I live in Oregon and am in the market to buy a house here. I’m considering purchasing one at a foreclosure sale, but I heard that the original homeowners might be able to recover the house even after I buy it at the foreclosure sale. This doesn’t seem right. How could the former owners get the house back after the foreclosure?
Under Oregon law, the former owners (and some other parties as well) could get the home back after the foreclosure by "redeeming" it -- that is, by paying the purchase price that you paid at the foreclosure sale, plus interest and expenses. However, they'll only get the right to redeem the property in the case of what’s called a judicial foreclosure.
We’ll describe below what the different types of foreclosures are and how Oregon’s redemption laws might affect your ability to feel comfortable with your home purchase.
Residential foreclosures in Oregon are often "nonjudicial," a procedure under which the lender does not have to go through state court to foreclose. Judicial foreclosures, in which the lender files a lawsuit in court, are also possible in Oregon.
How does the distinction between a nonjudicial and a judicial foreclosure matter to you as a potential purchaser at a foreclosure sale? As you’ll find out below, if the foreclosure is nonjudicial, the former homeowners won’t have the right to redeem the property, which is good news for you.
Finding out whether the foreclosure is nonjudicial or judicial. To learn which type of foreclosure process the lender is using, go to www.zillow.com. Sign up for a free account and log in. (If you don't have an account, you won’t be able to view all of the foreclosure information.) Find the house you’re interested in by entering the address in the search box. This brings up a map of the neighborhood. Then click on the property address, which is a link to its Web page. Scroll about one-third of the way down and click on “More foreclosure information.” This will tell you whether the foreclosure is nonjudical or judicial. (If you want to call someone for information about the foreclosure, you can probably find the name and phone number of the foreclosure trustee or attorney on this screen, as well.)
In Oregon, there is no redemption period after a nonjudicial foreclosure (Or. Rev. Stat. § 86.797(1)).
If the foreclosure is judicial, the homeowners may redeem the home within 180 days after the sale (Or. Rev. Stat. § 88.106, § 18.964).
If the homeowners get the right the redeem, they would have to pay the amount you paid at the foreclosure sale, plus interest and any amounts you paid for taxes, maintenance, or prior liens (Or. Rev. Stat. § 18.966).
Foreclosed homeowners don't often redeem in Oregon, and you can probably see why. An Oregon homeowner who, perhaps no more than six months ago, was unable to catch up on the home’s mortgage payments, would have to turn around and come up with not only the full purchase price, but additional amounts, too.
It’s also possible for some other party to redeem the home after a foreclosure, such as other creditors who had liens on the house or the IRS (if the agency held a federal tax lien on the home). This doesn’t happen very frequently either.
The IRS gets 120 days (or the allowable period under state law, whichever is longer) to redeem. If the IRS considers redeeming the house, it will send you a notice beforehand.
To find the statutes that discuss the right to redeem after a foreclosure in Oregon, go to Volume 1, Chapter 18 and Volume 2, Chapter 86 and Chapter 88 of the Oregon Revised Statutes.