Home Foreclosure Concepts You Must Know

Foreclosure means a home is at risk.  Most of the time, this is a home that serves as the Borrower’s primary residence.  In Portland, foreclosures can follow two very different processes – Judicial Foreclosures and Non-Judicial Foreclosures.  Over 95% of the foreclosures started in Portland in 2022 are Non-Judicial, so that this article will focus on that process.

Keep in mind that before any home foreclosure can commence, the lender must (with limited exception) have gone through the Oregon Foreclosure Avoidance Program (OFAP).  The “OFAP,” as we call it, is a good opportunity to learn information about the loan, the lender, and what loss mitigation opportunities may exist.

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How Do Foreclosures in Portland Work?

95% of the foreclosures in Portland follow the “nonjudicial” process.  In this process, the lender must strictly follow specific out-of-court steps outlined in the Oregon statutes. This law allows the lender to sell a property at a public auction after having advertised that Sale to the public. That’s right – foreclosure is very public, and some websites advertise these foreclosure auctions.  That is why, if you are facing a foreclosure, you will likely get dozens of letters from investors trying to buy your home at a steep discount!

A Portland foreclosure is initiated by filing documents in the County Recorder’s Office (not the Court) in either Multnomah, Clackamas, or Washington County.  If you live in Lake Oswego, you probably know that most of the city is in Clackamas County, but the Northern parts of the city are in Multnomah, and the Western parts are in Washington County.

What Should I Know When Facing a Foreclosure in Portland, OR?

Here are ten things you must know when facing a non-judicial foreclosure:

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  1. Foreclosure is a legal process to force the transfer of ownership of real property out of the name of the Homeowner into the name of a Lender, lienholder, or new purchaser.
  2. Nonjudicial Foreclosure is an out of Court process governed by strict compliance with Oregon statutes.  There is no Judge or Court to resolve disputes between the Homeowner and the Lender.  As a result, getting information or action from the Lender or Loan Servicer is often challenging.
  3. Nonjudicial foreclosure is initiated by the filing of a “Notice of Default and Election to Sell” (commonly referred to as a “NOD”) by the Lender’s agent called the “Trustee.”
  4. The NOD will contain a sale date at least 120 days after the NOD is issued.  On that date, a public auction will be held, and the property will be sold.  The NOD is frequently published on various websites to develop an interest in the auction.  
  5. The Homeowner can stop the Sale if, more than five days prior to the Sale, the Homeowner catches up on all missed payments, costs, and fees incurred by the Lender.  To do this, you need to obtain a “Reinstatement Quote” from the lender and follow their specific rules on how to pay the loan current.
  6. The sale date can be pushed back from the original date up to 6 months if the Trustee has reason to do so.  Usually, this is done in 30-day increments, and often, the Trustee will not announce a set over until the actual day and time the Sale is supposed to occur.
  7. The Sale is a public auction, and the lender is allowed to “credit bid” what they are owed.  Anyone else must have cash or be prequalified to bid by the Trustee.  
  8. The sale price usually equals the total amount of debt owed on the first mortgage note, including all fees and costs.  If the sale price is HIGHER than all mortgages and liens on the property, then the Homeowner should pay the difference.
  9. Once completed, the Borrower will no longer have any right to possession of the property and must move out of the property and remove all his/her personal belongings within ten days following the sale or face eviction.
  10. The Borrower has no right to redeem (buy back) the property after the Sale.  The Trustee will issue a new Deed in the name of the purchaser.

Seek Legal Advice for Foreclosures in Portland, OR, Now!

Consider speaking with a Portland foreclosure lawyer if you have inquiries regarding Oregon’s foreclosure procedure, wish to learn about possible defenses to a foreclosure, and perhaps contest the foreclosure in court. Keep in mind that the way courts and other authorities interpret and apply the law might change.

If you need help with judicial foreclosure, want to stop garnishment or repossession, or get help with filing bankruptcy,  contact Michael D. O’Brien & Associates to schedule your free consultation!

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