If you find yourself facing a property foreclosure (or even threatened by the prospect of it), it’s absolutely critical to understand how the foreclosure process works in Oregon & Washington.
If you’re in danger of defaulting on your mortgage, it’s important to contact your lender immediately and explore all available options. You may be able to work out a repayment plan or get a temporary extension on your loan. If you’re unable to keep up with your payments, don’t wait for the foreclosure process to begin – contact a lawyer or housing counselor right away.
If you’ve already received a notice of foreclosure, you should act quickly to protect your rights. You may be able to negotiate with the lender or ask for a postponement of the sale.
Understanding the Foreclosure Process in Oregon
What is foreclosure anyway?
Foreclosure is a process by which a lender, typically a bank, recovers possession of a property after the borrower has failed to make loan payments. Foreclosure proceedings can be lengthy and complex, so it’s important to understand your rights and options if you find yourself facing foreclosure.
By no means is foreclosure fun, but it’s not the end of the world.
By knowing how foreclosure works in Oregon & Washington… you’ll be much better equipped to navigate it well and come out on the other end in the best position possible.
Stages of the Foreclosure Process
Foreclosure works differently in different states around the country, but there are a few stages that are important to any foreclosure process.
The property foreclosure process usually goes through the following stages: pre-foreclosure, foreclosure auction, and REO.
Pre-foreclosure is when the homeowner misses a payment or two and the lender files a notice of default. The homeowner then has a set amount of time to cure the default (ie. catch up on missed payments) before the property goes into a foreclosure auction.
There are generally two ways different states use to foreclose upon a property: judicial sale or non-judicial (power of sale).
Connect with us through our contact page or by calling us at 503-765-9326 to have us walk you through the specific foreclosure process here in Portland.
Under Judicial Foreclosure:
· Your mortgage lender must file suit in the court system.
· You’ll get a letter from the court demanding payment.
· You’ll have 30 days to bring payment to court to avoid foreclosure (sometimes that can be extended).
· If you don’t pay after this period, a judgement will be entered and the lender can request the sale of your property – generally through an auction.
· Once the property is sold, the local sheriff serves an eviction notice and you must vacate the property.
Under Power of Sale (Non-Judicial) Foreclosure:
· The lender serves you with a notice demanding payment, and the courts are not required – although there may be some level of judicial review.
· After the established waiting period has gone by, a deed of trust is drawn up and control of your property is transferred to a trustee.
· The trusteed can then sell your property to the lender at a public auction (notice must be given).
Foreclosure Auction – What, When & After?
A foreclosure auction is when the property is put up for sale to the highest bidder. If there are no bids that meet the lender’s reserve price, then the property will go back to the lender and go into REO status.
REO is short for real estate owned, which means that the property has gone back to the lender after it failed to sell at auction. The lender will then list and market the property for sale to try and get their money back.
If an action is successful, the amount of the loan is paid off with the proceeds from the sale of the property.
Sometimes, if the sale of the property isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower. A deficiency judgement is where the bank gets a judgement against you, the borrower, for the remaining funds owned to the bank.
Some states limit the amount owed in a deficiency judgement to the fair value of the property at the time of the sale, while other states will allow the full loan amount to be asssesed.
Here’s a great resource that lists the state by state laws when it comes to deficiency judgements.
Thinking Ahead
It’s important to be proactive if you’re at risk of a property foreclosure. You should always call up your bank and try to negotiate a payment plan before the situation gets too far out of hand. If that doesn’t work, or if you need help finding a solution, it’s best to work with a local, reputable real estate firm like us at Bridgetown Home Buyers. Foreclosure auctions can be risky and may result in lower prices than what the property is worth.
An experienced invester can help you by negotiating directly with the banks – or even eliminate the prospect of a foreclosure, even if your home is worth less than you owe. We here at Bridgetown Home Buyers have multiple ways of purchasing your property they may help you out.
If you’re currently facing foreclosure and need to sell a property near Portland, please let us know. We can help!
We buy houses in Portland, Oregon over to Central Oregon and up to Washington, just like yours from people who need to sell fast!