If you’re facing a foreclosure in Oregon, the process will likely be nonjudicial (out of court), although the bank can use a more expensive judicial procedure by filing a lawsuit in state court. In this article, you’ll get information about both foreclosure types, as well as your legal rights under federal and state law, which might help you keep your home. (To learn what to do—and what not do—if you’re facing a foreclosure, see Foreclosure Do’s and Don’ts.)
Under federal law, homeowners get certain protections both before and during the foreclosure process. The servicer usually can’t start the foreclosure process until the homeowner is more than 120 days late on payments.
Also, the servicer has to give the homeowner information on ways to avoid foreclosure. Specifically, the servicer must attempt to contact the homeowner by phone no later than 36 days after the homeowner fails to make a payment—and in writing no later than 45 days after missing a payment—to discuss options that might resolve the problem. (To learn more about federal foreclosure laws, including those that protect homeowners after the foreclosure starts, see Federal Laws Protecting Homeowners: Foreclosure Protections.)
A judicial foreclosure begins when the bank files a lawsuit in court. The borrower may respond by filing an answer to prevent the court from entering a default judgment. The action will then proceed through the litigation process. If the court determines that the bank can foreclose, it will enter a judgment and an order allowing the bank to sell the home and to use the proceeds to pay off the debt. (Learn more about how judicial foreclosures work.)
In Oregon, most residential foreclosures are nonjudicial, which means the foreclosure happens without court supervision. Because most foreclosures in Oregon take this route, the rest of this article focuses on those procedures. Here’s how the process works in a nutshell:
Before filing a notice of default, the bank provides notice about participating in a resolution conference (mediation) to the borrower. (Or. Rev. Stat. § 86.729). The bank then records the notice of default in the county records and serves a notice of sale on the borrower 120 days before the sale, either by personal service or mail, along with a “danger” notice that warns of the impending foreclosure mailed on or before the date a notice of sale is served or mailed. (Or. Rev. Stat. § 86.752, § 86.756, § 86.764, § 86.774).
Notice of the sale must also be published in a newspaper for four weeks. (Or. Rev. Stat. § 86.774).
Oregon law provides you with the right to reinstate your loan at any time prior to five days before the sale. State law also limits the amount borrower can be charged in attorneys’ fees or trustee fees. (Or. Rev. Stat. § 86.778).
If you need help avoiding a foreclosure in Oregon, you might qualify for financial assistance from the state’s Hardest Hit Fund program. (To learn more, see Foreclosure Prevention Program in Oregon.)
Some states have a law that allows a foreclosed homeowner to “redeem” (buy back) the home after the foreclosure sale. Oregon law doesn’t provide a post-sale redemption period after a nonjudicial foreclosure. (Or. Rev. Stat. § 86.797). (If you think you will lose your home to foreclosure, read When Do You Have to Leave Your Home When It’s in Foreclosure?)
But state law also says that that the trustee may rescind the foreclosure sale and void the deed within 10 calendar days after the sale if the borrower and bank agreed to a foreclosure avoidance measure that would postpone or discontinue the sale, or if the bank accepts funds to reinstate the loan. (Or. Rev. Stat. § 86.782).
If the total mortgage debt is more than the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to get a personal judgment (called a “deficiency judgment”) against the borrower for this amount.
Oregon law doesn’t permit the bank to get a deficiency judgment after a nonjudicial foreclosure. (Or. Rev. Stat. § 86.797). (For a summary of the deficiency judgment law in Oregon, see Deficiency Judgments After Foreclosure in Oregon.)
You can read Oregon’s foreclosure laws for yourself in the Oregon Revised Statutes (§§ 86.726 through 86.815 for nonjudicial foreclosures and §§ 88.010 through 88.106 for judicial foreclosures).
While federal and state laws establish a structured foreclosure process, mistakes in foreclosures are common. If you think your bank or servicer has violated the law or you want to find out about different ways to fight a foreclosure, consider contacting a local foreclosure attorney. It’s also a good idea to contact a HUD-approved housing counselor if you want to learn about different loss mitigation options.