Understanding the foreclosure process in Oregon is an important part of navigating your own home foreclosure.
Before we dive in…
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, generally after the borrower stops making payments.
Foreclosure is no fun. But just know that it’s not the end of the world.
When you know how foreclosure in Oregon works… this page will arm you with the knowledge to make sure you navigate it well and come out the other end as well as possible.
The Basic Stages of A Foreclosure
There are a few stages that are important to any foreclosure process.
Foreclosure works differently in different states around the country.
The two ways lenders can use to foreclose upon a property are a judicial sale or non-judicial sale.
Connect with us by calling 503-383-1686 or through our contact page to have us walk you through the specific foreclosure process here locally in Oregon.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment. If you start getting these notices, pay attention to them! You can usually prevent a foreclosure even once the process has started, but ignoring the notices is the worst thing you can do.
Under Judicial Foreclosure:
- The mortgage lender files a lawsuit to receive a court order to foreclose on the property.
- You’ll get a letter from the court demanding payment (once again, don’t ignore this!).
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Even if the property is sold, you will have 180 days to redeem it by paying the purchase price, interest, foreclosure costs, and the purchaser’s operating expenses.
- In order to redeem a property, you have to file a notice to redeem within 30 days of the sale.
- If the property is not redeemed, the Sheriff serves an eviction notice and forces you to immediately vacate the property.
Non-Judicial Sale (Power of Sale Foreclosure):
- This type of foreclosure can be used when your mortgage agreement has a specific clause in which you have agreed to the sale of the property to satisfy the debt if you default.
- A notice of default is filed with the county. You are served with a copy at least 120 days before the sale is scheduled.
- You can cure the default at anytime by bringing the payments up to date (including any fees assessed).
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The property must be sold at auction for cash to the highest bidder.
- If the lender wants to take possession of the property, they can advance the opening bid up to the total amount owed, but no more than that. This is a common practice, as lenders do not want to lose their investment by having the house sell for less than is owed. Other bidders can increase the bid as high as they want.
Anyone who has an interest in the property must be notified during either type of foreclosure.
For example, any contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the sale proceeds.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
In Oregon, the bank cannot seek a deficiency judgment if the house was sold in a non-judicial foreclosure. Non-judicial foreclosures are the most common, but it is possible for a deficiency judgement to be awarded in some judicial foreclosures.
If the bank completes the foreclosure process, it will be reported to the credit bureaus, which will affect your credit score. Because of this, it’s best to avoid a foreclosure. When you realize you’re struggling to make your mortgage payments, you need to make a plan. There are a number of resources to help on our avoiding foreclosure page.
In addition to the resources on that page, your bank should also have programs to help. Call your bank and ask to speak to someone about mortgage assistance.
Ultimately, if you are not able to make your mortgage payments or modify your loan you are going to lose your house. Selling your house may be your best option. If you need to sell a property near Salem, we can help you.
Give us a call anytime 503-383-1686 or
fill out the form on this website today!
Another Foreclosure Resource For Salem Oregon HomeOwners: