As announced earlier this week, Oregon recently enacted legislation requiring certain types of forbearance accommodations for mortgage loans. OR HB 4204, § 1(9) (2020) requires the following:
“Within 60 days following the effective date of this 2020 special session Act (August 29, 2020), each lender authorized to do business in this state must provide written notice by mail to all of the lender’s borrowers of a borrower’s rights for accommodation under this section.”
Considering the fact that a “borrower” is defined (in part) as a “mortgagor of real property” under Ibid. § 1(2)(a) and a “lender” is defined (in part) as “a beneficiary or trustee . . . [or] a mortgagee” under Ibid. § 1(2)(f), this notice requirement applies not only to persons currently originating a loan, but borrowers on loans already in existence. Thus, this notice requirement is likely to be fulfilled during the post-closing/servicing process (which is beyond the scope of our services).
Nevertheless, to help clients provide this disclosure for persons who will become a “borrower” during the effective time of this Act (tentatively slated to expire on December 29, 2020 – 90 days after the tentative end of the “emergency period” on September 30, 2020), we have created Cx24147.
Because a borrower does not become a mortgagor until they sign a security instrument, we are configuring this document to print as close to closings as possible. However, because both Oregon law requires the notice to be mailed and our Closing packages are not distributed by mail via our Fulfillment Center, we have configured the document to print in those packages which are so distributed closest in time to closing. Thus, Cx24147 will be configured to print under the following conditions:
- Print Condition # 1:
- Document Package Type = Pre-Closing
- Integrated Disclosure Loan Indicator = Yes
- State Code = Oregon
- Print Condition # 2:
- Document Package Type = Initial Disclosure
- Integrated Disclosure Loan Indicator = No
- State Code = Oregon
Ibid. § 1(9) requires the notice to be “mail[ed]”. Under Oregon’s version of the Uniform Electronic Transactions Act (“UETA”), “if a law . . . requires a record . . . to be sent, communicated or transmitted by a specified method . . . (b) . . . the record must be sent, communicated, or transmitted by the method specified in the other law” (Or. Rev. Stat. Ann. § 84.022). Oregon’s version of the UETA supersedes section 101 of the Federal Electronic Signatures in Global and National Commerce Act (“ESIGN Act”; 15 U.S.C.A. § 7001), in accordance with Ibid. § 7002, thus (seemingly) preventing the notice from being electronically delivered.
However, while under Ibid. a state’s adoption of UETA can supersede the provisions of the ESIGN Act, there are exceptions. Under Ibid. § 7002(c), the ESIGN Act “does not permit a State to circumvent this subchapter . . . through the imposition of nonelectronic delivery methods under section 8(b)(2) of the Uniform Electronic Transactions Act.” Or. Rev. Stat. Ann. § 84.022(2)(b) is the equivalent of UETA’s § 8(b)(2).
Thus, Ibid. § 84.022(2)(b) may be preempted by the ESIGN Act and Cx24147 can be distributed electronically. However, this preemption only applies where a State “circumvents” the application of the ESIGN Act, which implies an intent to evade. It is not clear, from the language and intent of Oregon’s new law, if Oregon is attempting to “circumvent” the ESIGN Act by requiring the notices to be mailed. As noted previously, this notice requirement was likely intended to be fulfilled post-closing and, unless the borrower consents to receiving post-closing notices from a lender electronically, it is unlikely that a lender will be able to provide this notice electronically. Thus, Oregon’s new Act may only require the notice to be mailed because this is the only practical way to ensure that each borrower receives the notice.
Taken altogether, whether providing this notice electronically to a borrower is compliant or not is indeterminable. We are permitting this document to be sent through our eSign system, but we cannot guarantee that providing the notice in this manner will be sufficient. Clients are encouraged to consult with their own licensed legal counsel on this matter.
This new document will be available on Production starting July 15, 2020. Questions or concerns about it should be directed to Client Support at 1.800.497.3584.