In order to stop foreclosure in Oregon, homeowners need to be aware of all applicable options available to them before making any decisions. Three key points of information will be an attorney in Oregon specifically practicing foreclosure prevention, government sponsored counselors with through HUD and the FHA, and arguably most important, your mortgage lender or deed in trust of beneficiary, also your lender. With these three parties providing counsel and information, a homeowner struggling to meet financial obligations related to their primary residence can garner a clear picture of their applicable options. Below is a general outline of common options used by homeowners in the state of Oregon to stop a foreclosure.
Foreclosure Prevention Options Offered by Lenders
Loss mitigation departments with your lender may be willing to make concessions that will allow homeowners to remain in their primary residence. Some of the more common options a lender may be willing to approve include:
- Forbearance requests, which if approved by your lender, will allow a struggling homeowner to make partial or no payments on an outstanding mortgage or deed of trust temporarily in order to retain financial stability. The amount unpaid is then built back into the life of the loan, but the temporary reprieve may provide enough time for a homeowner to find a steady source of income to meet future mortgage or deed of trust obligations.
- Loan modifications, which if properly negotiated, will ultimately reduce the monthly payments owed by homeowners through adjusting existing terms, rates, and other conditions of an existing mortgage or deed of trust agreement.
- Loan refinancing, which will put a homeowner into an entirely new mortgage or deed of trust, which will ideally offer better rate terms and a lower principal amount
Any of the aforementioned options will require a homeowner to maintain frank and consistent communication with their existing lender, as well as potentially with an attorney who can assist with sculpting the terms of future loan modification or refinancing agreements.
Federal and Oregon State Foreclosure Prevention Legislation
Both the federal government and the state of Oregon have taken proactive measures to assist homeowners struggling to meet existing mortgage or deed of trust obligations. If eligible, certain homeowners may be able to find relief under one or more of these new laws. Some of the more notable federal laws are noted below, while the state of Oregon also has a slew of state laws in place that may also assist struggling homeowners.
- The HOPE for Homeowners Act, which depending on eligibility, allows certain homeowners to transition their existing variable rate loans into fixed rate, longer term mortgages through their lender that are backed by the Federal Housing Administration
- The Homeowner Affordability and Stability Act, which if eligible, will allow a homeowner to adjust their existing mortgage or deed of trust agreement into one that is ultimately more manageable on a month by month basis, allowing a homeowner to retain their primary residence
- The Emergency Economic Stabilization Act of 2008, which extended some of the provisions of the Mortgage Forgiveness and Debt Relief Act into 2012, offers tax breaks on debt forgiven related to a mortgage in default, which have previously been deemed taxable income under IRS laws
By consulting with a government-sponsored counselor with the Department of Housing and Urban Development and a foreclosure lawyer in Oregon, a homeowner can remain informed of all current and applicable laws they are eligible under for foreclosure relief and prevention.
Deed in Lieu of Foreclosure and Short Sale Arrangements
Other options for homeowners seeking to avoid foreclosure can be arranged through legal counsel and a homeowner’s lender. These options include:
- Deed in Lieu of Foreclosure: This arrangement allows a homeowner to turn over the title or deed of their property to their lender in exchange for cancelling all existing debt obligations related to that property.
- Short Sale: This arrangement requires a third party buyer to purchase a home in default, with the proceeds from this sale going to toward repaying an existing mortgage obligation in part or full. If the sale price does not cover an existing mortgage or deed of trust obligation entirely, the lender will agree beforehand to forgive any amount “short”, allowing a homeowner to unsaddle all debt obligations related to a given property.
Again, these options will require legal intervention most likely to ensure the terms of each affords a homeowner the most favorable outcome, in light of circumstances. Though each option will not allow a homeowner to retain their residence, they may offer an out for homeowners struggling under an existing deed of trust or mortgage agreement.
Chapter 7 and Chapter 13 Bankruptcy Options
If part of an overall debt crisis, some homeowners will file for either Chapter 7 or Chapter 13 bankruptcy protections. Aside from the immediate and temporary automatic stay on creditor collection actions, the following chapters of bankruptcy provide these long-term benefits to homeowners:
- Chapter 7: Liquidation and discharge under Chapter 7 bankruptcy statutes will allow a homeowner to discharge a current mortgage or deed of trust obligation, but will also liquidate most assets, such as the home itself. Property exemptions in the state of Oregon for Chapter 7 include a homestead exemption up to $25,000 or $33,000 for joint owners, which may benefit some homeowners
- Chapter 13: Reorganization under Chapter 13 may allow a homeowner to consolidate all debts, including those with a property lien attached to a home, that can reduce monthly payments on a given primary residence and allow a homeowner to retain their home
Any bankruptcy action has long-term implications, which will require the counsel and assistance of an attorney to appreciate fully.
Getting Legal Help to Prevent Foreclosure in Oregon
If you are a homeowner in default or facing an impending default on your mortgage or deed of trust obligations, consider consulting an attorney as soon as possible. An attorney will be able to inform homeowners of their legal rights in light of existing provisions in a mortgage or deed of trust agreement, as well as provide strategies to prevent foreclosure in both the short and long term.
