Delta variant pushes Oregon foreclosure moratorium through year-end

Oregon on Monday put a halt to residential foreclosures for the rest of 2021 in the wake of the coronavirus’ increasingly contagious delta variant causing an uptick in infection rates.

The executive order extends the state’s ban — previously set to end Aug. 31 — to Dec. 31. The extension of Oregon’s temporary ban on foreclosures will be the last under legislation authorizing it.

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“Extending the temporary moratorium another three months will prevent the removal of Oregonians from their homes by foreclosure, which would result in serious health, safety, welfare and financial consequences,” Gov. Kate Brown said in the executive order.

The move adds to signs that the broader restart of foreclosures won’t get fully underway until next year given various differences in jurisdictional rules, and other federal measures. These include forbearance and consumer protections that are already in effect for some loans, and soon will be for others. Those protections are temporary and slated to end Dec. 31.

The money allocated through the Treasury’s nearly $10 billion Homeowner Assistance Fund could also go partly toward foreclosure prevention. However, it remains unclear how fast states still in the midst of submitting their plans for the money will be able to distribute it.

More than 10 states and the District of Columbia have had separate guidance or recommendations around foreclosure, including their own bans, according to a recent report by law firm Perkins Coie.

Oregon’s legislation allowed for two extensions of its temporary ban by executive order in three-month increments. The ban previously was extended from June 30 to Sept. 30.

While it may make sense to extend or re-impose foreclosure moratoria in particularly high-risk areas with vulnerable populations when forbearance expirations start to peak, the latter won't happen until fall, and it's not clear that Oregon fits into the former category, Richard Kruse, principal at distressed asset manager Gryphon USA, said in an email.

"I think this is premature. We are still 45 days out from expiration," Kruse said. The number of people "coming out of forbearance is going up and unemployment is coming down. The numbers here suggest that continued moratoriums may not be reasonable. There is an argument to be made that areas of high minority concentration ... and ... less affluent Americans are at higher risk for a number of reasons. Both can be valid." A third reason "could be a high level of tenant-occupied properties in low-income areas. However, if you look at Census data [for Oregon], you'll see very few of the demographic of income triggers."