The state of Oregon recently amended its foreclosure laws. Among other things, as of January 1, 2020, a new law (SB 11) requires anyone who buys a property that's in a judicial foreclosure to give the seller (the homeowner) a notice about the loss of certain rights—including the relinquishment of redemption rights—if they go through with the sale.
The new law also requires foreclosure documents to include a general warning about being careful when fielding offers from third parties who offer to buy certain homeowner rights, like the right to surplus funds.
A "redemption period" is an amount of time after a foreclosure sale during which a foreclosed homeowner, or sometimes others, may reclaim the property by:
In some states, the homeowner can sell the right to redeem the property to a third party. (To learn more about redemption periods in general, see Right of Redemption After Foreclosure.)
Sometimes, scammers will offer to buy redemption or other rights in a foreclosure under the pretense of helping the homeowners either keep the home or get some money out of the process. But redemption rights have value and whoever owns these rights not only gets the right to repurchase the home after the sale, but also generally gets any excess proceeds that the sale generates.
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.
No redemption period following a nonjudicial foreclosure in Oregon. In Oregon, there is no redemption period after a nonjudicial foreclosure. (Or. Rev. Stat. § 86.797(1)).
Right to redeem after a judicial foreclosure in Oregon. If the foreclosure is judicial, the homeowners may redeem the home within 180 days after the sale. (Or. Rev. Stat. § 88.106, § 18.964).
Because nonjudicial foreclosures don't have a redemption period, the following requirements, which take effect on January 1, 2020, apply in judicial foreclosures only.
If you sell your home—say, in a short sale—during a foreclosure between the time when the complaint is filed and before the end of the redemption period, the purchaser must provide you with a notice. The notice must advise you that you're relinquishing certain interests in the property, such as your right to redeem the property and the right to surplus funds after a foreclosure sale. The notice must also tell you to exercise care and that you should consult with an attorney.
The complaint to foreclose must include a warning that the homeowner might get offers from people who want to buy the redemption rights or other rights. The notice must state that you should be careful about those offers because, by selling these rights, you might be giving up the right to any surplus funds.
The new law also requires the sheriff, when posting notice about the sale on the Internet, to include a warning for homeowners about selling the right to excess funds. The notice must state that you should be careful about selling this right.
If you're facing a judicial foreclosure in Oregon and want to learn more about redemption rights, consider talking to a local foreclosure attorney. If you need information about different ways to avoid a foreclosure, consider talking to a HUD-approved housing counselor.
Effective date: January 1, 2020