Legal Question in Real Estate Law in Oregon
I am in the final stages of a Pre-Forclosure Sale of our FHA Mortgage Loan Property. I have the closing documents that state "Provided the closing and funds meet with the requirements outlined herein, Flagstar will not pursue its right to the deficiency, if any."
I want to be sure that Flagstar or the FHA can not come after us (or garnish wages/retirement accts) in the future for the deficiency in the loan, unless of course they find some act of Fraud. Which of course there is not, but any info I've gotten so far says that is most likely they only reason they would pursue a deficiency judgement.
1 Answer from Attorneys
You should have an attorney look over the exact language of the documents. In general, mortgage holders cannot pursue deficiency judgments in Oregon anyway. ORS 87.770(2) states:
Except in accordance with subsection (4) of this section, after a trustees sale under ORS 86.705 (Definitions for ORS 86.705 to 86.795) to 86.795 (Compensation of trustee), or after a judicial foreclosure of a residential trust deed, an action for a deficiency may not be brought or a judgment entered against the grantor, the grantors successor in interest or another person obligated on:
(a) The note, bond or other obligation secured by the trust deed for the property that was subject to the trustees sale or the judicial foreclosure; or
(b) Any other note, bond or other obligation secured by a residential trust deed for, or mortgage on, the property that was subject to the trustees sale or the judicial foreclosure when the debt, of which the note, bond or other obligation is evidence:
(A) Was created on the same day as, and used as part of the same purchase or repurchase transaction as, the note, bond or other obligation secured by the foreclosed residential trust deed; and
(B) Is owed to or was originated by the beneficiary or an affiliate of the beneficiary in the residential trust deed that was subject to the trustees sale or the foreclosure.