The Foreclosure Process | ||
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The most common form of real estate financing in Oregon is a note and trust deed, also called a mortgage. The process of foreclosure on a trust deed is known as nonjudicial foreclosure which means the beneficiary does not go to court to foreclose on the property.
Missed Payments:
In Oregon, a homeowner must fall 90 days, typically three payments, behind on their mortgage before the lender can legally initiate the foreclosure process. So if you have missed fewer than three payments, you're not actually in foreclosure. This phase is very important, however, because you have to go through it before the foreclosure process can start, and this is the phase in which you as a homeowner have the most options at your disposal.If you are behind on your payments, this is the best time to rework your finances, to call your lender to work out a solution, and to put your home on the market for a fast sale.
Pre-Foreclosure:
Once a homeowner's mortgage payments have not been made for at least 90 days, the lender records a public notice that the owner has defaulted on their mortgage, and then serves or mails the notice to the homeowner. In Oregon this notice is called a Notice of Default (NOD). This NOD also sets a date for the trustee sale or auction.In Oregon, this pre-foreclosure stage or grace period gives a homeowner 120 days to "cure" the default. To cure the default, the homeowner can either work out an arrangement with the lender, sell the property or come up with the money to bring the note current
The Trustee Sale/Auction:
If the default is not cured within three months after the Notice of Default is issued, the lender or their representative (the foreclosure trustee) files a Notice of Trustee Sale that is recorded with the County Recorder's Office, delivered to the homeowner, posted on the door of the property and published in a local newspaper -- to make sure everyone knows when and where the auction will be.This auction is typically held on the steps of the county courthouse. In Oregon, the homeowner has the "right to redemption" (he can come up with the outstanding cash and stop the foreclosure process) up to five days prior the home being sold at the auction.
At the auction, the home is sold to the highest bidder. These auctions require cash payment from third-party buyers and few buyers can afford to bring enough cash to the courthouse to pay in full. As a result, many lenders simply buy back the property at the auction.
Post-Foreclosure:
If a third party has not purchased the property at the trustee sale, the lender takes ownership of it. The property becomes what is called a bank-owned property, also known as REO, short for Real Estate Owned (by lender).REOs are sold in one of two ways. Most often, they are listed with a local real estate agent for sale on the open market; they are usually put on the multiple listing service (MLS) so that local buyers' agents can show and sell the property to a qualified buyer for a commission. Some lenders prefer to sell their REO properties at an REO liquidation auction, often held in auction houses, at convention centers or at the property.
Feel free to give us a call with your questions about foreclosures or send us an email.
Next Foreclosure Article: Understanding Short Sales
