Judicial foreclosure

Original method: Around since the 1800s.

More costly: Court filing and attorney fees increase the costs for the lender and possibly the borrower.

Court oversight: Borrowers get a hearing before a judge where they could challenge the foreclosure.

Sheriff’s involvement: Local sheriff actually sells property after the court rules.

Right of redemption: Up to 180 days after sheriff’s sale, borrower has right to reclaim the property by matching the winning bid.

Length: Entire process could take close to a year.

Nonjudicial foreclosure

Newer: Available since 1959.

Less costly: No requirement to go before a judge or hire a lawyer.

Quicker: Set up to take 120 days, though it rarely does.

Public recording: The trust deed, any assignments of trust and any appointment of a successor trustee must be recorded in county recorder’s office where property is located. Several courts in Oregon say lenders have failed to meet this requirement.

Proper notice: Notice of default must be filed in county recorder’s office and sent to borrower by certified mail. Notice of sale must be given to both borrower and tenants at least 120 days before a foreclosure sale. It also must be published in a newspaper of general circulation once a week for 4 weeks, at least 20 days before sale.

Right to cure: Borrower has right to pay all missed payments and lenders’ fees up to five days before sale to cancel foreclosure.

Auction sale: Trustee auctions off property on courthouse steps to highest bidder.

Sources: The Oregonian research; William Larkins

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Oregon foreclosures appear likely to shift to the courts

Their preferred method in legal limbo, lenders are gearing up to move Oregon foreclosure sales from the courthouse steps into the courtroom itself, with significant implications for both homeowners and the housing market.

For half a century, the vast majority of the state’s residential foreclosures have occurred without a judge’s involvement. Oregon is one of 24 states that allow nonjudicial foreclosures, provided lenders give borrowers proper notice, publicize the sale and abide by other requirements.

But late last year, federal judges began blocking them, ruling that lenders had failed to follow one of those requirements: filing the mortgage’s ownership history in county records.

No one can say how many of the estimated 26,000 foreclosures pending in Oregon will ultimately land in front of a judge. But attorneys and trustees involved in both processes say hundreds of files are being reviewed.

“It could be thousands, ultimately,” said Lance Olsen, attorney with Routh Crabtree Olsen in Bellevue, Wash., whose affiliate, Northwest Trustee Services Inc., is the largest nonjudicial service provider in the West.

Check out the rest here…

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