Oklahoma's homeownership rate has dropped in recent years to 66% down from 73% a few years ago. The trend in the Sooner State follows the national rates so closely that the state could be used to define the national average in terms of home sales and ownership. Buyers in Oklahoma sometimes seek out alternative financing options to purchase a home or renovate an existing property. Loans from the big banks and mortgage companies can take awhile to fund and require quite a bit of paperwork. In Oklahoma, hard money loans offered by individual and small group investors are becoming a popular option for many. These loans close quickly and require way less paperwork. However, they require the buyer to use their home or other owned real estate as collateral to secure the loan. Buyers willing and able to do that are more likely to fund fast and move in without having to go through the longer and sometimes invasive process of financing a real estate purchase.
Oklahoma Foreclosure Laws
Oklahoma allows for foreclosures that happen through the court system, called a judicial foreclosure; as well as, foreclosures that take place outside of the courts, called non-judicial. In the past, most foreclosures in Oklahoma were managed without the courts, which means the process moves swiftly and can make it difficult for homeowners that are behind on payments to catch up and save their home. In recent years, lawmakers have taken steps to slow the process a bit and have built in new provisions that allow homeowners to push a pending foreclosure into the judicial process. This requires two steps and they must take place at least ten days before the foreclosure sale:
- The homeowner must notify the lender attempting foreclosure by certified mail that the property to be sold is a homestead (primary residence) and that they are electing for judicial foreclosure.
- The homeowner must file a copy of that notice in the county clerk's office. Okla. Stat. tit. 46, § 43. It is important to note that even if the mortgage loan paperwork contains a "power of sale" clause granting the lender an option to manage foreclosure without the courts, this notice from a homeowner will force them into a judicial process.
Property Redemption after Foreclosure Sale
In some states, homeowners in foreclosure have the right to redeem (repurchase) the home within a certain period of time, even after the foreclosure. In Oklahoma, homeowners cannot redeem the property after the foreclosure sale. But they do have that right, up to the date of the sale. For people facing foreclosure outside of the court system, property can be redeemed at any time before the foreclosure sale actually takes place. This requires paying the entire amount owed and making the arrangements with the lender. In a judicial foreclosure, the homeowner has a little more time as they still have the right to redeem until a judge officially confirms the foreclosure sale.
Oklahoma does allow lenders to seek deficiency judgments against homeowners in foreclosure. Sometimes, selling the home at auction does not bring in enough money to cover what was owed by the borrower. In these cases, the lender can still charge that additional debt to the homeowner. It works a little bit differently based on whether the foreclosure is judicial or non-judicial and there are limits to what a homeowner can be charged. But this is a possible concern for people facing foreclosure in Oklahoma and borrowers behind on payments should make sure they understand the possibility that foreclosure may not eliminate the entire debt.
Deed in Lieu of Foreclosure
A Deed in Lieu of Foreclosure is a special option for Oklahoma homeowners who are faced with losing their home due to their inability to pay back their mortgage. When this agreement happens, the borrower gives the lender possession of their home, so that the lender does not have to follow through with the lengthy legal foreclosure process. With these agreements, the parties agree to “call it even.” Some homeowners are even able to get a small cash settlement to cover their moving costs or they may be able to negotiate terms that remove concerns of a deficiency judgment. These are all things that can be negotiated between both parties when they enter into this type of agreement.
Grace Period Notice
Oklahoma does not have a standard, set grace period in place for all foreclosures. Some states provide for a period of time once a lender files initial paperwork that allows for catching up on back payments, finding legal counsel, mediation or time to negotiate a loan modification. In Oklahoma, there is a standard waiting period between 20 and 60 days based on whether the process is going through the court system or not. Both ways, there is time for homeowners to negotiate and catch up. But Oklahoma does not have a guaranteed grace period in place.
Protection for Military Personnel
Protection against foreclosures for members of a reserve or Oklahoma national guard unit. Oklahoma law extends the protections of the federal service members Civil Relief Act to members of the Oklahoma National Guard when ordered to state active duty or full-time National Guard duty. Okla. Stat. tit. 44, § 208.1.
High Risk Mortgage Protections
In July of 2002, Oklahoma law enacted a set of anti-predatory lending laws in order to help protect Oklahoma homebuyers from predatory lenders. Some of the provisions of this new set of laws include the prohibition of a lender charging points and fees in excess of 6% of the total principal financed amount, the prohibition of a mortgage company issuing a loan to a borrower in an amount that the borrower could not reasonably afford to repay, and the prohibition of the financing of single-premium credit insurance, among others.
Additional State Laws
The maximum legal interest rate on a loan in Oklahoma is 6%. Oklahoma's statutory interest rate limit is 6 percent unless stated otherwise through a valid contract (which may be as simple as agreeing to the "fine print"). Exceptions to this limit include pawnshops, small loans, and retail installment plans.
Oklahoma is a homestead state. Under Oklahoma's homestead law, property owners may exempt up to 1 acre of property in an urban area or 160 acres if it is rural (to help protect farms). It may be in more than one parcel. At least 75 percent of the total square footage claimed must be used as the homeowner's principle residence, and the homestead exemption may not exceed $5,000 if at least 25 percent is used for business purposes.
Additionally, a qualifying disabled veteran (or a surviving spouse) may sell their homestead, acquire another homestead property in the same calendar year and keep their property tax homestead exemption.
Lender Licensing Requirements
Mortgage Broker Branch License
This license is required for all offices, other than the main office identified on the Mortgage Broker License, whether located in Oklahoma or not, which conducts business with Oklahoma consumers.
Mortgage Lender Branch License
This license is required of an entity, unless exempt, that takes an application for a residential mortgage loan, makes a residential mortgage loan or services a residential mortgage loan and is an approved or authorized mortgagee with direct endorsement underwriting authority granted by the United States Department of Housing and Urban Development, seller or servicer of the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation, or issuer for the Government National Mortgage Association.
Mortgage Loan Originator
This license is required of any individual or sole proprietor, who for compensation or gain or in the expectation of compensation or gain takes an application or offers to negotiate or modify the terms of an existing residential mortgage loan on Oklahoma residential property for others.