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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 loan agreement. Foreclosures can also be initiated by others having a lien on a property such as the county if property taxes are not paid. 

How does the foreclosure process work?
There are two types of foreclosure processes in Oregon when a mortgage loan is in default — judicial and nonjudicial.

Oregon foreclosure laws require financial institutions to request a face-to-face meeting with the homeowner before starting either foreclosure process. This meeting is also known as the resolution conference under the Oregon Foreclosure Avoidance Program. Financial institutions not starting more than 175 foreclosure actions in a prior year do not have to comply with the resolution conference requirements before starting the foreclosure process. For information about Oregon’s Foreclosure Avoidance Program, go to https://www.foreclosuremediationor.org​.

In a judicial foreclosure, the servicer or its representative takes you to court to recover the money you owe by selling the house. Both the servicer and its representative act on behalf of the owner of the loan, commonly known as the investor.  

If you receive a Notice of Hearing or any notice to appear in court regarding the sale of your house, contact an attorney as soon as possible. Visit the Lawyer Referral Services page from the Oregon State Bar: http://www.osbar.org/public/ris/​. Before you receive this Notice of Hearing, your servicer may send you a notification informing you of its intention to start the foreclosure process. 

The judicial process starts when the servicer or its representative requests the circuit court authorize the sheriff to conduct the sale of the house. The document securing the loan can be a Deed of Trust. If you receive a complaint and summons to sell your home, contact an attorney as soon as possible because you only have thirty days in which to respond to the lawsuit by filing an answer with the court.  If you fail to respond to the lawsuit within the 30-day period, the lender is likely to request that the court enter a judgment by default against you. The notice will include the name of the servicer asking for the property’s sale, the property address, the reason for the request, and the time and location of the hearing. The judge will decide if the servicer is entitled to have the house sold. If the judge rules for the servicer, the judge will issue an order called writ of execution. In a judicial foreclosure, the former homeowner has the right to recover the house within 180 days after the property’s sale, known as the redemption period. The redemption rights do not give the former homeowner the right to continue living in the house, unless there is a mutual agreement to do so. To redeem the house within this period, the former homeowner, following a formal notification process, must notify the new owner of that intention. The former homeowner must pay the new owner, whether a person or the financial institution, the amount paid at the sheriff’s sale to purchase the house, including applicable interest. The total amount to redeem the property may also include payments made by the purchaser for property taxes, insurance, and other expenses to maintain the house in good condition.​

In the nonjudicial process, the document securing the loan is a Deed of Trust and the power of sale is given to the trustee. The parties involved are the “beneficiary,” the financial institution or investor you owe the money to; the “trustee,” the neutral third 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 “grantor.” This process applies to owner-occupied, one-to-four unit, single-family dwellings.

A nonjudicial process of foreclosure by “advertisement and sale” commonly starts if you, the homeowner, are in default by not making your mortgage payments as agreed and they have been continuously late. After trying to contact you to bring your mortgage payments current, the financial institution will give instructions to the trustee to start the foreclosure process. After complying with the requirements before starting the foreclosure process, the trustee will file a Notice of Default in the county records where the house is located. When the notice of default is recorded, the foreclosure process becomes public information and takes approximately 120 to 180 days until the house is sold or transferred. Immediately after the filing of the notice of default, the trustee will send a Notice of Trustee’s Sale or Trustee’s Notice of Sale to you and all parties with an interest in the property. You can reinstate your loan by bringing your loan current, in addition to paying the late fees and the expenses to foreclose. Do this no later than five days before the house’s sale (auction date) if the process is nonjudicial. If you were not able to reach an agreement with the servicer to save your house and unless the servicer decides to postpone the sale, the trustee will conduct a trustee’s sale at the place and time noted on the Trustee’s Notice of Sale.

Oregon law allows a postponement of the sale for up to 180 days. The postponement will be announced at the time and place of the scheduled sale date and a written notification will be also be sent to the homeowner at least 15 days before the new sale date, unless the first postponement is for less than two days from the sale date. In a judicial foreclosure, you can satisfy the debt up to the date a judgment is to be issued.

Oregon law requires trustees to provide homeowners additional notifications. One is “NOTICE: YOU ARE IN DANGER OF LOSING YOUR PROPERTY IF YOU DO NOT TAKE ACTION IMMEDIATELY.” Trustees must provide this notification to the homeowner at the same time or before the required notification that the house is in pre-foreclosure. The purpose of the “notice of home loss danger” 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 they can do to try to save their home. The notification also must include a toll-free number homeowners can call to get information about approved nonprofit providers of foreclosure prevention counseling programs. The notice also includes contact information for the Oregon State Bar’s Lawyer Referral Service if you decide to hire a lawyer. Low-income homeowners can also ask for legal assistance.