Oregon Foreclosure Law Summary

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

In Oregon, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or 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.

More information on Oregon foreclosure laws <http://www.leg.state.or.us/billsset.htm> .

Foreclosure Activity Continues To Fall

The "foreclosure wave" many predicted at the end of last year is beginning to look more like a drought, as foreclosure sales dropped significantly in February. Although sales to 3rd Parties, typically investors, were down month-over-month, as a percentage of all sales 3rd Parties purchased a record 37.6 percent of foreclosures, up from 20.3 percent a year earlier, and just 2.2 percent in February 2008.
Further eliminating any possibility of a foreclosure wave for months to come, was a substantial drop in new foreclosure filings in California, Nevada, and Washington. Arizona saw a modest increase in foreclosure starts, while Oregon jumped a dramatic 39.4 percent. Despite the size of the increase, it simply offset a drop in January, and showed little change in comparison to earlier months. Nevada remains far below the average number of foreclosure starts; and the dramatic changes to their foreclosure laws will likely drag out the Nevada foreclosure process for years to come.
Unlike years past, February's drop in sales was not due to the short month. Thanks to the Leap Year, California had only one less business day than usual in February (because of the Abraham Lincoln's birthday observation). The other states do not observe Lincoln's birthday, and so had the same number of business days as other months.

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Credit Update

When it comes to repairing credit and applying for a home loan the underwriting philosophy can be summed up in one phrase. A period of financial difficulty in the past does not necessarily make the risk unacceptable if a good payment record has been maintained since. The key after going through financial hardships is to establish new credit and to maintain it. This can’t be stressed enough.
Government agencies that underwrite and insure loans have timelines after a specific credit altering event before a potential homebuyer can be approved for a home loan. As an example, with foreclosures, deed-in-lieu and short sales the time frame with FHA is 3 years. For bankruptcies the time frame is 2 years. Conventional loans are 2 to 3 years longer in most cases. There are extenuating circumstances that would allow the borrower to be approved in a shorter time period but those approvals are very difficult to come by.
Sometimes borrowers do not have any credit which also can make getting a home loan challenging. The standard industry guidelines request everyone to have a minimum of 12 months of credit history on three traditional credit references. These would be auto and student loans along with credit cards. When a borrower does not meet the minimum standard then FHA allows lenders to establish a nontraditional credit history.
If the borrower does not have any revolving or installment debt on their credit report the lender is required to substantiate payments to other credit references. These may include: rental housing, gas company, electricity, water, landline home telephone service and cable TV. Twelve months of cancelled checks are generally requested. In addition, insurance bills, furniture payments, medical bills and cell phone services may also be utilized.
Establishing and maintaining good credit has become more important than ever before when applying for a home loan.