Losing one’s home to foreclosure can be extremely stressful. For some distressed homeowners, however, the sale of their home in a foreclosure auction does not necessarily mean their concerns are over. In some states, homeowners may be liable for deficiency judgments after foreclosure. If you’re facing foreclosure, determining whether your state allows deficiency judgments will help you decide what the best options are for you.
If a home is sold at a foreclosure sale for less than the amount owed on the mortgage, the difference is called the deficiency. In some states, the lender may file a lawsuit to collect the deficiency. A deficiency judgment is a money judgment as a result of such a lawsuit, holding a borrower personally liable to repay the deficiency.
To find out whether deficiency judgments are allowed in Oregon, you should look to Oregon’s laws regarding deficiency judgments, which can be found in Oregon Revised Statutes (Ore. Rev. Stat.) Sections 86.157 and 86.797. A summary of Oregon’s laws governing deficiency judgments can be found below.
Oregon law prohibits lenders from seeking deficiency judgments from the borrower after:
In addition, Oregon prohibits lenders from seeking a deficiency judgment after a short sale if the lender reports to the Internal Revenue Service that it has cancelled all or part of the borrower’s debt as a result of the short sale and provides the borrower with a copy of the report. Ore. Rev. Stat. § 86.157.
Oregon does not have specific statutes regulating deficiency judgments after a deed in lieu of foreclosure. Thus, the specific deed in lieu of foreclosure agreement negotiated by the borrower and the lender will determine whether the borrower remains liable for any balance owed on the mortgage. To be safe, borrowers should get from their lenders a written release of liability for any deficiency.