Thursday, September 20, 2012
With the Effective Date of SB-1552, Non-Judicial Foreclosures
Have Come to a Near Standstill as Judicial Foreclosures Jump 10 Fold
EUGENE, Ore. – While the number of foreclosures in Oregon did not change much from July to August, the method of foreclosure filings did take a dramatic new course in rough, unchartered “foreclosure seas.” Officials with Eugene-based Gorilla Capital, say that Oregon’s new foreclosure laws may have stemmed the tide of non-judicial foreclosures, but it will send waves of foreclosed homeowners into a more expensive and swamped civil court system.
“The decrease in the number of Notice to Defaults filed in the past month is a deceiving indicator of Oregon’s home foreclosure market,” said John Helmick, Gorilla Capital’s CEO, whose company operates in 20 Oregon counties. “The new law, Oregon SB-1552, is a sneaker wave that wipes out what benefit there is for a homeowner in a non-judicial foreclosure; drowns the lender and homeowner in unnecessary fees; and offers the homeowner no way to keep their credit rating a float.”
Oregon SB-1552, which took effect July 11, extends the foreclosure notice period from 120 days to 180 days, and places a number of additional demands on lenders, including requiring lenders to pay for mediation sessions with homeowners who are in the non-judicial foreclosure process.
According to Helmick, it’s believed that the new law will alter the foreclosure process for thousands of Oregonians, resulting in significant decreases in non-judicial notices of default, and a corresponding increase in judicial filings.
In a non-judicial foreclosure, if the home sells for less than what is owed to the lender, the deficiency is forgiven and the former homeowner owes nothing to the bank. In about two years, many former homeowners can oftentimes repair their credit rating, and may be eligible for a home loan.
With judicial foreclosure, the lender receives a judgment for the full amount of the debt. If the home sells for less than the full amount of the debt – which is what occurs in most cases – the money judgment remains against the homeowner. The judgment can be sold and the owner of the judgment can garnish the wages and accounts and place a judgment lien on real and personal property of the former homeowner.
By modifying the foreclosure statutes, the legislature has begun a process that will ultimately cause thousands of Oregonians to be subject to judgment liens rather than to have the “underwater” portion of their mortgage forgiven.
In total, there were 122 notices of default filed during August in Oregon, compared to 926 during the same month in 2011. Gorilla reports August’s numbers are roughly about the same as July 2012. However, judicial foreclosures have spiked to their highest levels ever.
“Oregon’s new foreclosure law is severely punitive,” Helmick said. “It is expensive, will over tax an exhausted civil court system, and offers homeowners in foreclosure little long-term hope.”
Helmick expects non-judicial foreclosure numbers to remain low during the coming months, but predicts judicial foreclosure filings to rise dramatically.
About Gorilla Capital
Gorilla Capital is one of the nation’s leading purchasers of distressed real estate. Gorilla Capital has been ranked by Inc. Magazine as one of the 1,000 fastest growing companies in America, each of the last 3 years, and was recently ranked as the 20th fastest growing real estate company in America. Oregon Business magazine ranked the company on the Private 150 list of the largest privately held companies in Oregon. Operating in multiple states, Gorilla Capital is based in Eugene, Ore.
The company prides itself on being methodical, efficient and tireless in its pursuit of properties that will appeal to the value-conscious homebuyer. After research, inspection, assessment and purchase of the distressed real estate, Gorilla renovates the house and then offers the fully remodeled home to the public at exceptional value. All of Gorilla’s homes are backed by a third party, one-year home warranty.
For more information, visit www.GorillaCapital.com, or call (541) 344-7867.