In Oregon, lenders may foreclose on deeds of trust or mortgages in default using either a judicial or non-judicial foreclosure process. The non-judicial process is much more common but judicial foreclosures are on the rise. After searching the Clerk’s Recordings, the majority of the Notices of Lis Pendens in Deschutes County were recorded by the following lenders: Wells Fargo, Fannie Mae (through the loan servicer), One West Bank, Deutsche Bank, US Bank, GMAC, and Nationstar.
By Hillary Borrud / The Bulletin Published: May 04. 2012 4:00AM PST
Anthony Raguine, a civil technician in the Deschutes County Sheriff’s Office, had an audience Thursday morning as he began to read the terms of a foreclosure sale.
The handful of chairs in the Sheriff’s Office lobby were nearly all occupied as the second foreclosure auction of the morning got under way.
“Are you here for the Larkin property?” Raguine asked.
Two men nodded “yes,” and a woman wearing glasses and a black cardigan said she was there to place a bid for the creditor.
Raguine said the property for sale, on state Highway 126 near the Eagle Crest resort west of Redmond, was an attractive one.
“If I wasn’t with the Sheriff’s Office, I’d be interested in that property,” Raguine said. “It’s beautiful.”
In the end, the only person who placed a bid was the creditor’s representative, attorney Gabriela Sanchez.
Judicial foreclosures are beginning to trickle in to the Sheriff’s Office, which auctions off foreclosed properties following a court judgment. Oregon allows both judicial foreclosures, which go through the courts, and nonjudicial foreclosures that begin with a notice of default.
The Sheriff’s Office gets involved at the end of the lengthy judicial process.
The recent increase is more visible at the front end, in records filed at the County Clerk’s Office. These show that beginning in October, lenders filed roughly 30 to 40 judicial foreclosures per month. Previously, the monthly totals were generally in the single digits. Lenders continue to use the nonjudicial process for most foreclosures in Deschutes County. In April, 126 notices of default were filed in the county. These start the nonjudicial foreclosure process.
Fannie Mae and Wells Fargo filed many of the judicial foreclosures in Deschutes County, although the plaintiffs include a cross-section of major U.S. banks.
A spokesman for Fannie Mae declined to comment on why the lender is increasingly opting for the courts in Oregon. A spokesman for Wells Fargo confirmed the bank is going the judicial route more often, but did not say why.
“We are doing a higher percentage of judicial foreclosures than in the past, but there’s no one factor driving that,” Tom Unger, a Wells Fargo spokesman based in Portland, wrote in an email on Thursday. “We work with local foreclosure counsel to determine the most appropriate course of action in a given foreclosure on a case-by-case basis. For a variety of factors, in the current environment we have been pursuing a higher percentage of foreclosures through the judicial process than we have in the past.”
One source of uncertainty for lenders is that state and federal courts in Oregon have issued contradictory opinions on whether the Mortgage Electronic Registration Systems, or MERS, meets state real estate finance law. Lenders have generally relied upon MERS to document property transactions. If Oregon’s highest court ultimately rules against MERS, that could force more lenders to opt for judicial foreclosures. The Oregonian reported in late March that a U.S. District Court judge in Portland planned to ask the state Supreme Court to sort out the matter.
In the meantime, some Deschutes County staff members have noticed a moderate increase in judicial foreclosures. Raguine said he averaged 3.5 foreclosure sales a week through most of April, up from one per week in previous months.
Capt. Tim Edwards, who oversees civil staff at the Sheriff’s Office, said people involved in foreclosures warned of a major increase in judicial foreclosures on the horizon.
“They expected it by now, but quite frankly, we have seen some increase but not the huge increase we were expecting,” Edwards said recently.
So far, the increase is too small to impact Deschutes County Circuit Court.
“Usually, the judges will tell me if they’re experiencing something different, and they haven’t,” said Court Administrator Ernest Mazorol. “Overall, we file about 20,000 cases a year so it would have to be a pretty big blip.”
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