Oklahoma Foreclosure Laws

Answers

How are trust deeds or mortgage liens treated in Oklahoma?

Oklahoma primarily operates as a title theory state where the property title remains in trust until payment in full occurs for the underlying loan. Foreclosure is a non-judicial remedy under this theory. The document that secures the title is called a mortgage. Oklahoma law also permits mortgages to serve as liens upon real property and for judicial foreclosures to occur through the courts. Because the power of sale provisions in a mortgage is a faster mechanism to effectuate foreclosure, this is the primary vehicle to foreclose. Judicial foreclosures are usually used when no power of sale language is contained in the loan documents and the use of such a mechanism gives rise to certain redemption rights.

How are Oklahoma mortgages/deeds of trust foreclosed?

The primary method of foreclosure in Oklahoma involves what is known as non-judicial foreclosure. This type of foreclosure does not involve court action but requires notice commonly called notice of intention to foreclose by power of sale. When the mortgage is initially executed it will usually contain a provision called a power of sale clause which upon default allows an attorney acting on behalf of the mortgagee to sell the property in order to satisfy the underlying defaulted loan.  A designated attorney acts as a representative of the lender to effectuate the sale which typically occurs in the form of an auction. Because this is a non-judicial remedy there are very stringent notice requirements and the legal documents are required to contain the power of sale language in order to use this type of foreclosure method.

Power of Sale Notice Requirements:

1. Prior to initiating a foreclosure the lender must send the borrower a written notice of the intent to foreclose by power of sale. This notice gives the borrower thirty-five (35) days to cure the default and reinstate the mortgage. If a borrower has been in default for three (3) times in the past 24 month period no right to additional notice will be required. If homestead property is involved and the mortgage has been in default more than four (4) times in the last 24 months no additional notice is required prior to acceleration. A copy of the notice of sale must be published date at least 4 consecutive weeks in a newspaper of general circulation in the county in which the property is located with the notice published not less than 30 days before the proposed sale.
2. The notice of sale must be personally served not less than thirty (30) days prior to the date of the sale and must be recorded within ten days of the passing of the thirty-five (35) day cure notice period.
3. Foreclosure sales must take place on a day other at the time, place and date designated in the notice of sale as part of a public auction. The foreclosure sale will take place between 9AM and 5PM. The representative of the mortgagee will auction the property to the highest bidder. The foreclosure sale may be postponed if at least ten (10) days written notice is provided to the original recipient of the notice of default. The high bidder must post 10% of the bid amount and if that cannot be done the sale can be made to the next highest bidder.

In Oklahoma, the lenders can also go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

What are the legal instruments that establish an Oklahoma mortgage?

The documents are known as the mortgage, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. Alternatively, a mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

How long does it take to foreclose a property in Oklahoma?

Depending on the timing of the various required notices, it usually takes approximately 90 days to effectuate an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and postponements of sales, or files for bankruptcy.

Is there a right of redemption in Oklahoma?

Oklahoma has no post-sale statutory right of redemption for non-judicial foreclosures, which would allow a party whose property has been foreclosed to reclaim that property.

Are deficiency judgments permitted in Oklahoma?

Yes. A deficiency judgment may be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage or deed of trust secures. Deficiency actions must be brought within 90 days after the foreclosure sale. Judgment cannot exceed the difference between the amount of the debt and the fair market value of the property. Costs and fees in filing the deficiency can also be recovered.

What statutes govern Oklahoma foreclosures?

The laws that govern Oklahoma foreclosures are found in Title 46 Oklahoma Statutes (Oklahoma Power of sale Mortgage Foreclosure Act) Chapter 2A §43.