Foreclosure can be a terrifying word, but sometimes the concept is worse than the reality. After taking the time to learn a bit about foreclosure, the homeowner can take back some control and explore non-retention options on their timeline, or even better, the problem can be fixed and the home retained. In Oregon, foreclosures are completed either through a Judicial process or through a non-Judicial (out of court) process. Read on for the top ten things you should keep in mind about the Judicial process.
10 Things you MUST know when facing Judicial Foreclosure
1. Foreclosure is a process to force the transfer of ownership of property out of the name of the Homeowner into the name of a Lender or new purchaser.
2. Judicial foreclosure is a Court process governed by compliance with the Oregon Rules of Civil Procedure. There is a Judge to resolve any disputes between the Homeowner and the Lender. However, the Courts cannot give legal advice to a Homeowner in foreclosure – the Homeowner is on their own or must hire their own lawyer.
3. Judicial foreclosure is initiated by the filing of a lawsuit by a law firm who represents the Lender or the Lender’s agent (the loan servicer.) This law firm cannot give legal advice to the Homeowner and often will not give any information to the Homeowner as that may prejudice their client’s case.
4. Once a judicial foreclosure lawsuit is served, the Homeowner has 30 days to respond. A response requires specific admission or denials to the Complaint, requires listing of any counterclaims, cross claims or affirmative defenses that the Homeowner may have. If you fail to respond an Order of Default can be entered which prevents any challenges to the lawsuit.
5. The Homeowner does NOT have a legal right to stop a judicial foreclosure by paying all the missed payments, costs and fees incurred by the Lender.
6. After a default is entered then a Money Judgment will be issued saying the Homeowner owes money to the Lender. This Judgment will be picked up by the Credit Reporting Agencies.
7. After the Money Judgment is entered the Court will issue a Writ to the County Sheriff authorizing him to hold a public auction of the property.
8. The auction price is usually less than the total amount of debt owed on the first mortgage note and is paid to the Lender. The difference between the amount realized at sale and the Money Judgment amount is called a deficiency and can sometimes be collected from the Homeowner or a co-signer on the loan.
9. Once the sale is completed, the Homeowner will no longer have any right to possession of the property and must move out of the property and remove all his/her personal belongings or face eviction by the Sheriff.
10. The Borrower has a right to redeem (buy back) the property within 180 days following the sale but must pay the full price realized at auction. After that 180 days, the Sheriff will issue a new Deed in the name of the purchaser.