What is a Foreclosure?
A foreclosure is the legal process by
which a property, pledged as collateral for a debt is sold
to satisfy the debt. When a borrower obtains a loan
from a lender the borrower agrees to two very important
conditions of the loan, and pledges the property as
collateral.
1. The Borrower promises to make
payments according to the terms and conditions of the loan.
2. The Borrower pledges the home as
collateral.
If the borrower fails to make timely
payment, they are then in default of their obligation to the
lender. When the lender accelerates the loan or activates
the Due on Sale Clause, or starts the legal proceedings
against the borrower in order to force the sale of the
property to satisfy the debt obligation, this is know as
Foreclosure.
Foreclosure Process
In the State of Oregon, lenders may
foreclose on deeds of trusts or mortgages in default by way
of either a judicial or a non-judicial foreclosure process.
Judicial Foreclosure
The judicial process of foreclosure, which
involves filing a lawsuit to obtain a court order to
foreclose, is used when no power of sale is present in the
mortgage or deed of trust. Generally, after the court
declares a foreclosure, your home will be auctioned off to
the highest bidder.
In this type of foreclosure, the borrower
may redeem the property by paying the purchase price, with
interest, the foreclosure costs and the purchaser's expenses
in operating and maintaining the property within 180 days
after the date of sale. The borrower must file a notice no
less than two (2) days and not more than thirty (30) with
the sheriff to redeem.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is
used when a power of sale clause exists in a mortgage or
deed of trust. A "power of sale" clause is the clause in a
deed of trust or mortgage, in which the borrower
pre-authorizes the sale of property to pay off the balance
on a loan in the event of the their default. In deeds of
trust or mortgages where a power of sale exists, the power
given to the lender to sell the property may be executed by
the lender or their representative, typically referred to as
the trustee. Regulations for this type of foreclosure
process are outlined below in the "Power of Sale Foreclosure
Guidelines".
Power of Sale Foreclosure
Guidelines
If the deed of trust or mortgage contains
a power of sale clause and specifies the time, place and
terms of sale, then the specified procedure must be
followed. Otherwise, the non-judicial power of sale
foreclosure is carried out as follows:
- A notice of default must be recorded in
the county where the property is located and the borrower
and/or occupant of the property must be served with a copy
of the notice at least 120 days before the scheduled
foreclosure sale date.
- A copy of the notice must be published
once a week for four (4) successive weeks, with the last
notice being published at least twenty (20) days prior to
the foreclosure sale.
- Said notice must contain a property
description, recording information on the trust deed, a
description of the default, the sum owing on the loan, the
lender's election to sell and the date, time and place of
sale.
- The borrower may cure the default at
any time prior to foreclosure by paying all past due
amounts, plus costs.
- The sale must be at auction to the
highest bidder for cash. Any person, except the trustee,
may bid at the sale, which take place between 9:00 am and
4:00 pm at the location stated in the notice of record.
- The sale may be postponed for up to 180
days from the original sale date if at least twenty (20)
days advance notice is given, by mail, to the original
recipients of the notice.
A deficiency judgment cannot be obtained
through a non-judicial foreclosure, but may be pursued when
other foreclosure methods are used.
Quick Facts:
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available:
Yes
- Primary Security Instruments: Deed
of Trust, Mortgage
- Timeline: Typically 180 days
- Right of Redemption: Yes
- Deficiency Judgments Allowed: Yes
Additional Foreclosure Resources
