Passed on May 19 by the Oregon House of Representatives, HB2009 is the latest state-mandated round of consumer protections designed to protect customers financially affected by the COVID-19 pandemic from undergoing collection procedures or having their homes foreclosed for the duration of the emergency. This financial relief bill took effect on June 1 and will last for 90 days beyond the yet-undetermined emergency period, which could be anywhere from September 30 to December 31, 2021. In short, Oregonians could possibly be protected under this bill for another 7+ months: great news for struggling borrowers and potentially challenging news for brokers and lenders doing business in the Beaver State.
HB2009’s tenets are fairly straightforward. Assuming that certain fairly simple conditions are met, lenders are disallowed from treating a borrower’s missed payment as a defaulting condition and must allow borrowers to defer said missed payments to the end of the bill’s emergency period. Lenders are also forbidden from collecting fees or penalties, imposing default rates of interest, or initiating foreclosure procedures during this time. While it is required that borrowers notify their lenders if they are unable to make payments due to pandemic-caused financial difficulties, servicers are also required to advise their customer base that they may be entitled to the above relief.
As these protective limitations restrict lenders’ collecting and foreclosing authority during the COVID emergency, it is imperative that Oregon servicers - as well as servicers in other states with similar mandates - take great care in adhering to the letter of the law or risk federal penalties. This particular bill equally places duty and blame between borrower and lender when it comes to responsibility of protection under HB2009. The borrower must alert their lender if their finances are in dire straits and they may or will miss payments, but the lender is also ordered to disclose this option to all borrowers so that no possibility of confusion or misinterpretation of the law can exist.
It is also imperative that lenders diligently address HB2009’s do’s and don’ts with their marketing teams. While the use of social media as a means to contact delinquent borrowers is sometimes considered to be a ‘gray area’ when it comes to collecting on overdue accounts during ‘non-emergencies’ and is generally allowable if such attempts are not considered to be “harassment” or “deceptive”, this bill expressly forbids reaching out to borrowers during the pandemic in any shape or form in an attempt to collect. Any attempt to do so would be considered a violation of HB2009 and carry with it severe penalties. Just another challenge for advertisers and collectors in these turbulent times, but it’s a storm that all must weather together until the market (and the world) return to some semblance of normality.