Understanding the foreclosure process in Virginia is an important part of taking the best steps to resolve your own home foreclosure.
Before we dive in…
Understanding the Foreclosure Process in Virginia
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take back property securing a loan, most often after the borrower stops making payments on their mortgage.
Foreclosure is not an experience anyone wants. But just know that it’s not the end of the world.
When you know how foreclosure in Virginia works… it arms you with the knowledge to make sure you navigate it well and come out the other side with as best an outcome as possible.
The Basic Stages of A Foreclosure
There are a few stages that are important to any foreclosure process.
It is also important to know that Foreclosure works differently in different states around the country.
The two ways different states use to foreclose upon a property are: judicial sale or power of sale.
Connect with us by calling (804) 728-0400 or through our contact page so we can better understand where you are in the process and get help from the local attorneys we work with to walk you through the specific foreclosure process here locally in Richmond.
In either scenario, foreclosure typically doesn’t go to court until at least 3-6 months of missed payments have elapsed. This can be a bit different depending on your lender. Usually (but not always), a lender will send out many notices that you are in arrears – overdue or behind in your payment.
Under Judicial Foreclosure:
- Your mortgage lender must file suit in the court system.
- You will get a letter from the court demanding payment.
- Assuming the loan is valid, you’ll have 30 days to bring your past due balance to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay the balance owed during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- After the property is sold, the sheriff serves an eviction notice and forces you to immediately vacate the property.
Under Power of Sale (or Non-Judicial Foreclosure):
- The mortgage lender serves you with papers demanding payment, and the courts are not required – although the process might be subject to judicial review.
- After the established waiting period has elapsed, a deed of trust is drawn up and control of your property is transferred to a trustee.
- The trustee can then sell your property to the lender or a third party at a public auction (notice must be given).
Anyone who has a legal interest in the property must be notified during either type of foreclosure.
For example, any unpaid contractors or banks with liens against a foreclosed property are entitled to collect from the proceedings of an auction.
What Happens After A Foreclosure Auction?
After a foreclosure is complete, the loan amount is paid off with the proceeds of the sale.
Sometimes, if the sale of the property at auction isn’t enough to pay off the loan, a deficiency judgment can be issued against the borrower.
A deficiency judgment is where the bank gets a judgment against you, the borrower, for the remaining funds owed to the bank on the loan amount after the foreclosure sale.
Some states limit the amount owed in a deficiency judgment to the fair value of the property at the time of sale, while other states will allow the full amount of the loan to be assessed against the borrower.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Generally, it’s best to avoid a foreclosure auction. Instead, make a phone call to someone at the bank who is authorized to help, or work with a reputable real estate firm like us at Top Dollar Housebuyers to help you negotiate discounts off the amount owed to avoid having to carry out a foreclosure.
Experienced investors can help you by negotiating directly with banks to lower the amount you owe in a sale – or even eliminate it, even if your home is worth less than you owe. It can’t hurt to learn more about your options.
If you need to sell a property near Richmond, we can help you.
We buy houses in Richmond VA like yours from people who need to sell fast.
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Another Foreclosure Resource For Richmond VA HomeOwners: