How are trust deeds or mortgage liens treated in Oregon?

Oregon primarily operates as atitle theory state where the property title remains in trust until payment in full occurs for the underlying loan. Foreclosure is anon-judicial remedy under this theory. The document that secures the title is usually called adeed of trust. Oregon law also permitsmortgages to serve as liens upon real property and forjudicial foreclosures to occur through the courts. Because thepower of sale provisions indeeds of trust is a faster mechanism to effectuate foreclosure, this is the primary vehicle to foreclose.

How are Oregon mortgages foreclosed?

The primary method of foreclosure in Oregon involves what is known asnon-judicial foreclosure. This type of foreclosure does not involve court action but requires notice commonly calledforeclosure by advertisement. When thetrust deed is initially signed it will usually contain a provision called apower of sale clause which upon default allows atrustee to sell the property in order to satisfy the underlying defaulted loan. Thetrustee acts as a representative of the lender to effectuate the sale which typically occurs in the form of an auction. Because this is a non-judicial remedy there are very stringent notice requirements and the legal documents are required to contain thepower of sale language in order to use this type of foreclosure method.

Power of Sale Notice Requirements:

1. Prior to initiating a foreclosure the lender must file a notice of default in the county in which the property is located and the defaulting borrower must be personally served with such notice at least 120 days before the sale date. A copy of the notice of default must be published date at least once a week for 4 consecutive weeks in a newspaper of general circulation in the county in which the property is located with the last notice published at least 20 days before the proposed sale.  A notice of the proposed sale must also be recorded with the recorder where thetrust property is located.Residential trust property refers to non-commercial single or multi-family housing.
2. Notice of default as described above must contain certain information including the date, time and place of sale, a description of the default, thelenders election to sell and the recording information from the deed of trust.
3. Foreclosure sales must take place between 9AM and 4PM on a day other at the time, place and date designated in thenotice of sale as part of a public auction. The trustee will auction the property to the highest bidder. The foreclosure sale may be postponed for 180 days form the original sale date if at least 20 days written notice is provided to the original recipient of the notice of default.

In Oregon, thelenders can also go to court in what is known as ajudicial foreclosure proceeding where the court must issue a final judgment of foreclosure. If the deed of trust does not contain thepower of sale language, the lender must seek judicial foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in court along with what is known alis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

What are the legal instruments that establish a West Oregon mortgage?

The documents are known as thetrust deed ordeed of trust, and in a commercial transaction, asecurity agreement. Sometimes the mortgage document is combined with the security agreement.  Alternatively, amortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in thenote.

How long does it take to foreclose a property in Oregon?

Depending on the timing of the various required notices, it usually takes approximately 180 days to effectuate an uncontestednon-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and postponements of sales, or files forbankruptcy.

Is there a right of redemption in Oregon?

Oregon has a post-salestatutory right of redemption for judicial foreclosures, which would allow a party whose property has been foreclosed to reclaim that property 180 days after the sale by making payment in full of the sum of the unpaid loan plus costs and by submitting notice to the Sheriff not more than 30 and not less than 2 days in advance of the redemption.

Are deficiency judgments permitted in Oregon?

Yes. A deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage or deed of trust secures.

What statutes govern Oregon foreclosures?

The laws that govern Oregon foreclosures are found in Chapter 86 Oregon Revised Statutes (Mortgages, Trust Deeds) and Chapter 88 (Foreclosure of Mortgages and other liens).

http://www.leg.state.or.us/ors/086.html
http://www.leg.state.or.us/ors/088.html