Dealing with Foreclosure in Oregon, Part 4

Dealing with Foreclosure in Oregon
(c) 2009 Benjamin D. Knaupp
Attorney at Law
Admitted in Oregon since 1997

#4. Do I have any legal defenses to a foreclosure?
A foreclosure proceeding must follow strict rules in order to be enforceable. Proper legal notice must be given to you and lien holders and the notice must contain a number of statutorily required details (see ORS 86.745). Most banks are using large bulk-volume foreclosure processing firms that use legal documents overseen by attorneys, and so generally most foreclosure sales are properly performed. If, however, your lender and the trustee conducting the sale don’t follow all the rules, you can file a legal challenge to the sale prior to the date of the sale, or within 48 hours of the sale to preserve your rights to the property.
There are other potential legal defenses to a foreclosure, including invalid legal documents, failure to provide certain federal notices required by law, etc., but these are very rare. A new law in Oregon (House Bill 3630, to be added to ORS 86.705 to 86.795) will provide that a certain form of notice must be provided to homeowners starting in 2009. If the notice is not given, the homeowner will have a right to an action against the trustee who conducted the sale.
Most importantly, once the foreclosure sale has taken place, and a proper public auction was held, the homeowner lose the right to possess the house, and can be evicted using the F.E.D. procedure, which takes about 2 weeks to complete. If the trustee did not follow procedures at the sale, the homeowner's only remedy is a legal action against the trustee for damages.

Next up is part 5: What happens to my property debts after foreclosure.
For all 8 questions stay tuned for updates to this blog or go to my legal website. You can also watch my video explaining the 8 foreclosure questions in brief. If you live in Beaverton, Hillsboro, or Portland Oregon, give me a call with your questions or comments, or post a comment to this blog.

Dealing with Foreclosure in Oregon, Part 3

Dealing with Foreclosure in Oregon
(c) 2009 Benjamin D. Knaupp
Attorney at Law
Admitted in Oregon since 1997

#3. What is a deed in lieu of foreclosure?
If your lender won’t agree to modify your loan, and you can’t “short sell” your home, some lenders–typically small lenders like credit unions–may accept a deed in lieu of foreclosure. This could be a good option for a homeowner who needs to move out of the home and doesn’t need it as a residence.
A deed in lieu of foreclosure is a legal agreement between you and your lender whereby you transfer title to the property to the lender so that the foreclosure sale is not necessary. Lenders are more willing to agree to a deed in lieu of foreclosure if their loan is the only lien against the property, and if your loan is close to the fair market value of the home. A deed in lieu of foreclosure agreement should be in writing and should be carefully reviewed by your attorney to make sure it protects you and not just your lender. They key protection you need is protection against a deficiency action.
A second key protection you need is a promise by the lender to report your mortgage debt as “Paid - Settled” to the credit reporting agencies. The primary benefit of a deed in lieu of foreclosure is that if negotiated properly, a foreclosure sale is not recorded on your credit report, thus preserving your credit score. Some lenders are reporting a deed in lieu of foreclosure the same as a foreclosure sale, which would not benefit you.

Next up in part 4 is legal defenses to a foreclosure action. For all 8 questions stay tuned for updates to this blog or go to my legal website. You can also watch my video explaining the 8 foreclosure questions in brief. If you live in Beaverton, Hillsboro, or Portland Oregon, give me a call with your questions or comments, or post a comment to this blog.

Dealing with Foreclosure in Oregon, Part 2

This entry is a continuation from Part 1, posted earlier.

#2. How does a short sale work?
A short sale is when your bank agrees to release you from your mortgage debt when you sell your home for less than what you owe the bank. A lender’s agreement to accept a short sale deal is completely voluntary. Most short sale attempts ultimately fail because the lender is not willing to release you from your debt and take a loss on their loan unless they get most of their money back. If the short sale will net less than 80% of the loan amount, it’s a good bet that a lender will refuse to authorize the sale.
If your lender agrees to let you try a short sale, they will probably offer you an agreement with specific terms that generally favor them and protect them from unnecessary losses. Often a lender will send you a Notice of Default and Election to Sell your property while simultaneously telling you they will allow you to “short sell” your home. Don’t be fooled–they can and will still proceed with the foreclosure sale unless they receive an offer from a purchaser prior to the sale. Verbal representations from agents of the lender to postpone the foreclosure sale and give you more time to short sell the home are not binding on the lender unless they are in writing.
Currently, we are hearing from more realtors that short sales are picking up. We are working with local realtors to review short sale agreements and get the foreclosure sale postponed for a better chance to sell the home.
For all 8 questions stay tuned for updates to this blog or go to my legal website. You can also watch my video explaining the 8 foreclosure questions in brief. If you are in the Beaverton, Hillsboro, or Portland Oregon area, you can get my telephone number and call in your questions or comments, or just post a comment to this blog.

Dealing with Foreclosure in Oregon, Part I

Dealing with Foreclosure in Oregon
(c) 2009 Benjamin D. Knaupp
Attorney at Law
Admitted in Oregon since 1997

If you are facing foreclosure of a home or a second residence, you are not alone. Record numbers of people just like you are struggling in this economy with unemployment and declining property values. When you can’t make your house payments, most homeowners will receive a Notice of Default and Election to Sell their home from their lender or servicing agent. When you get this notice, you are officially “in foreclosure” which is a legal process governed by Oregon statutes. When you get this notice, or even before you receive it, you need to know what your rights, obligations, and duties are under the law, and how your can best cope with the situation.

I have found that there are 8 important questions relating to the foreclosure process that Oregonians need to know and understand. Knowing the questions and the answers to them could be the difference between losing your home or saving it, and potentially thousands of dollars in expenses or opportunity costs. Here are the 8 questions in brief.

#1. How does a home loan modification work?
Home loan modification is an agreement between you and you lender whereby your lender agrees to modify some or all of the terms of your loan. Most successful home loan modification agreements involve a reduction in the interest rate or repayment term of the loan. There is currently a confusing mix of private and government programs available to the public. Most of the government programs are new, so few people have any real experience dealing with them. There are both paid and “free” services being marketed to homeowners but very little certainty about what you are getting for the money you might be paying.

Currently I am noting relatively few homeowners having success with home loan modifications. While there are government provided incentives to lenders if they modify certain loans, there are several requirements you must meet in order to be eligible for a modification, and then only if your lender consents to the modification. The important thing to realize is that there are currently no laws that force a lender to modify your home loan. After reviewing a homeowner’s financial situation and the terms of their loan, I can usually make an educated guess as to whether a home loan modification offer will be offered by your bank.

For all 8 questions stay tuned for updates to this blog or go to my legal website. You can also watch my video explaining the 8 foreclosure questions in brief. If you are local to Beaverton, Hillsboro, or Portland Oregon, you can get my telephone number and call in your questions or comments, or just post a comment to this blog.