Understanding the foreclosure process in VA is an important part of navigating your own home foreclosure.
Before we dive in…
Understanding the Foreclosure Process in VA
What is foreclosure anyway?
Foreclosure is the legal procedure employed by lenders to reclaim property that serves as collateral for a loan, typically initiated when the borrower ceases making payments.
Facing foreclosure can be a challenging experience, but it’s important to remember that it’s not the end of the world.
When you know how foreclosure in VA works… it arms you with the knowledge to make sure you navigate it well and come out the other end as well as possible.
The Basic Stages of A Foreclosure
Several critical stages characterize the foreclosure process, each holding significance in its progression.
Foreclosure procedures vary across states throughout the nation, showcasing differences in how each jurisdiction handles the process.
The two ways different states use to foreclose upon a property are: judicial sale or power of sale.
Connect with us by calling (540) 212-4047 or through our contact page to have us walk you through the specific foreclosure process here locally in Front Royal.
In both situations, foreclosure proceedings typically do not proceed to court until a period of 3 to 6 months has passed with missed payments. Generally, the lender will often issue multiple notices indicating that you are in arrears, signifying that you are overdue or behind in your payments.
Under Judicial Foreclosure:
- Legal action must be initiated by your mortgage lender through the judicial system.
- A notification will be issued by the court, compelling you to make the required payment.
- Assuming the loan is valid, you’ll have 30 days to bring payment to court to avoid foreclosure (and sometimes that can be extended).
- If you don’t pay during the payment period, a judgment will be entered and the lender can request the sale of your property – usually through an auction.
- Once 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 initiates legal proceedings by serving you with payment demands, and while court involvement is not mandatory, the process may undergo judicial scrutiny.
- Following the expiration of the specified waiting period, a deed of trust is prepared, transferring property control to a trustee.
- Subsequently, the trustee gains the authority to conduct a public auction of your property, with prior notification, and sell it to the lender.
All parties with a stake in the property must receive notification during either form of foreclosure process.
For example, any 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?
Once the foreclosure process concludes, the outstanding loan balance is settled using the proceeds from the property’s 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 occurs when the bank obtains a legal judgment against the borrower, which stipulates the remaining debt owed to the bank following the foreclosure auction.
Certain states impose limitations on the amount subject to a deficiency judgment, capping it at the fair market value of the property at the time of sale. Conversely, other states may permit the borrower to be held liable for the entire outstanding loan amount.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
In most cases, it’s advisable to steer clear of foreclosure auctions. Instead, consider reaching out to your bank directly or collaborating with a trusted real estate company like ours at Five15 Properties to explore options for negotiating discounts on the outstanding amount, thus sidestepping the need for foreclosure proceedings.
Experienced investors possess the skills to negotiate with banks directly, aiming to reduce the amount owed in a sale, or potentially even eliminate it, especially if the property’s value is lower than the outstanding debt.
If you’re in need of selling a property in proximity to Front Royal, our team is available to assist you throughout the process.
We buy houses in Front Royal VA like yours from people who need to sell fast.
Give us a call anytime (540) 212-4047 or
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Another Foreclosure Resource For Front Royal VA HomeOwners: