We bought a house in 2007, and lived in it for 3 years. In 2010 we bought another house to fit our family needs. We rented the first house and continued to make payments until about 8 months ago when we decided to short sell it. The rent would not cover the payments and our family size increased by two. However, recently the bank rejected our application. We may have to foreclose on the house because we cannot afford to keep it anymore.
I know in Oregon the bank cannot obtain a deficiency judgment on our current primary property. What I don't know is whether or not they can obtain one for the rental house. We did not purchase the first house with the intent of renting it.
In Oregon, "'Residential trust deed' means a trust deed on property upon which are situated four or fewer residential units, one of which the grantor, the grantor’s spouse or the grantor’s minor or dependent child occupies as a principal residence at the time a trust deed foreclosure is commenced." However, statutory language is soon going into effect changing the time of determining whether it's a RTD to the time when a client goes into default, not when foreclosure is commenced.
It might be worth looking into moving you (or a family member) into the property during the foreclosure proceedings. It's likely you will want to discuss your specific details with an attorney.
Licensed in Oregon. Answers provided for informational use only and are not legal advice. Advice provided is general information only. No attorney/client relationship is created unless and until we have met and entered into a written representation agreement. Feel free to contact me at www.MaugerLaw.com if you need to discuss your matter further.
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Real Estate Attorney
What matters in not your intent when you acquired or financed the property. As Mr. Mauger stated, Oregon law is about to change. A trust deed at this moment is a "residential trust deed" if you occupy the property as your residence at the time foreclosure is commenced. The new law, effective in July, will provide that it is a residential trust deed" if you occupy the property as your residence at the time of the first default on account of which the property is foreclosed. Since you are not occupying the property, you are very much subject to a possible deficiency judgment (but only if they foreclose through the court system; when property is foreclosed through the advertisement and sale process, no deficiency is possible regardless of the status of the property).
While the change in the law defining residential trust deed may benefit people who move out of the property after a default occurs, it is potentially detrimental to you, if you move back in after a default occurs.
You really need to get the assistance of a real estate lawyer to guide you through this mine field. There are some non-profit organizations helping homeowners with this type of problem but beware of the scammer organizations (I am not referring to lawyers), who will demand a fee up front, making extensive promises, and accomplishing nothing. The Consumer Protection division of the Oregon Attorney General (office in Portland) may be able to give you the names of those whom you should avoid.
This comment is general in nature and is not intended as legal advice. It does not create an attorney client relationship and obviously is not confidential. You should contact an attorney in your area who can review with you all of the relevant facts and give you specific legal advice.
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