2013 Oregon Revised Statutes
Volume : 02 - Business Organizations, Commercial Code
Chapter 086 - Mortgages; Trust Deeds
Section 86.157 - Action for residual debt after short sale of residential property.

(1) As used in this section:

(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.

(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.

(c) "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.

(d) "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.

(e) "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.

(f) "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 debt 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. [2011 c.480 §1]

Note: 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.