Can the lender come after you for the rest? Deficiency judgments in Oregon

Deficiency rules in Oregon, point by point

• No deficiency after a trustee's sale

  After the sale

  Once a trustee sells the home out of court, the lender cannot bring an action for a deficiency on the note the trust deed secured. This applies to any trust deed sold this way, not only homes.

  ORS 86.797(2)(a)

• No deficiency after a court foreclosure of a residential trust deed

  In the foreclosure judgment

  A residential trust deed covers property with four or fewer units, one of them your principal residence or your spouse's or child's. For these, a court foreclosure judgment may not include a money award against you for the debt.

  ORS 86.797(2); ORS 86.705

• Same-day second loans are also covered

  After the sale

  The bar also covers a second loan made the same day as part of the same purchase or refinance and owed to or made by the same lender or its affiliate. An unrelated home equity loan from another lender is not covered and may still be collected.

  ORS 86.797(2)(b)

• Older seller-financed and small purchase mortgages

  At the foreclosure sale

  For a court foreclosure of a mortgage (not a trust deed), collection of any shortfall ends at the sale if the mortgage secured money owed to the seller for the purchase, or secured $50,000 or less of the purchase price of your home after September 13, 1975.

  ORS 88.103

• Short sale protection

  After the short sale closes

  For a home with four or fewer units that you live in, if the lender reports to the IRS that it canceled all or part of the debt in a short sale and gives you written proof of that report, it and anyone it assigns the loan to cannot seek the residual debt. Get the cancellation in writing before closing.

  ORS 86.157

• Deed in lieu

  Before you sign

  We found no Oregon statute that sets a deficiency rule for a deed in lieu of foreclosure. The written agreement controls, so ask for language that the deed fully satisfies the debt.

• If a collector still comes after you

  As soon as you get a letter or lawsuit

  Ask which loan the claim is on and whether it was secured by the home that was sold. A guarantor of a residential trust deed also cannot recover the deficiency from you. Judgment remedies on a civil judgment generally last 10 years, so do not ignore court papers; call Oregon State Bar referral or legal aid.

  ORS 86.797(5); ORS 18.180

The short answer in Oregon

Common questions in Oregon