, judicial foreclosures have spiked to their highest levels ever.
   "Oregon's new foreclosure law is severely punitive," Helmick said. "It is expensive, will overtax an exhausted civil court system, and offers homeowners in foreclosure little long-term hope."
   Helmick expects nonjudicial foreclosure numbers to remain low during the coming months, but predicts judicial foreclosure filings to rise dramatically.
   For more information, visit www.GorillaCapital.com, or call 541-344-7867.