Oregon Statutes 86.157 – Action for residual debt after short sale of residential property; payoff statements
(1) As used in this section:
Terms Used In Oregon Statutes 86.157
- Beneficiary: A person who is entitled to receive the benefits or proceeds of a will, trust, insurance policy, retirement plan, annuity, or other contract. Source: OCC
- Contract: A legal written agreement that becomes binding when signed.
- Deed: The legal instrument used to transfer title in real property from one person to another.
- Evidence: Information presented in testimony or in documents that is used to persuade the fact finder (judge or jury) to decide the case for one side or the other.
- Foreclosure: A legal process in which property that is collateral or security for a loan may be sold to help repay the loan when the loan is in default. Source: OCC
- Grantor: The person who establishes a trust and places property into it.
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Mortgagee: The person to whom property is mortgaged and who has loaned the money.
- Mortgagor: The person who pledges property to a creditor as collateral for a loan and who receives the money.
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Person: includes individuals, corporations, associations, firms, partnerships, limited liability companies and joint stock companies. See Oregon Statutes 174.100
- Real property: Land, and all immovable fixtures erected on, growing on, or affixed to the land.
- United States: includes territories, outlying possessions and the District of Columbia. See Oregon Statutes 174.100
(a) ‘Borrower’ means an individual who, directly or indirectly and individually or together with another person, is obligated on a real estate loan agreement, including but not limited to a mortgagor or a grantor, as defined in ORS § 86.705, or an assignee or successor in interest.
(b) ‘Lender’ means a person that makes, extends or holds a real estate loan agreement, including but not limited to a mortgagee or a beneficiary, as defined in ORS § 86.705, or an assignee or successor in interest.
(c) ‘Payoff statement’ means a written statement that sets forth, as of the date the lender prepares the statement, amounts a borrower must pay in order to fully satisfy the borrower’s obligation under a real estate loan agreement.
(d) ‘Real estate loan agreement’ means an arrangement between a lender and a borrower, including but not limited to a mortgage or a trust deed, by means of which the lender agrees to extend a loan and the borrower agrees to secure the loan in whole or in part with residential property, or an interest in residential property, that is located in this state.
(e) ‘Residential property’ means real property upon which is situated four or fewer improvements designed for residential use, one of which a borrower occupies as the borrower’s residence.
(f) ‘Residual debt’ means an amount due on a loan, evidence of which exists in a real estate loan agreement, note, bond, contract or similar written agreement, that a borrower is unable to pay out of the proceeds from a sale of the residential property that secures the loan.
(g) ‘Short sale’ means a sale of residential property that is subject to foreclosure under ORS § 86.705 to 86.815 or ORS Chapter 88 for an amount that is less than the remaining amount due on the loan that the residential property secures.
(2) If a lender reports to the Internal Revenue Service that as a consequence of or in conjunction with a short sale of residential property the lender has canceled all or a portion of a borrower’s obligation under a real estate loan agreement and the lender provides to the borrower written evidence of the lender’s report to the Internal Revenue Service, the lender or an assignee of the lender may not bring an action or otherwise seek payment for the residual debt following the short sale.
(3)(a) Except as provided in paragraph (b) of this subsection, a borrower or an agent of the borrower may rely on a payoff statement for the purpose of establishing the amount the borrower must pay to satisfy the borrower’s obligation under a real estate loan agreement other than a real estate loan agreement for a construction loan.
(b) A borrower or an agent of the borrower may not rely on a payoff statement after a lender prepares and delivers an amended payoff statement to the borrower or borrower’s agent. For purposes of this paragraph, a lender delivers an amended payoff statement to the borrower or borrower’s agent if the lender provides the amended payoff statement by electronic means in accordance with ORS Chapter 84, sends the amended payoff statement by United States mail postage prepaid and correctly addressed to the borrower or borrower’s agent at all addresses on file with the lender for the borrower or borrower’s agent, including post office boxes, or sends the amended payoff statement by facsimile, provided that the borrower or borrower’s agent receives the amended payoff statement before the borrower disburses funds for the purpose of satisfying the obligation in accordance with subsection (5) of this section.
(4) If an amount that a borrower owes under a real estate loan agreement, other than a real estate loan agreement for a construction loan, does not appear on a payoff statement or amended payoff statement and the borrower or an agent of the borrower satisfies the obligation set forth in the payoff statement in accordance with subsection (5) of this section, the lender may recover the amount only as an unsecured obligation or only by foreclosing a mortgage, trust deed or security agreement for any other property that secures the obligation.
(5) To satisfy an obligation set forth in a payoff statement or an amended payoff statement, a borrower must submit the amount shown in the payoff statement or amended payoff statement, instruct the lender to close any line of credit that is related to the obligation and request a certificate described in ORS § 86.100 or a reconveyance under ORS § 86.720 before any deadline, expiration date or maturity date specified in the payoff statement or amended payoff statement. A borrower that disburses funds to a lender in the amount shown in the payoff statement or an amended payoff statement has discharged a mortgage for the purpose of requesting a certificate under ORS § 86.100 or performed the borrower’s obligation for the purpose of requesting a reconveyance under ORS § 86.720. [2011 c.480 § 1; 2015 c.431 § 1; 2017 c.251 § 1]
86.157 was enacted into law by the Legislative Assembly but was not added to or made a part of ORS Chapter 86 or any series therein by legislative action. See Preface to Oregon Revised Statutes for further explanation.
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