So, if you owe the bank $300,000 on a house that sells for $200,000, you still owe the bank $100,000
You might think, in weeks and months to come, that the home foreclosure crisis is over. Actually, it’s just going behind closed doors.
We have a news story in the works, but that will take time and require painstaking compilation of confusing strands in a complex legal web. Meanwhile, in mid-September, most of the home foreclosure notices published in Oregon newspapers will disappear, leaving the impression that our housing crisis has eased.
Not so. In fact, people with serious financial problems now risk losing much more than their houses.Foreclosures will be moved to the courts, where borrowers can be held accountable for the entire deficiency instead of just turning over keys to the front door.
It’s a change from “non-judicial” to “judicial” foreclosure proceedings.
First, without reciting all the legal details, a non-judicial foreclosure is handled by a trustee who holds the deed on behalf of a lender. The process requires newspaper notice of the foreclosure and a property sale at auction. The borrower my lose his or her house and credit rating, but nothing more.
A judicial foreclosure is handled by the courts, ending in a sale conducted by the county sheriff “on the courthouse steps.” Sheriff’s sales of property also have required newspaper notices in the past, but the Oregon Legislature decided instead to hide them on an obscure website.