Oregon Law Regarding a Home Foreclosure
In the United States, individual states exercise the power to regulate property foreclosures. States can operate as lien theory or title theory, regarding mortgage loans. Oregon is a title theory state, and the security instrument signed for the loan is called a deed of trust. This document will place the property used as collateral in a trust until the loan is paid in full. The terms of the deed of trust signed for an Oregon property decides if a judicial foreclosure will be needed or not.
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Preforeclosure
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The preforeclosure period is considered the time between the account becoming delinquent and the time the lender begins the foreclosure process. Some lenders will allow borrowers a grace period for late payments. This is often five to 15 days after the due date. When the borrowers fail to make a payment by the end of the grace period, if one exists, the account is flagged as delinquent. Depending on the lending company's process, the foreclosure process will begin 30 to 90 days after this time.
Judicial Foreclosure
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Two types of foreclosures can occur in Oregon: judicial and nonjudicial. If no power-of-sale clause is included in the security instrument signed by the borrowers, the lender must proceed through the courts. This process begins by filing a lis pendens complaint against the borrowers. Ultimately, the court will issue a ruling for or against the borrowers. If the lender successfully wins the foreclosure complaint, the borrowers will have the chance to remit the payment requested by the court. If they cannot pay what is owed, the property will be sold at auction.
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Nonjudicial Foreclosure
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If the deed of trust contained a power-of-sale clause, the court system is not needed to begin foreclosure. This clause enables the trustee to sell the property at auction to recoup the lender's loss, if all lawful procedures are followed. First, the trustee must file a notice of default on pubic record with the county recorder. Second, the borrowers must be served with the notice of default. In Oregon, this must occur at least 120 days before the proposed sale date. After this, the trustee must advertise the sale in a public newspaper.
Trustee Sale and Redemption
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If the borrowers cannot repay the lender before the sale, the sale will proceed as scheduled, in auction format, where the highest bidder wins. Most often, the starting bid begins at the total amount owed to the lender based on the loan amount, plus interest and fees. The only right of redemption available in Oregon is after a judicial foreclosure procedure. With this, the borrowers have up to 180 days after the foreclosure sale to repay the lender and reclaim ownership of the property.
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