Foreclosures in Oregon
What is foreclosure?
Foreclosure is the legal process a lender initiates to force the sale of
a mortgaged property when the borrower has not met the terms of the mortgage.
Foreclosures can also be initiated by others having a lien on your property
such as the county if you don't pay property taxes.
How does the foreclosure process work?
There are two common types of foreclosure processes in Oregon - judicial
and non-judicial. The most regularly used process in this state is the non-judicial,
where the document securing the loan is a deed of trust. The parties involved
are the financial institution or beneficiary, which is the institution you
owe the money to; the trustee, which is the neutral party to whom you conveyed
or transferred temporarily the title of your house to be held in trust until
your loan is paid off; and you as a borrower or trustor/grantor.
One of the most important components of the foreclosure process is the proper
procedures of notification. For purposes of illustration, we will briefly
discuss the process of foreclosure by "advertisement and sale,"
which will start if you, the homeowner, are not making your mortgage payments
as agreed and they have been continuously late for at least 60 to 90 days.
After trying to contact you to have you bring your mortgage payments current,
the financial institution will give instructions to the trustee to start the
foreclosure process or, in lending jargon, "accelerate" the loan.
First, the trustee will send out a notification of sale to you and all parties
with an interest in the property. This notification lets you know your home
is in the foreclosure process and it will be filed in the county or counties
where your house is located. At this point the information about the loan
in default and the foreclosure process becomes public information.
The notification of sale should include the following:
- Your name(s) and address, the names of the trustee and financial institution.
- The legal description of the property and often the commonly known address
- Information about the records within the county where the notification
of sale has been recorded
- The reason why your house is in foreclosure
- The total amount(s) owed
- The decision made to sell the property to satisfy the debt
- The date, time and place of the sale
- Your rights under state law to stop the foreclosure process if you bring
your loan current, including paying expenses incurred by the financial institution
to cover the foreclosure process.
You have the right to reinstate your loan by bringing your loan current,
in addition to paying the expenses mentioned above, but you should do this
no later than 5 days before the sale (auction date) of the house.
At least 20 days prior to the sale of the property, the trustee should publicize
for the last time the sale/auction in a local newspaper in the county or counties
where the property is located. The publication will also include the date,
time and place where the sale of the property will take place.
The buyers of the property will be entitled to take possession of the property
ten (10) days after the auction date. Anyone interested, including yourself,
may present a bid to buy the house.
Effective June 9, 2008, a new state law – the Mortgage Rescue Protection
Act – requires trustees to provide homeowners a “notice of home
loss danger.” The trustees are required to provide this notification
to the homeowner at the same time or before the required notification that
the house is in foreclosure.
The purpose of the notice is to promptly and clearly notify homeowners who
occupy the property as their primary residence, about the risk of losing their
homes and, if possible, what homeowners could do to try to save their homes.
The notification also should include a toll-free number where homeowners can
call to get information about approved non-profit organizations that provide
foreclosure prevention counseling programs in different areas of the state.
Also, the law and the notice provide homeowners with the opportunity to seek
legal assistance if they meet the definition of low income under federal guidelines.
For more information on foreclosure prevention counseling and legal assistance,
please see the resources section of this publication or call the telephone
numbers provided in the required notifications. If you receive such notification,
we strongly recommend calling the toll-free number provided and seek help
from an approved counselor or legal assistance in your area. Also, you can
find the contact information in the resources section.
Also, if you do not pay your annual property taxes to the county or counties
where your house is located, after three years of unpaid property taxes, the
county will start the foreclosure process.
Proper procedures of notification must be followed. You will receive in your
annual property tax statements the notification about when your house is subject
to foreclosure.
What if my house sells for less than I owe?
If your house is sold at auction or is transferred to the lender and the
amount for which it was sold or transferred is not enough to cover the balance
of your loan, the financial institution, with certain exceptions, may have
to cancel or forgive the balance between the fair market value of the house
and the amount you owe. This balance or deficit is also known as "cancellation
of debt." The institution will file the applicable IRS forms with the
amount(s) owed and other relevant information. You will receive a copy of
the applicable 1099 form(s) in reference to the amount "forgiven."
With certain exceptions, you may have to include this amount as part of your
income when you file your income taxes. Talk to a tax adviser about the potential
impact on your tax filings.
A recent law, the "Mortgage Forgiveness Debt Relief Act" amending
the Internal Revenue Code, provides with additional exclusions for some homeowners
who lost their homes, if occupied as their primary residence, to foreclosure
and the lender canceled or "forgave" a debt secured by the house.
This new law can be applied for residential discharged debts of up to $2 million
($1 million if married filing separately) made on or after January 1, 2007,
but before January 1, 2010.
For additional information please see our resources section for the IRS web
site or contact your tax advisor.
How can I save my house?
Contact your lender right away to talk about what options you might have.
A HUD-approved nonprofit foreclosure counselor can also help you sort through
your options. Click here to find
a counselor in your area.
Some of your options may include:
• Forbearance
Ask your lender if you can reduce or suspend your monthly payments for a
short period of time. This option may be available if you, for example,
are expecting funds that would help bring your loan current.
• Mortgage Modification
With this option, you could refinance or extend the term of your loan to
lower your payments.
• Partial Claim
This allows you to use a one-time payment from the FHA insurance fund to
bring your mortgage current.
• Pre-foreclosure sale
This option may allow you to sell your prop¬erty for an amount lower
than your mortgage balance and avoid foreclosure.
• Deed-in-lieu of foreclosure
With this option, you may be able to “give back” your house to
the lender and avoid foreclosure.
You also may qualify for the Making Home Affordable Plan,
part of President Obama’s economic stimulus package. Scroll down for
more information.
For homeowners 62 or older another option maybe a loan program
called reverse mortgage. There are various types of reverse mortgages, the
most common being the Home Equity Conversion Mortgage (HECM) administered
by the Federal Housing Administration (FHA,) and the HomeKeeper, which is
a Fannie Mae loan product. These type of loans, unlike a regular mortgage,
does not to have to paid back unless the house is no longer occupied as primary
residence or is sold. It is very important that you seek counseling prior
to obtain this type of loan, because it may not be the type of loan you are
interested in.
Making
Home Affordable Plan
The Making Home Affordable Plan, a new initiative that is
part of the President's economic stimulus plan, includes two programs for
homeowners who occupy their houses and use them as a primary residence. There
are other conditions homeowners must meet to qualify. These programs are called
the Home Affordable Modification and the Home Affordable Refinance. It is
important to note, these options available to eligible homeowners are free!
Please be sure to explore other relief programs and options
available for homeowners who are at risk of losing their homes to foreclosure.
The following links provide more information:
Making Home Affordable Overview
www.cbs.state.or.us/external/dfcs/ml/foreclosure/MHAP.pdf
Making Home Affordable Plan
www.makinghomeaffordable.gov
FannieMae
http://loanlookup.fanniemae.com/loanlookup/
FreddieMac
https://ww3.freddiemac.com/corporate/
1-800-FREDDIE
Resources
Tax information
For property tax information in Oregon counties:
bluebook.state.or.us/local/counties/counties.htm
Department of Revenue:
(503) 378-4988
www.oregon.gov/DOR
Federal tax liens for unpaid taxes:
www.irs.gov/businesses/small/article/0,,id=108339,00.html#Notice
“Cancellations of Debt” or CODs as a result of a home foreclosure;
formulas to calculate CODs:
www.irs.gov/newsroom/article/0,,id=174034,00.html and
www.irs.gov/faqs/faq4-4.html
Construction or "mechanic's liens:"
Construction Contractors Board:
(503) 378-4621
www.oregon.gov/ccb
Mortgage payments rights information:
Department of Housing and Urban Development (HUD)
www.hud.gov/offices/hsg/sfh/nsc/nschome.cfm
Federal Trade Commission
Mortgage servicing publication
www.ftc.gov/bcp/edu/pubs/consumer/homes/rea10.shtm
Loan programs:
1-800-CALL-FHA
http://portal.hud.gov/portal/page?_pageid=33,717441&_dad=portal&_schema=PORTAL
For information on Fannie Mae's "HomeSaver Advance" loan program
www.efanniemae.com/sf/servicing/homesaveradvance.jsp
For information on the "Hope for Homeowners - H4H"
http://portal.hud.gov/portal/page?_pageid=73,7601299&_dad=portal&_schema=PORTAL
Reverse Mortgages
Information about the Home Equity Conversion Mortgage (HECM)
www.fha.gov/reverse/index.cfm
To obtain information about Fannie Mae's HomeKeeper loan program
please call 1-800-7Fannie (1-800-732-6643) or email resource_center@fanniemae.com.
Foreclosure counseling agencies:
800-SAFENET or 800-723-3638
www.dfcs.oregon.gov/ml/foreclosure/counselors.html
Foreclosure Hotline:
888-995-HOPE
(888-995-4673)
Foreclosure scams:
To report foreclosure scams:
State Attorney General Office:
(877) 877-9392
www.doj.state.or.us
Freddie Mac - Avoid Fraud
a video explaining how foreclosure scams work
www.youtube.com/AvoidFraud
Verify Oregon mortgage lender licenses/registration
Oregon Division of Finance and Corporate Securities (DFCS)
www4.cbs.state.or.us/ex/dfcs/dfcslic/mortgage_lender/
File a complaint against a lender
Banks
www.cbs.state.or.us/dfcs/complaint.html#banks
Credit Unions
www.cbs.state.or.us/dfcs/complaint.html#cu
Mortgage companies
www.cbs.state.or.us/dfcs/complaint.html#ml
Other resources:
Housing Connections
www.housingconnections.org
Dial 2-1-1
www.211info.org
The Division of Finance & Corporate Securities has a
free publication for consumers "Foreclosure, you can avoid it."
For a free copy, please contact:
(503) 378-4140 Toll-free (866) 814-9710, or write to:
DFCS
Consumer Information Program
350 Winter Street NE, Room 410
Salem, Oregon 97301
You also can download the brochure at:
www.dfcs.oregon.gov/pdf/3496e.pdf
Statutes
Foreclosure- related Oregon Revised Statutes
Chapter 86
www.leg.state.or.us/ors/086.html
Chapter 87
www.leg.state.or.us/ors/087.html
Chapter 88
www.leg.state.or.us/ors/088.html
Collection of property taxes and delinquent taxes
Chapter 311
www.leg.state.or.us/ors/311.html
