Foreclosure Law in Oregon

In Newport, Oregon is a process authorizing a lender of a mortgage to take possession or ownership of the property that secured the mortgage in the first place, to cut their losses when a borrower defaults on his or her loan.

A foreclosure typically involves a forced sale of the house at auction, so the bank can recover at least some of the loss it has incurred as a result of the default. Banks typically want to rid themselves of the property as soon as possible, collect as much money as they can from the sale, and then move on.

In Oregon, and every other state, foreclosed homeowners can go through a "foreclosure by judicial sale." In this type of foreclosure sale, a court supervises the sale, ensuring that the bank makes every reasonable effort to get the highest price possible for the house. The purpose of this is to maximize the chances that the bank gets, at the very least, the remaining balance of the mortgage. Although this may seem counter-intuitive, it is intended to protect the borrower: it helps prevent them from still owing money after the house is sold at auction.

Some states treat mortgages as "non-recourse loans." A non-recourse loan is one that is secured by the borrower's property, but for which the borrower is not personally liable. Basically, this means that a lender in a foreclosure can take the house that was mortgaged, but nothing else. If the house sells for less than the lender is owed, it cannot go after the borrower.

How to Possibly Avoid Foreclosure in Newport, Oregon

It's quite important that you engage in continued communication with your bank. Lenders are surprisingly willing to make accommodations if it means they still get paid something, but in order to accommodate your situation, they have to know about it.

You should be mindful of the fact that your bank wants you to make your monthly mortgage payments - they probably aren't scheming to trick you into giving up your home. This isn't out of altruism, it's due to the fact that foreclosure is almost never as lucrative for the bank in the long run than a mortgage that is paid in full over a period of years or decades, with interest accruing the whole time. For a bank, a foreclosure is simply a last resort to cut their losses.

It's possible that your lender is willing to negotiate a plan that results in temporarily-lower payments on your mortgage, especially if this means that they will be able to get some payments, instead of none at all.

Finally, there is the "short sale." Typically considered a last resort, a short sale results in the borrower losing their home, but discharges almost all of their remaining mortgage debt. If the house is worth far less than the balance of the mortgage, this might be a good option. In Oregon, when a house is sold in a short sale, the proceeds go to the lender. If it sells for less than the mortgage balance, whatever's leftover is forgiven. If it sells for more, the surplus goes to the homeowner.

Can a Newport, Oregon real estate attorney help?

In Newport, Oregon, dealing with a possible foreclosure is never easy. However, the assistance of a knowledgeable real estate lawyer can make the whole process much more bearable, and possibly delay or even prevent the foreclosure altogether.