Oklahoma Foreclosure Laws

Under Oklahoma foreclosure laws, foreclosures may be judicial or nonjudicial. However, most Oklahoma foreclosures are carried out in court. If the terms of the loan permit, a lender or other foreclosing party can avoid litigation via nonjudicial foreclosure, but homeowners often opt to convert nonjudicial foreclosures in Oklahoma to judicial foreclosures in order to extend the timeline of the Oklahoma foreclosure process. 

In Oklahoma, foreclosures typically take about 90 days from the point at which the court awards the foreclosing party a foreclosure judgment, and nonjudicial, uncontested foreclosures also take about 90 days. However, the Oklahoma pre-foreclosure process, which involves moving the suit through the court system, can take several months or more. Unlike many other states, Oklahoma did not implement a statewide eviction ban or state-governed foreclosure forbearance as part of a health-policy response to the 2020 COVID-19 pandemic, but the state is still governed by national policies, such as the U.S. Centers for Disease Control and Prevention (CDC)’s eviction ban, which ultimately extended from 2020 into 2021. Real estate investors wishing to buy Oklahoma foreclosures should check state and local regulations to determine if there are any foreclosure forbearance or eviction ban policies in place that might affect your Oklahoma foreclosure investing strategy. 

The Oklahoma Pre-Foreclosure Process 

As in most other states, federal law discourages the initiation of foreclosure proceedings in Oklahoma until the borrower has fallen 120 days past due on their mortgage loan payments. Although this period of time is not officially part of the pre-foreclosure process, real estate investors should consider it an essential part of investment strategy because many homeowners in this stage feel they have entered “pre-foreclosure” and may be considering selling their properties. 

Under Oklahoma foreclosure laws, a lender can proceed with foreclosure out of court as long as the mortgage or deed of trust gives them the authority to do so and the borrower does not contest the foreclosure. However, Oklahoma law makes it difficult to initiate a foreclosure out of court, so this type of foreclosure is rare. 

The majority of foreclosures in Oklahoma are judicial and move through the court system. After sending any required warning letters to the borrower, the lender files in court against the borrower for default on the loan. A notice of this court action is also delivered in person and by mail to the borrower, after which the borrower usually has 20 days to respond. If the court decides to rule against the borrower, the property is scheduled for public sale. 

Oklahoma Foreclosure Laws: Notice Of Sale / Auction 

After the court awards the foreclosing party a foreclosure judgment, the homeowner is entitled to receive a notice of sale by mail and by publication in a local newspaper. Once the notice of sale is recorded in the county where the property is located, the notice may be published in a local newspaper in the county where the property is located once each day for four consecutive weeks. The first publishing date must be at least 30 days prior to the date of sale. 

Homeowners facing foreclosure can stall the foreclosure sale by taking two steps at least 10 days prior to the foreclosure sale: 

  1. Notifying the foreclosing party (usually the lender or bank) via certified mail that the property being sold is their homestead, giving them the right to opt for a judicial foreclosure. 

    Note that this does not necessarily apply to investment properties.

  1. Recording a copy of the notice to the foreclosing party along with a legal description of the property at the County Clerk’s office. 

Homeowners can convert a nonjudicial foreclosure to a judicial foreclosure even if the terms of their mortgage include a power of sale clause as long as they complete the two requirements listed above more than 10 days prior to the scheduled sale of the property. 

Once the foreclosure judgment is awarded and proper notice of sale given, the Oklahoma foreclosure is ready for the foreclosure sale. The highest bidder must provide cash or certified funds equal to 10 percent of their bid amount. If the highest bidder cannot do this, the lender can accept the next-highest bid. 

If for any reason the sheriff’s sale is cancelled, the entire foreclosure process starts over. Investors buying Oklahoma foreclosures should note that pandemic-related delays in 2020 resulted in some foreclosure sales being postponed indefinitely and other auction platforms taking their sales entirely online. The County Clerk’s office should be able to provide you with updated information about the venue and timing of Oklahoma foreclosure sales. 

Oklahoma Foreclosure Laws: Rights of Reinstatement & Redemption 

After the foreclosure sale, it takes about 15 days for the sale to be confirmed by the court. This means that the Oklahoma court must approve the sale before it is recorded. Former homeowners can redeem their properties by paying off the full amount owed until confirmation happens. The borrower has no redemption rights after the sale has been confirmed. Oklahoma foreclosure laws do not allow for reinstatement in judicial foreclosures, but they do honor terms in the mortgage that permit it. Review loan documents to determine if reinstatement is an option. 

Deficiency Judgments in Oklahoma 

Oklahoma foreclosure laws permit lenders to seek deficiency judgments under certain circumstances. Some banks opt to include the request for a deficiency judgment in their motion for the order to confirm the foreclosure sale. Others make the request separately, but that request must be submitted within 90 days of the Oklahoma foreclosure sale. 

Oklahoma foreclosure laws govern the amounts allowed for deficiency judgments. The maximum allowed deficiency judgment must be the lesser of the following two values: 

  1. The difference in the fair market value (FMV) of the Oklahoma foreclosure and the total debt, including interest, attorneys’ fees, and costs and expenses associated with the sale; or 
  1. The difference between the total debt and the sales price of the foreclosure. 

If a homeowner permits a foreclosing party to proceed with a nonjudicial foreclosure, they have the option to give the court notice that they “elect against a deficiency judgment”. This is done via formal notice at least 10 days before the sale stating that the property is the borrower’s homestead and that the borrower elects against a deficiency judgment. This can be useful for real estate investors to know when working with Oklahoma foreclosure owners because homeowners may be concerned that if the home goes into foreclosure, they will still owe money. The lender is often willing to “pay” for the expediency of a nonjudicial foreclosure by not pursuing a deficiency judgment. 

What Happens When You Buy Oklahoma Foreclosures? 

Investors buying Oklahoma foreclosures must obtain a sheriff’s deed to the property before they acquire full control of the asset. During the time in which the court has not yet confirmed the sale, the former owner may redeem the property. The process can take a little more than two weeks. Once the investor has the sheriff’s deed in hand, they may obtain a writ of assistance and remove tenants or residents still living in the property should they wish to do so. 

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