On December 17, 2020, Governor Kate Brown issued an executive order related to Oregon’s foreclosure moratorium (HB 4204). Under Executive Order 20-67 (EO 20-67), Governor Brown determined that a state of emergency continues to exists in the State of Oregon as a result of COVID-19 and elected to continue her prior executive order (EO 20-37), which extended HB 4204’s foreclosure moratorium through December 31, 2020.
Signed into law on June 30, 2020, HB 4204 imposed a foreclosure moratorium in the State of Oregon and limited the ability of lenders to declare defaults under their loans and charge default interest, inspections and attorneys’ fees during the “emergency period.” HB 4204 also required lenders to provide notice of the moratorium to all borrowers and provided a private cause of action to borrowers against lenders who violated the statute. A full summary of HB 4204 is available here.
Importantly, the “emergency period” under HB 4204 was originally set to expire on September 30, 2020, unless it was extended by Governor Brown prior to August 31, 2020. Utilizing that extension, on August 31, 2020, Governor Brown extended the “emergency period” through December 31, 2020 pursuant to EO 20-37. Now, under EO 20-67, Governor Brown seeks to continue EO 20-37. Unfortunately for lenders, the effect and legality of this continuation is not clear.
Regarding the effect, new EO 20-67 is riddled with inconsistencies. In some places, EO 20-67 states that Governor Brown is reviewing prior executive orders (including EO 20-37) to decide whether they should be extended. In other places, however, Governor Brown states she is continuing EO 20-37 without modification and without any expiration date. Adding to this lack of clarity, EO 20-67 does not reference the “emergency period” under HB 4204. Rather, at most, it only continues prior EO 20-37 to an indeterminate date. But it is unclear whether the extension of EO 20-37 is also an extension of the “emergency period” and, therefore, the foreclosure moratorium itself.
Compounding the confusion, even were EO 20-67 an attempt to extend the “emergency period” under HB 4204, it does not appear Governor Brown has that authority. As detailed above, Governor Brown was only permitted to extend the “emergency period” if she did so prior to August 31, 2020. Having previously exercised that extension authority and the August 31 deadline having expired, HB 4204 would seem to preclude any further extension by executive order.
Bottom line: Because of the clear limitations under HB 4204 on extensions of the “emergency period” and the lack of clarity in EO 20-67, without further action from the Oregon legislature, we believe it is more likely than not that Oregon’s foreclosure moratorium will expire on December 31, 2020. Regrettably for lenders, however, with a private right of action available to borrowers for violations of HB 4204, lenders seeking to protect and foreclose on their collateral are left to risk liability to their borrowers or to sit idle on long-defaulted loans and wasting collateral. The potential liability for lenders found in violation of HB 4204 includes not only actual damages to a borrower, but also the borrower’s attorneys’ fees and costs.