Understanding the Foreclosure Process in Virginia

Understanding the Foreclosure Process in Virginia

What is foreclosure anyway?

Foreclosure is the formal legal process through which mortgage lenders exercise their right to take back property that secures a loan, typically after the borrower has defaulted on their payment obligations.

While foreclosure can be an incredibly stressful and challenging experience, it’s important to remember that it’s not the end of the world and there are ways to navigate it successfully.

When you have a solid understanding of how foreclosure works in Virginia… you empower yourself with the knowledge needed to make informed decisions, explore all available options, and emerge from the process in the best possible financial position.

Knowledge truly is power when it comes to protecting your rights and interests during this difficult time.

The Basic Stages of A Foreclosure

There are several distinct stages that are critical to understanding any foreclosure process, and each stage presents different opportunities for homeowners to take action.

It’s important to note that foreclosure procedures work quite differently across various states throughout the country, with each state having its own specific laws, timelines, and requirements.

The two primary methods that different states use to foreclose upon a property are: judicial sale or power of sale.

Understanding which method your state uses can significantly impact your strategy for dealing with foreclosure.

Connect with us by calling 804-999-4516 or through our contact page to have our experienced team walk you through the specific foreclosure process here locally in Virginia, including important deadlines and your legal rights.

In either scenario, foreclosure typically doesn’t advance to court proceedings until approximately 3-6 months of missed payments have accumulated. Usually (but not always), a lender will send out multiple notices informing you that you are in arrears – meaning you are overdue or behind in your mortgage payment.

These early warning notices are critical opportunities to take action before the formal foreclosure process begins.

Under Judicial Foreclosure:

• Your mortgage lender is required by law to file a formal lawsuit in the state court system to initiate the foreclosure process.
• You’ll receive official correspondence from the court demanding payment of the past-due amount.
• Assuming the loan is valid and in default, you’ll typically have 30 days to bring the full payment to court to avoid foreclosure (and in some circumstances, this timeline can be extended with proper legal representation).
• If you are unable to make payment during the designated payment period, a formal judgment will be entered against you and the lender can then request the sale of your property – most commonly through a public auction process.
• Once the property is successfully sold at auction, the sheriff or other law enforcement official serves an eviction notice and you will be legally required to immediately vacate the property.

Under Power of Sale (or Non-Judicial Foreclosure):

• The mortgage lender serves you with legal papers demanding payment, and the courts are not required to be involved in the process – although the proceedings may still be subject to judicial review if challenged.
• After the established waiting period mandated by state law has elapsed, a deed of trust is formally drawn up and control of your property is legally transferred to a trustee who acts on behalf of the lender.
• The trustee is then authorized to sell your property to the highest bidder at a public auction (proper public notice must be given according to state requirements).

It’s critical to understand that anyone who has a legal or financial interest in the property must be properly notified during either type of foreclosure proceeding.

For example, any contractors, subcontractors, or banks with liens against a foreclosed property are legally entitled to collect their share from the proceeds of an auction sale, which can impact how much money remains after the foreclosure is complete.

What Happens After A Foreclosure Auction?

After a foreclosure is complete and the auction has concluded, the outstanding loan amount is paid off using the sale proceeds from the auction.

Sometimes, if the sale price of the property at auction isn’t sufficient to fully pay off the remaining loan balance, a deficiency judgment can be issued against the borrower for the remaining amount.

A deficiency judgment is a legal ruling where the bank obtains a judgment against you, the borrower, requiring you to pay the remaining funds still owed to the bank on the original loan amount after the foreclosure sale has been completed.

The rules surrounding deficiency judgments vary significantly by state – some states limit the amount owed in a deficiency judgment to the fair market value of the property at the time of sale, while other states will allow the full remaining loan amount to be assessed against the borrower regardless of the property’s actual value.

Here’s a great resource that lists the state by state deficiency judgment laws, since every state has different rules and it’s important to understand your specific situation.

Generally speaking, it’s in your best interest to avoid a foreclosure auction altogether if possible. Instead, consider calling up the bank directly to negotiate, or work with a reputable and experienced real estate firm like us at Home Acquisitions to help you negotiate significant discounts off the amount owed to avoid having to carry out a foreclosure and potentially damage your credit for years to come.

Experienced real estate investors and professionals can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate the deficiency entirely in some cases, even if your home is currently worth less than what you owe on the mortgage (an upside-down or underwater mortgage situation).

If you need to sell a property anywhere in Virginia, we have the experience and resources to help you navigate this challenging situation.

We buy houses throughout Virginia like yours from people who need to sell fast and want to avoid the lengthy foreclosure process.

Give us a call anytime at 804-999-4516 or fill out the form on this website today! >>

Another Foreclosure Resource For Virginia HomeOwners:

• Resources On Avoiding Foreclosure from the U.S. Government >>t;>