In Oregon, attention must be paid in drafting loan documents and identifying the date final payment is due (the “Maturity Date”). In loans secured by real property, the Maturity Date should be included in any recorded mortgage, trust deed, memorandum, or amendment. If not included, the creditor is deemed to have a ten-year period from the date of the loan documents to be paid in full or foreclose.
Except as provided in ORS 88.120, pursuant to ORS 88.110, the obligation secured by a mortgage or trust deed is conclusively presumed to be paid and discharged ten years following a stated maturity date (whether in the original document or any recorded extension thereof) or, if there is no maturity date included, ten years from the date contained in the recorded mortgage or trust deed. Without considering the exception, that means that the loan may go from being secured to being unsecured unless the obligation is foreclosed within ten days from the date of signing the loan documents.
Pursuant to ORS 88.120, this rule does not apply to the State of Oregon or when ALL of the following facts exist at the time the foreclosure suit is commenced:
- Any portion of the mortgage debt, or any interest therein, has been voluntarily paid within the ten years immediately preceding the suit.
- The original mortgage still owns the property; and
- No lien or right of a third party has attached to the property after expiration of the ten-year period.
Given the narrow safety net contained in ORS 88.120, the better course of action for every secured creditor is to include a specific maturity date and, if the debt is not paid on or before that maturity date, then pursue all foreclosure rights. If the creditor is able to workout a payment plan that allows payment beyond the original maturity date, then it should record a modification of the loan documents to change the maturity date.