Update on Mandatory Forbearances and Foreclosure Moratorium During the Coronavirus Crisis: On June 30, 2020, Oregon Governor Kate Brown signed House Bill 4204 into state law. This new law requires lenders to offer forbearances to Oregon homeowners affected by the coronavirus (COVID-19) pandemic. The law also prohibits foreclosures during the emergency period.
Before 2012, Oregon foreclosures were almost always nonjudicial (out of court). In 2012, though, mortgage companies and banks in Oregon began filing more and more judicial foreclosures through the state courts. The main reason for this shift was that the state implemented a mediation law that applied to nonjudicial foreclosures only—not judicial ones. So, banks started using the courts to foreclose to avoid the mediation program.
Subsequently, the Oregon legislature expanded the foreclosure mediation program to include judicial foreclosures. As a result, banks have generally shifted back to using the nonjudicial foreclosure process. Though, you might still face a judicial foreclosure in Oregon.
Because most foreclosures in Oregon are nonjudicial, this article focuses on those procedures. (If you're facing a judicial foreclosure and want to learn about those procedures, read What Is Judicial Foreclosure?)
Under federal law, in most cases, a loan servicer must wait until the borrower is over 120 days' delinquent before officially starting the foreclosure process. (12 C.F.R. § 1024.41). The 120-day preforeclosure period is an appropriate time to submit an application to your servicer asking for a loss mitigation option (an alternative to foreclosure).
In most cases, before the bank can foreclose a residential deed of trust in Oregon—either nonjudicially or judicially—it must first offer the borrower the opportunity to have a face-to-face mediation meeting (called a “resolution conference”) with the bank and a neutral mediator. The purpose of the meeting is to explore options to avoid a foreclosure. (Or. Rev. Stat. § 86.726).
The bank will send a notice about the resolution conference to the borrower. To participate in the resolution conference, the borrower must, among other things, agree to the meeting, meet with a housing counselor beforehand (unless the homeowner can't get an appointment before the conference), and pay a fee. The conference will occur within 75 days after the bank sends the notice. (Or. Rev. Stat. § 86.729).
If you don't work out an alternative to foreclosure at a resolution conference or otherwise, the foreclosure will proceed. Under Oregon law, the trustee (the third party that handles nonjudicial foreclosures) has to provide three types of foreclosure notices: a notice of default, a notice of sale, and a “danger” notice.
Notice of default. To begin the foreclosure, the trustee records a notice of default in the county records. (Or. Rev. Stat. § 86.752).
Notice of sale. After recording the notice of default, and at least 120 days before the sale, the trustee must serve or mail a notice of sale to the borrower. (Or. Rev. Stat. § 86.764). The trustee must also serve the notice of sale to the occupant of the property at least 120 days before the sale. The trustee must attempt to serve the occupant personally and, if the first attempt fails, post the notice in a conspicuous place on the property. The trustee must make a second attempt to serve the notice to the occupant and, if that attempt fails, post the notice in a conspicuous place on the property again. The trustee must make a third attempt and, if that attempt fails, mail a copy of the notice to “occupant” at the property address. (Or. Rev. Stat. § 86.774). Also, the trustee must publish the notice of sale in a newspaper. (Or. Rev. Stat. § 86.774).
Danger notice. On or before the date the trustee serves or mails the notice of sale, the trustee must mail what’s called a danger notice to the borrowers. This notice warns the borrowers that they’re at risk of losing the property to foreclosure and includes information about what the borrower can do to try to save the home. (Or. Rev. Stat. § 86.756).
"Reinstating" is when a borrower catches up on the defaulted loan's missed payments, plus fees and costs, to stop a foreclosure. Oregon borrowers can reinstate at any time prior to five days before the sale. (Or. Rev. Stat. § 86.778).
In some states, a foreclosed borrower may redeem the home within a specific amount of time after the foreclosure sale. In Oregon, however, the borrower doesn't get a post-sale redemption right after a nonjuducial foreclosure. (Or. Rev. Stat. § 86.797).
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a "deficiency." Some states allow the foreclosing bank to seek a personal judgment, which is called a "deficiency judgment," against the borrower for this amount. Other states prohibit deficiency judgments with what are called anti-deficiency laws.
In Oregon, deficiency judgments are not allowed following nonjudicial foreclosures. (Or. Rev. Stat. § 86.797).
This article contains citations to Oregon’s foreclosure laws so you can read the statutes yourself. Keep in mind that statutes change, so checking them is always a good idea. (If you need help finding the statutes, see Finding Your State’s Foreclosure Laws.) How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting a lawyer if you’re facing a foreclosure.
You should also consider talking to a lawyer if you want to get more information about foreclosure procedures in Oregon or find out about potential defenses to a foreclosure. Moreover, it's a good idea to make an appointment to speak to a HUD-approved housing counselor to learn about different loss mitigation options.