Foreclosure & Alternatives Law
Foreclosure Laws in Oklahoma
Along with the rest of the country, there are home owners in Oklahoma struggling to stay in their homes. Lenders in the Sooner state have the legal right to repossess homes whose mortgages are past due. Borrowers are not without their options, however, and the sooner a borrower acts the more options the homeowner has.
Types of Foreclosure in Oklahoma
Oklahoma has two major types of foreclosure procedures, both of which are determined by the type of documents signed when the home is purchased. Both types of loans are documented with the signing of a mortgage. The difference is whether or not the mortgage included a power of sale clause. For mortgages that include the clause, in the event the borrower defaults, the lender can exercise a non-judicial foreclosure, which means the lender does not have to go to court to repossess the home. If the mortgage does not include the power of sale clause, the lender has to go through the court system to foreclose on the home.
The Foreclosure Process — Power of Sale Clause
If a borrower falls behind on one's mortgage, the lender can take back the property and sell it to recoup the investment. For loans with a power of sale clause, there is a set process that the lender must follow for the foreclosure to be legal:
- Written notice must be sent to the borrower that states the lender intends to foreclose by power of sale. The notice gives the borrower 35 days to cure the default and bring the mortgage current. If the borrower has been in default three time in the last 24 months or four times in 24 for a homestead, no other notice has to be given before the lender proceeds to the sale.
- The notice of sale must be published in a newspaper in the county where the home is located. The notice must run for four consecutive weeks and for no less than 30 before the sale date. It also must be posted within 10 days after the 35-day time period to cure the default has passed.
- The notice of sale has to be personally delivered to the borrower no less than 30 days before the date of the sale.
- The sale takes place on the date listed in the notice of sale, between 10 a.m. and 5 p.m. The auction is performed by a lender's representative — normally an attorney — and the property is sold to the highest bidder. Upon winning the auction, 10 percent of the purchase price must be posted.
The Foreclosure Process — Traditional Mortgage
For borrowers who have a traditional mortgage, if the loan becomes past due, the lender has the right to petition the court to return the home to the lender. This process is called lis pendens. The first step of the foreclosure requires the lender to send the borrower a notice to cure default. The notice details how much the borrower owes and gives the borrower a set amount of time to pay the past due balance. If the borrower fails to cure the default, the lender can then petition the court to foreclose on the property. Once the petition is filed the borrower is personally served the documents. At this point, the borrower has several options:
- Pay the past due amount and all court fees.
- Respond to the petition and request a judge settle the case.
- Do nothing and let the foreclosure run its course.
- Take another course of legal action.
If the borrower chooses to let the foreclosure go through, the court will grant the foreclosure. The lender can then sell the property at auction.
Options for Homeowners
Homeowners can seek financial relief from the court, but should act quickly since the foreclosure process generally only takes 90 days. A bankruptcy filing puts the foreclosure process on hold. If a homeowner wants to protect oneself from being held responsible via a deficiency judgment, having to pay the difference between the loan amount and what the home sold for at auction, filing for Chapter 7 bankruptcy protection could be the solution. For homeowners who want to save their homes, a Chapter 13 filing may be optimal.