US Laws, Codes, Statutes & Cases

TITLE 9

 

MORTGAGES AND LIENS

 

Chapter     86.       Mortgages; Trust Deeds

                  87.       Statutory Liens

                  88.       Foreclosure of Mortgages and Other Liens

 

_______________

 

Chapter 86 — Mortgages; Trust Deeds

 

2007 EDITION

 

MORTGAGES; TRUST DEEDS

 

MORTGAGES AND LIENS

 

REAL PROPERTY MORTGAGES

 

86.010       Nature of mortgagee’s interest

 

86.020       Covenant to pay money not implied

 

86.030       Absolute deed as a mortgage

 

86.040       Improvements on mortgaged lands

 

86.050       Payment of taxes and other charges by mortgagee

 

86.060       Assignment of mortgage

 

86.080       Record of assignment not notice to mortgagor

 

86.095       Acts not affecting priority of lien of credit instrument

 

86.100       Discharge of mortgage

 

86.110       Discharge of record by owner and holder of mortgage note who is not the mortgagee of record

 

86.120       Discharge of mortgage on real property; effect of discharge

 

86.130       Discharge by foreign executors, administrators, conservators and guardians

 

86.140       Liability of mortgagee for failure to discharge mortgage

 

86.150       Loan agreements and promissory notes to state maximum prepayment privilege penalty

 

86.155       Priority of line of credit instrument as to certain advances; procedure to limit indebtedness in residential line of credit instrument

 

LATE CHARGES

 

86.160       Definitions for ORS 86.160 to 86.185

 

86.165       Late charge

 

86.170       Prohibited mortgage provisions

 

86.175       Scope

 

86.180       ORS 86.160 to 86.185 not applicable to certain mortgagees; notice to borrowers

 

86.185       ORS 86.160 to 86.185 not applicable to certain loans

 

REAL ESTATE LOANS; SECURITY PROTECTION

 

86.205       Definitions for ORS 86.205 to 86.275

 

86.210       Types of lender security protection provisions allowed

 

86.214       Application of ORS 86.210 and 86.245 to real estate loan agreements

 

86.240       Limit on amount required in security protection escrow account; compliance with federal laws for certain loans as compliance with state laws

 

86.245       Interest on security protection deposits; exception

 

86.250       Service charge prohibited where interest required

 

86.255       Arrangements where security protection provisions not required; information to borrower

 

86.260       Payment of taxes where security protection provision required; credit of discount where taxes not paid; cause of action by borrower

 

86.265       Effect of lender violation of ORS 86.205 to 86.275

 

86.270       ORS 86.205 to 86.275 inapplicable to certain loan agreements; notice to borrower

 

86.275       Severability

 

CHATTEL MORTGAGES

 

86.405       Secretary of State to furnish statement of mortgages filed before September 1, 1963; fee

 

86.440       Discharge of mortgage recorded with county recording officer

 

86.460       Discharge of mortgage filed with Secretary of State; fee

 

86.470       Discharge, assignment and foreclosure of mortgages on chattels registered and licensed by Department of Transportation

 

INVESTMENTS; FEDERAL HOUSING ADMINISTRATOR

 

86.610       Power of financial institutions, fiduciaries and others to make loans secured by property insured by Federal Housing Administrator

 

86.620       Investment of funds of financial institutions, fiduciaries and others in bonds and mortgages accepted by Federal Housing Administrator, debentures issued thereby, and obligations of national mortgage associations

 

86.630       Eligibility of securities described in ORS 86.620 as security for deposits, investment or reserve of securities

 

86.640       Applicability of other laws requiring security or regulating loans and investments

 

TRUST DEEDS

 

86.705       Definitions for ORS 86.705 to 86.795

 

86.710       Trust deeds authorized to secure performance of an obligation; methods of foreclosure after breach

 

86.715       Trust deed deemed to be mortgage on real property; applicability of mortgage laws

 

86.720       Reconveyance upon performance; liability for failure to reconvey; release of trust deed

 

86.725       Time within which foreclosure must be commenced

 

86.735       Foreclosure by advertisement and sale

 

86.740       Notice of sale to be given to certain persons

 

86.742       Failure to give notice of sale; action by omitted person; defense; pleading and proving knowledge of sale; attorney fees; exclusive remedy

 

86.745       Contents of notice of sale

 

86.750       Service and publication of notice; recording proof of compliance

 

86.753       Discontinuance of foreclosure proceedings after cure of default

 

86.755       Sale of property

 

86.757       Request for information from trustee

 

86.759       Information provided by trustee

 

86.765       Disposition of proceeds of sale

 

86.770       Effect of sale

 

86.775       Contents of trustee’s deed to purchaser

 

86.780       Recitals in trustee’s deed and certain affidavits as prima facie or conclusive evidence

 

86.785       Requests for copies of notice of default or notice of sale

 

86.790       Qualifications of trustee; appointment of successor trustee; duty of trustee

 

86.795       Compensation of trustee

 

PENALTIES

 

86.990       Penalties

 

REAL PROPERTY MORTGAGES

 

      86.010 Nature of mortgagee’s interest. A mortgage of real property is not a conveyance so as to enable the owner of the mortgage to recover possession of the property without a foreclosure and sale. This section is not intended as a limitation upon the right of the owner of real property to mortgage or pledge the rents and profits thereof, nor as prohibiting the mortgagee or pledgee of such rents and profits, or any trustee under a mortgage or trust deed from entering into possession of any real property, other than farmlands or the homestead of the mortgagor or successor in interest, for the purpose of operating the same and collecting the rents and profits thereof for application in accordance with the provisions of the mortgage or trust deed or other instrument creating the lien, nor as any limitation upon the power of a court of equity to appoint a receiver to take charge of the property and collect the rents and profits thereof.

 

      86.020 Covenant to pay money not implied. No mortgage shall be construed as implying a covenant for the payment of the sum thereby secured. When there is no express covenant for such payment contained in the mortgage, and no bond or other separate instrument to secure such payment shall have been given, the remedies of the mortgagee shall be confined to the lands mentioned in the mortgage.

 

      86.030 Absolute deed as a mortgage. When a deed purports to be an absolute conveyance in terms, but is made or intended to be made defeasible by a deed of defeasance or other instrument, the original conveyance shall not be thereby defeated or affected as against any person other than the maker of the defeasance, or the heirs or devisees of the maker, or persons having actual notice thereof, unless the instrument of defeasance is recorded with the recording officer of the county where the lands lie.

 

      86.040 Improvements on mortgaged lands. No person shall sell, dispose of, remove or damage any building or other improvements upon mortgaged lands. All such improvements are deemed a part of the mortgaged property and are subject to the mortgage lien. When any improvements are removed from the mortgaged premises in violation of this section, the mortgagee may follow and regain possession of such improvements wherever found or may recover the reasonable value thereof from the person removing them.

 

      86.050 Payment of taxes and other charges by mortgagee. Whenever a mortgagor fails to pay when due any taxes, assessments, interest on prior mortgages, insurance premiums or other charges necessary to be paid for the protection of the lien of a mortgagee, the mortgagee may pay the same, and such payments shall be added to the mortgage debt and secured by the mortgage held by the mortgagee, and shall bear interest at the same rate as specified in the mortgage. This section applies only to mortgages executed after June 3, 1929, and does not affect the right of parties to specifically contract otherwise than as provided in this section.

 

      86.060 Assignment of mortgage. Mortgages may be assigned by an instrument in writing, executed and acknowledged with the same formality as required in deeds and mortgages of real property, and recorded in the records of mortgages of the county where the land is situated.

 

      86.070 [Repealed by 1965 c.252 §1]

 

      86.080 Record of assignment not notice to mortgagor. The recording of the assignment of a mortgage is not of itself notice of such assignment to the mortgagor, or the heirs or personal representatives of the mortgagor, so as to invalidate a payment made by any of them to the mortgagee.

 

      86.090 [Repealed by 1965 c.252 §1]

 

      86.095 Acts not affecting priority of lien of credit instrument. (1) Actions that do not affect the priority granted to the lien of a credit instrument at the time it is first received for recordation shall include but shall not be limited to:

      (a) Renegotiation or adjustment of the initial interest rate provided in the note or the credit instrument, upward or downward, which may increase or decrease the amount of periodic payments or may extend or shorten the term of the credit instrument, or both;

      (b) An increase in the underlying obligation secured by the credit instrument during any part of the term of the credit instrument as a result of deferment of all or a portion of the interest payments and the addition of such payments to the outstanding balance of the obligation;

      (c) Execution of new notes at designated intervals during the term of the credit instrument that reflect changes made pursuant to paragraph (a) or (b) of this subsection;

      (d) Extension of the term of the credit instrument;

      (e) Substitution of a note if there is no increase in the principal amount to be paid under the note;

      (f) Modification of periodic payments required under the note if there is no increase in the principal amount due under the note; or

      (g) Advances made under ORS 86.155.

      (2) As used in this section, the addition of accrued interest to the principal amount of the underlying obligation is not an increase in the principal amount.

      (3) As used in this section, “credit instrument” includes a mortgage, a line of credit instrument, a deed of trust and a contract for sale of real property. [1981 c.304 §2; 1987 c.716 §2; 1991 c.246 §1; 2001 c.20 §1]

 

      86.100 Discharge of mortgage. Any mortgage shall be discharged of record whenever there is presented to the recording officer a certificate executed by the mortgagee, or the personal representatives or assigns of the mortgagee, acknowledged or proved and certified as prescribed by law to entitle conveyances to be recorded, specifying that such mortgage has been paid or otherwise discharged. Every such certificate, and the proof or acknowledgment thereof, shall be recorded at full length. [Amended by 1965 c.252 §2]

 

      86.110 Discharge of record by owner and holder of mortgage note who is not the mortgagee of record. (1) Whenever a promissory note secured by mortgage on real property is transferred by indorsement without a formal assignment of the mortgage, and the mortgage is recorded, the mortgage, upon payment of the promissory note, may be discharged of record by the owner and holder of the promissory note making and filing with the appropriate recording officer a certificate, verified by oath, proving the satisfaction of mortgage and declaring, in substance, that the owner and holder is the owner and holder of the note secured by the mortgage by indorsement of the mortgagee and that the note has been fully paid and proving that fact to the satisfaction of the recording officer.

      (2) Upon receiving the certificate, the recording officer shall record the document and index the document as a satisfaction of mortgage. The record shall have the same effect as a deed of release of the mortgagee duly acknowledged and recorded. [Amended by 1965 c.252 §3; 2001 c.577 §1]

 

      86.120 Discharge of mortgage on real property; effect of discharge. No mortgage upon real property shall be discharged except as provided in ORS 86.110 or by the person appearing upon the records of the county where the mortgage is recorded to be the owner thereof. A discharge of the mortgage by such person shall operate to free the land described in the mortgage from the lien of the mortgage as against all subsequent purchasers and incumbrances for value and without notice.

 

      86.130 Discharge by foreign executors, administrators, conservators and guardians. Foreign executors, administrators, conservators and guardians may discharge mortgages upon the records of any county upon recording with the recording officer of the county in which the mortgage is recorded a certified copy of their letters testamentary, or of administration, or of guardianship or of conservatorship. The certificate shall include a statement that the letters are in effect, and the certificate shall be recorded in the mortgage records. [Amended by 1973 c.506 §§2,44]

 

      86.140 Liability of mortgagee for failure to discharge mortgage. If any mortgagee or the personal representative or assignee of the mortgagee, after full performance of the condition of the mortgage before or after a breach thereof, shall, within 30 days after being thereto requested, and after tender of reasonable charges, fail to discharge the same, or to execute and acknowledge a certificate of discharge or release thereof, that person shall be liable to the mortgagor, or the heirs or assigns of the mortgagor, in the sum of $500 damages and also for all actual damages occasioned by such failure, to be recovered in an action at law. The owner and holder of the promissory note referred to in ORS 86.110 is deemed the personal representative of the mortgagee for the purposes of this section. [Amended by 1955 c.29 §1; 1955 c.512 §1; 1993 c.648 §1]

 

      86.150 Loan agreements and promissory notes to state maximum prepayment privilege penalty. (1) Any person making a loan having a loan period of more than three years secured by a mortgage or by a trust deed on real property located in this state shall, with respect to such loan, expressly and clearly state on the loan agreement and promissory note any maximum prepayment privilege penalty. The statement shall include the maximum prepayment penalty applicable for prepayment during the first year of the loan period and for each year thereafter.

      (2) Violation of subsection (1) of this section with respect to a loan agreement or promissory note shall render any prepayment privilege penalty provision in the agreement void.

      (3) “Loan agreement” as used in this section means a written document issued in connection with a particular loan which sets forth the terms upon which the loan will be made. “Loan agreement” does not include a mortgage or trust deed which secures a promissory note. Nothing in this section shall be deemed to require a lender to issue a loan agreement.

      (4) This section does not apply to any loan agreement executed on or before September 13, 1967, or any loan not primarily for personal, family or household use. [1967 c.336 §§1,2; 1987 c.716 §3]

 

      86.155 Priority of line of credit instrument as to certain advances; procedure to limit indebtedness in residential line of credit instrument. (1) As used in this section:

      (a) “Credit agreement” means any promissory note, loan agreement or other agreement that provides for advances subsequent to the date of recording of the line of credit instrument that secures the note or agreement.

      (b) “Line of credit instrument” means a mortgage or trust deed that secures a consumer or commercial credit agreement and creates a lien on specified real property up to a stated amount, provided that the front page of the mortgage or trust deed, or a memorandum thereof:

      (A) Contains the legend “line of credit mortgage,” “line of credit trust deed” or “line of credit instrument” either in capital letters or underscored above the body of the mortgage or trust deed;

      (B) States the maximum principal amount to be advanced pursuant to the credit agreement; and

      (C) States the term or maturity date, if any, of the credit agreement exclusive of any option to renew or extend the term or maturity date.

      (c) “Residential line of credit instrument” means any line of credit instrument creating a lien on real property upon which are situated or will be constructed four or fewer residential units, one of which, at the time the credit agreement is entered into, is the borrower’s residence or is intended, following construction, to be a residence of the borrower.

      (2) A line of credit instrument shall have priority, regardless of the knowledge of the lienholder of any intervening lien, as of its date of recording as to the following advances whether the advances are optional or obligatory advances:

      (a) Principal advances made any time pursuant to the credit agreement, to the extent the total outstanding advances do not exceed the maximum principal amount stated in the line of credit instrument under subsection (1)(b)(B) of this section;

      (b) Interest, lawful charges and advances made any time pursuant to the credit agreement for the reasonable protection of the real property including, but not limited to, advances to pay real property taxes, hazard insurance premiums, maintenance charges imposed under a declaration or restrictive covenant and reasonable attorney fees, whether or not the interest, lawful charges or advances exceed the maximum principal amount stated in the line of credit instrument under subsection (1)(b)(B) of this section; and

      (c) Advances made any time after the date of recording and pursuant to a credit agreement that is not secured by a residential line of credit instrument to complete construction of previously agreed-upon improvements on the real property, whether or not the advances exceed the maximum principal amount stated in the line of credit instrument under subsection (1)(b)(B) of this section provided, however, that the front page of the instrument states that the maximum principal amount to be advanced pursuant to the credit agreement may be exceeded by advances to complete construction pursuant to this subsection.

      (3) Actions that do not affect the priority granted to the advances set forth in subsection (2) of this section shall include, but not be limited to, those actions set forth in ORS 86.095 (1). If any modification to a credit agreement increases the maximum principal amount to be advanced pursuant to the credit agreement, then principal advances that are made that exceed the original maximum principal amount stated in the line of credit instrument shall have priority as of the date of recording an amendment to the line of credit instrument that states the increased maximum principal amount.

      (4) In the case of a residential line of credit instrument, the debtor may limit the indebtedness secured by that line of credit instrument to the amount of the credit outstanding by delivering a notice by personal service upon the lienholder or trust deed beneficiary or by mailing a notice by certified mail, return receipt requested, to the lienholder or trust deed beneficiary at the address given for payment or, if none, to the address of the lienholder or trust deed beneficiary indicated in the line of credit instrument or deed of trust. To be sufficient to limit indebtedness under this subsection, the notice must:

      (a) State that it is made under this section;

      (b) Contain the legal description in the line of credit instrument or the street address of the real property;

      (c) Provide the information necessary to locate the line of credit instrument in the public record;

      (d) State the debtor’s intention to limit the amount of credit secured by the line of credit instrument to the amount owed at the time the notice is received;

      (e) State the date sent; and

      (f) Be signed and acknowledged by all debtors obligated under the line of credit instrument.

      (5) Not later than the 20th day after receipt of the notice described in subsection (4) of this section, the lienholder or trust deed beneficiary shall:

      (a) Indorse on the notice, or on an addendum to the notice, the principal amount of the indebtedness secured by the line of credit instrument on the date the lienholder or trust deed beneficiary received notice;

      (b) Sign and acknowledge the notice or the addendum, if applicable; and

      (c) Record the notice and addendum in the public record where the line of credit instrument was originally recorded.

      (6) If the lienholder or trust deed beneficiary fails to record the notice and addendum, if applicable, within the time period specified in subsection (5) of this section, the debtor may record the notice in the public record where the line of credit instrument was originally recorded, together with proof of receipt by, or personal delivery to, the lienholder or trust deed beneficiary.

      (7) Notwithstanding subsection (4) of this section, the line of credit instrument shall continue to have priority as of its date of recording as to:

      (a) Principal advances, including any advance the creditor is required to honor, that were made before a notice under subsection (4) of this section is received;

      (b) Interest, lawful charges and advances described in subsection (2)(b) and (c) of this section; and

      (c) All advances made after a notice under subsection (4) of this section is received that are within the amount owed at the time the notice under subsection (4) of this section is given. [1987 c.716 §4; 1989 c.198 §1; 1991 c.313 §1; 1991 c.438 §1; 1997 c.152 §1; 2001 c.20 §2; 2007 c.71 §18]

 

LATE CHARGES

 

      86.160 Definitions for ORS 86.160 to 86.185. As used in ORS 86.160 to 86.185:

      (1) “Late charge” means a sum payable by a mortgagor to the holder of a mortgage pursuant to a note or mortgage to compensate the holder for servicing and other costs attributable to the receipt of mortgage payments from the mortgagor after the date upon which payment is due.

      (2) “Mortgagor” includes the grantor under a deed of trust.

      (3) “Mortgage” includes a deed of trust.

      (4) “Residential real property” means a single-family, owner-occupied dwelling and appurtenances. [1977 c.427 §1]

 

      86.165 Late charge. No lender may impose a late charge:

      (1) With respect to any periodic installment payment received by it within 15 days after the due date. However, if the 15-day period ends on a Saturday, Sunday or legal holiday the 15-day period is extended to the next business day.

      (2) In a dollar amount which exceeds five percent of the sum of principal and interest of the delinquent periodic installment payment or the amount provided in the note or mortgage held by the lender, whichever is the lesser.

      (3) Unless the note or mortgage held by the lender provides for payment of a late charge on delinquent periodic installments and a monthly billing, coupon or notice is provided by the lender disclosing the date on which periodic installments are due and that a late charge may be imposed if payment is not received by lender within 15 days thereafter. However, if the lender and the borrower have provided in the note or other written loan agreement that the payments on the loan shall be made by the means of automatic deductions from a deposit account maintained by the borrower, the lender shall not be required to provide the borrower with a monthly billing, coupon or notice under this subsection with respect to any occasion on which there are insufficient funds in the borrower’s account to cover the amount of a loan payment on the date the loan payment becomes due and within the period described in subsection (1) of this section.

      (4) More than once on any single installment. [1977 c.427 §2; 1979 c.101 §1; 1993 c.280 §1]

 

      86.170 Prohibited mortgage provisions. Any provision in a mortgage for a late charge except as authorized by ORS 86.160 to 86.185 shall be invalid. [1977 c.427 §3; 1997 c.631 §384]

 

      86.175 Scope. ORS 86.160 to 86.185 shall be applicable only to late charges on loans secured by residential real property. [1977 c.427 §4]

 

      86.180 ORS 86.160 to 86.185 not applicable to certain mortgagees; notice to borrowers. Nothing in ORS 86.160 to 86.185 shall pertain to a mortgage banking company or mortgage servicing company except that if the terms of the mortgage do not conform to the requirements of ORS 86.165, the borrower shall be notified prior to the execution of the mortgage. [1977 c.427 §5]

 

      86.185 ORS 86.160 to 86.185 not applicable to certain loans. Nothing in ORS 86.160 to 86.185 shall apply to loans insured, guaranteed or purchased by an instrumentality of the federal government, whose regulations establish late charge limitations. [1977 c.427 §6]

 

REAL ESTATE LOANS; SECURITY PROTECTION

 

      86.205 Definitions for ORS 86.205 to 86.275. As used in ORS 86.205 to 86.275:

      (1) “Borrower” means any person who becomes obligated on a real estate loan agreement, either directly or indirectly, and includes, but is not limited to, mortgagors, grantors under trust deeds, vendees under conditional land sales contracts, and persons who purchase real property securing a real estate loan agreement, whether the persons assume the loan or purchase the property subject to the loan.

      (2) “Direct reduction provision” or “capitalization provision” means any provision which is part of a real estate loan agreement, whether incorporated into the agreement or as part of a separately executed document, whereby the borrower makes periodic prepayment of property taxes, insurance premiums and similar charges to the lender or the designee of the lender, who applies such prepayments first to accrued interest and then to the principal amount of the loan, and upon payment of such charges, adds the amount of such payment to the principal amount of the loan.

      (3) “Escrow account” means any account which is a part of a real estate loan agreement, whether incorporated into the agreement or as part of a separately executed document, whereby the borrower makes periodic prepayment to the lender or the designee of the lender of taxes, insurance premiums, and similar charges, and the lender or the designee of the lender pays the charges out of the account at the due dates.

      (4) “Lender” means any person who makes, extends, or holds a real estate loan agreement and includes, but is not limited to, mortgagees, beneficiaries under trust deeds, and vendors under conditional land sales contracts.

      (5) “Lender’s security protection provision” means any provision which is a part of a real estate loan agreement, whether incorporated into the agreement or as part of a separately executed document, whereby the borrower prepays, pledges or otherwise commits cash or other assets owned by the borrower in advance of due dates for payments of property taxes, insurance premiums and similar charges relating to the property securing the loan in order to assure timely payment of the charges and protect the lender’s security interest in the property, and includes, but is not limited to, escrow accounts, direct reduction provisions, capitalization provisions, and pledges of savings accounts.

      (6) “Person” means individuals, corporations, associations, partnerships and trusts, and includes, but is not limited to, financial institutions as defined in ORS 706.008, investment companies, insurance companies, pension funds, and mortgage companies.

      (7) “Real estate loan agreement” or “real estate loan” means any agreement providing for a loan on residential property, including multifamily, occupied by the borrower in the amount of $100,000 or less, secured in whole or in part by real property, or any interest therein, located in this state, and includes, but is not limited to, mortgages, trust deeds and conditional land sales contracts. [1975 c.337 §1; 1997 c.631 §385]

 

      86.210 Types of lender security protection provisions allowed. A lender may require a lender’s security protection provision under ORS 86.205 to 86.275 either as a direct reduction provision, an escrow account, or a pledge of an interest-bearing savings account in an amount not to exceed the maximum amount which a lender may require a borrower to deposit in a lender’s security protection provision under ORS 86.240 and bearing interest at a rate not less than the rate required on lender’s security protection provisions by ORS 86.245. [1975 c.337 §2; 1987 c.577 §1]

 

      86.214 Application of ORS 86.210 and 86.245 to real estate loan agreements. To the extent not inconsistent with provisions of existing real estate loan agreements and provided such agreements are not silent with regard to a lender’s security protection provision, the provisions of ORS 86.210, 86.245 and this section shall apply to real estate loan agreements entered into prior to, on and after October 1, 1987. To the extent that the provisions of existing real estate loan agreements are inconsistent with the provisions of ORS 86.210, 86.245 and this section, the existing real estate loan agreements are silent as to a lender’s security protection provision, or any part of ORS 86.210, 86.245 and this section is declared unconstitutional as to existing real estate loan agreements, the provisions of ORS 86.205 to 86.275 (1985 Replacement Part) shall govern and be in full force and effect. [1987 c.577 §4]

 

      86.215 [1975 c.337 §§3,4,5; 1985 c.613 §2; repealed by 1987 c.577 §5]

 

      86.220 [1975 c.337 §6; repealed by 1987 c.577 §5]

 

      86.225 [1975 c.337 §6a; repealed by 1987 c.577 §5]

 

      86.230 [1975 c.337 §6b; repealed by 1987 c.577 §5]

 

      86.235 [1975 c.337 §7; repealed by 1987 c.577 §5]

 

      86.240 Limit on amount required in security protection escrow account; compliance with federal laws for certain loans as compliance with state laws. (1) No lender, in connection with a real estate loan agreement, shall require a borrower or prospective borrower:

      (a) To deposit in any escrow account which may be established in connection with the agreement, prior to or upon the date of settlement, a sum in excess of the estimated total amount of property taxes, insurance premiums, and similar charges which actually will be due and payable on the date of settlement, and the pro rata portion thereof which has accrued, plus one-sixth of the estimated total amount of the charges which will become due and payable during the 12-month period beginning on the date of settlement; or

      (b) To deposit in any escrow account, which may be established in connection with the agreement, in any month beginning after the date of settlement a sum in excess of one-sixth of the total amount of estimated property taxes, insurance premiums or similar charges which will become due and payable during the 12-month period beginning on the first day of the month, except that in the event the lender determines there will be a deficiency on the due date, the lender shall not be prohibited from requiring additional monthly deposits in the escrow account of pro rata portions of the deficiency corresponding to the number of months from the date of the lender’s determination of the deficiency to the date upon which the charges become due and payable.

      (2) For real estate loan agreements subject to the federal Real Estate Settlement Procedures Act of 1974 (12 U.S.C. 2601 et seq.) and to Regulation X of the federal Department of Housing and Urban Development (24 C.F.R. 3500.1 et seq.), compliance with the Real Estate Settlement Procedures Act and with Regulation X shall be considered to be compliance with this section. [1975 c.337 §13; 1995 c.182 §1]

 

      86.245 Interest on security protection deposits; exception. (1) As used in this section, “discount rate” means the auction average rate on 91-day United States Treasury bills, as established by the most recent auction of such Treasury bills, as published by the United States Department of the Treasury, Bureau of the Public Debt, less 100 basis points.

      (2) Except as provided in subsections (5) and (7) of this section, any lender who requires a lender’s security protection provision in connection with a real estate loan agreement shall pay interest to the borrower on funds deposited in the account at a rate not less than the discount rate. The discount rate shall be determined with reference to the most recent auction date before May 15 and November 15 each year.

      (3) The rate of interest payable on the account shall be adjusted semiannually to reflect changes in the discount rate. These adjustments shall be calculated on May 15 and November 15 each year. Adjustments calculated on May 15 shall take effect on the following July 1, and adjustments calculated on November 15 shall take effect on the following January 1.

      (4) Interest shall be computed on the average monthly balance in the account and shall be paid not less than quarterly to the borrower by crediting to the escrow account the amount of the interest due.

      (5) Except as provided in subsection (6) of this section, this section does not apply to real estate loan agreements entered into prior to September 1, 1975, or on which the payment of interest on a lender’s security protection provision violates any state or federal law or regulation.

      (6) If federal law or regulation does not prohibit the payment of interest on a lender’s security protection provision by federally chartered or organized lenders, this section applies to the federally chartered or organized lenders and the state chartered or organized lenders that are similar to the federally chartered or organized lenders with respect to a lender’s security protection provision executed in connection with real estate loan agreement entered into prior to and in existence on September 1, 1975.

      (7) This section does not apply to real estate loan agreements made by, held for sale to or sold to the State of Oregon. [1975 c.337 §8; 1979 c.327 §29; 1983 c.492 §1; 1987 c.577 §2; 1995 c.182 §2; 1997 c.68 §1; 2005 c.3 §1]

 

      86.250 Service charge prohibited where interest required. No lender requiring a lender’s security protection provision with respect to which interest is required to be paid by the lender under ORS 86.245 shall impose a service charge in connection with such provision. [1975 c.337 §9]

 

      86.255 Arrangements where security protection provisions not required; information to borrower. In any real estate loan agreement with respect to which a lender does not require a lender’s security protection provision, the parties may mutually agree to any arrangement whereby the borrower prepays, pledges or otherwise commits assets in advance of due dates for payment of property taxes, insurance premiums and similar charges relating to the real property in order to assist the borrower in making timely payments of the charges. Prior to entering any such arrangement, the lender shall furnish the borrower a statement in writing, which may be set forth in the loan application:

      (1) That the arrangement is not a condition to the real estate loan agreement;

      (2) If it is an escrow account, whether or not the lender will pay interest and if interest is to be paid, the rate of interest; and

      (3) Whether or not the borrower must pay the lender a charge for the service. If a charge is agreed to, the charge shall not exceed the amount of interest income earned under subsection (2) of this section. [1975 c.337 §10]

 

      86.260 Payment of taxes where security protection provision required; credit of discount where taxes not paid; cause of action by borrower. (1) If a lender has a requirement that the borrower pay funds into a lender’s security protection provision for the payment of property taxes on property that is the security for the real estate loan agreement, insurance premiums, and similar charges, and there are funds in the account, the lender shall pay the taxes or the amount in the account if less than the taxes due, in time to take advantage of any discount authorized by ORS 311.505, and all other charges on or before the due dates for payments.

      (2)(a) If the lender fails to pay the taxes in accordance with subsection (1) of this section resulting in a loss of discount to the borrower, the lender shall credit the lender’s security protection provision in an amount equal to the amount of discount denied on account of such failure, together with any interest that has accrued on the unpaid property taxes to the date the property taxes are finally paid.

      (b) If the failure of the lender to comply with subsection (1) of this section is willful and results in the loss to the borrower of the discount, or if the failure to comply was not willful but upon discovery of the failure to comply and the loss of discount, the lender fails to credit the lender’s security protection provision required by paragraph (a) of this subsection, the borrower shall have a cause of action against the lender to recover an amount equal to 15 times the amount of discount the borrower would have received, together with any interest that accrued on the unpaid property taxes to the date of recovery. The court may award reasonable attorney fees to the prevailing party in an action under this section. [1975 c.337 §11; 1979 c.703 §15; 1981 c.897 §18; 1995 c.618 §48]

 

      86.265 Effect of lender violation of ORS 86.205 to 86.275. A violation of ORS 86.205 to 86.275 by a lender shall render the lender’s security protection provision voidable at the option of the borrower, and the lender shall be liable to the borrower in an amount equal to:

      (1) The borrower’s actual damages or $100, whichever is greater, and

      (2) In the case of any successful action to enforce the foregoing liability, the court costs of the action together with reasonable attorney fees at trial and on appeal as determined by the court if the court finds that written demand for the payment of the borrower’s claim was made on the lender not less than 10 days before the commencement of the action. No attorney fees shall be allowed to the borrower if the court finds that the lender tendered to the borrower, prior to the commencement of the action, an amount not less than the damages awarded to the borrower. [1975 c.337 §14; 1981 c.897 §19]

 

      86.270 ORS 86.205 to 86.275 inapplicable to certain loan agreements; notice to borrower. ORS 86.205 to 86.275 shall not apply to a real estate loan agreement which is serviced or held for sale within one year by a mortgage servicing company neither affiliated with nor owned in whole or in part by the purchaser and which is made, extended or held by a purchaser whose principal place of business is outside this state; provided that if the purchaser requires a lender’s security protection provision, prior to entering into such agreement, the mortgage servicing company shall furnish the borrower a statement in writing, which may be set forth in the loan application, that the mortgage servicing company is not required by the laws of this state to pay interest on the lender’s security protection provision, and specifically informing the borrower why the borrower is not entitled to interest on the account. [1975 c.337 §15]

 

      86.275 Severability. If any section of ORS 86.205 to 86.275, or the application of any section to any real estate loan agreement shall be held invalid, the remainder of ORS 86.205 to 86.275, and the application of ORS 86.205 to 86.275 to any real estate loan agreement other than the one or those to which it is held invalid, shall not be affected thereby. [1975 c.337 §12]

 

      86.310 [Amended by 1955 c.21 §1; repealed by 1961 c.726 §427]

 

      86.315 [1953 c.700 §2; repealed by 1961 c.726 §427]

 

      86.320 [Repealed by 1961 c.726 §427]

 

      86.330 [Repealed by 1961 c.726 §427]

 

      86.340 [Repealed by 1961 c.726 §427]

 

      86.350 [Amended by 1955 c.182 §1; repealed by 1961 c.726 §427]

 

      86.360 [Repealed by 1961 c.726 §427]

 

      86.370 [Amended by 1957 c.404 §1; repealed by 1961 c.726 §427]

 

      86.380 [Repealed by 1961 c.726 §427]

 

      86.390 [Repealed by 1961 c.726 §427]

 

      86.400 [Repealed by 1961 c.726 §427]

 

CHATTEL MORTGAGES

 

      86.405 Secretary of State to furnish statement of mortgages filed before September 1, 1963; fee. Upon the payment of a fee of 50 cents for each name to be searched for chattel mortgages filed under former ORS 86.370 or 86.390, prior to September 1, 1963, the Secretary of State shall furnish to any person applying therefor a statement of any mortgages noted on the indexes created under former ORS 86.380, or if no mortgages are noted, a statement to that effect. All such fees received by the Secretary of State shall be promptly paid to the State Treasurer and placed in the General Fund. [1961 c.726 §409]

 

      86.410 [Repealed by 1961 c.726 §427]

 

      86.420 [Repealed by 1961 c.726 §427]

 

      86.430 [Repealed by 1961 c.726 §427]