In Oregon, banks have traditionally chosen to non-judicially foreclose on homes after a period of default on the mortgage payments (non-judicial foreclosures can be quicker and less costly than judicial foreclosures).  There is no law that requires the bank to foreclose within a certain period of time.  Indeed sometimes many months or years pass before the bank gets around to beginning the foreclosure process.

Under the non-judicial foreclosure statutes, the banks must give the homeowner/debtor at least 120 days before the scheduled foreclosure sale.  The notice is posted on the debtor’s door and mailed to the debtor.  But things have changed recently in Portland, Oregon, with banks filing more and more judicial foreclosures.  The reason why the banks are now filing judicial foreclosures is because of all of the legal issues involved with MERS (Mortgage Electronic Registration System).

Essentially the MERS system was created by the banks to bypass the county recording statutes.  For example, in Oregon it is a requirement under the non-judicial foreclosure statutes that all transfers of the trust deed are recorded with the relevant county.  However, the banks in using their MERS system did not follow this basic statute by recording each and every transfer of the trust deed.  Consequently, many debtors have been successful in legally challenging non-judicial foreclosures in Oregon when the MERS system was used.  There currently is a case pending in front of the Oregon Supreme Court regarding this issue.  As a consequence, the banks are deciding to file judicial foreclosures—at least until the Oregon Supreme Court resolves the MERS question.  A judicial foreclosure lawsuit is like any other lawsuit in the sense that the debtor must be personally served with the lawsuit and then has 30 days to file an Answer.  If the debtor does not file an Answer with the court within 30 days of being served, then the bank can obtain a default judgment.  But this does not mean that the debtor is immediately evicted from his/her home.

Indeed there are numerous statutes that the banks must follow after obtaining a default judgment for foreclosure.  If the debtor doesn’t file an Answer within 30 days, the bank would need to apply for a default judgment.   Once the default judgment is entered and the property ordered sold, the bank must then apply for a writ of execution.  This writ then has to be delivered to the sheriff and also recorded.  Then the sheriff has to return it within 60 days and the sale has to take place no later than 150 days after the sheriff has received the writ.  Finally, the sheriff has to give at least 28 days notice of sale, both by mail to certain parties and by publication (once a week for 4 consecutive weeks in newspaper or on sheriff’s website).  (The sale can be postponed by the sheriff for various reasons.)  Once the house is sold at foreclosure, notice must be sent to the judgment debtor.  The buyer gets a “certificate of sale” but no sheriff’s deed until the debtor’s redemption rights expire 180 days later.  Once the house is sold, the bank (or other purchaser) has the immediate right to possession.  The bank could either have a default judgment that provides for possession (e.g., “this judgment shall have the same effect as a writ of assistance”) or go through the regular FED (eviction) process.

As can be seen from the above discussion, the timing with judicial foreclosures is not as clear cut as the timing with non-judicial foreclosures (at least from the point that the bank begins the formal non-judicial versus the judicial foreclosure process).  But the bottom line is that once served with a judicial foreclosure lawsuit, the debtor will not be immediately or imminently evicted from the house.  Most likely, there will be at least a few months, if not longer, before the debtor would need to be out of the house.  And that is premised on the debtor not filing an Answer and challenging the judicial foreclosure (if the debtor files an Answer either by themselves or with an attorney, this could significantly delay the foreclosure).

There are some highly skilled attorneys in Portland, Oregon, who specialize in foreclosure defense.  I do not specialize in foreclosure defense, but I will give my potential clients and/or clients referrals to these Portland attorneys if the debtor is facing a foreclosure issue.  There are numerous strategies for dealing with a potential, impending, and/or imminent foreclosure.  Some of these strategies involve filing a bankruptcy and some don’t.  My advice to those debtors who are facing a potential, impending, and/or imminent foreclosure is to schedule an appointment as soon as possible with an experienced and trustworthy Portland bankruptcy attorney.  Timing can be crucial when dealing with foreclosure issues.  Feel free to call my office to discuss.