Understanding the foreclosure process in Virginia is an important part of navigating your own foreclosure. In this article we will touch on the basics of foreclosure to help you understand the process.
What is foreclosure anyway?
Foreclosure is the legal process that lenders use to take ownership of a property when the borrower stops making payments on their mortgage. This can happen for various reasons, such as financial hardships, job loss, or unexpected emergencies. While foreclosure may seem overwhelming, knowing the process in Virginia empowers homeowners to handle it more efficiently and explore potential solutions.
Foreclosure is not a fun process but it’s not the end of the world and know that you have options.
The Basic Stages of A Foreclosure
It’s essential to grasp the key stages of foreclosure to understand how the process unfolds in Virginia. While foreclosure procedures differ across states, there are generally two methods used: judicial sale or power of sale.
Virginia is a power of sale state, but you can connect with us by calling 703-544-7516 or through our contact page to have us walk you through the specific foreclosure process here locally in Reston.
In either scenario, foreclosure typically doesn’t go to court until 3-6 months of missed payments have elapsed. Usually (but not always), a lender will send out many notices that you are in arrears – or overdue/behind on your payments.
Under Judicial Foreclosure:
In this process, the mortgage lender files a lawsuit in the court system. The borrower receives a letter from the court demanding payment. If the loan is valid, the borrower usually has 30 days to make the payment to avoid foreclosure, and sometimes this period can be extended. Failure to pay during this period leads to a judgment, and the lender can request the sale of the property, often through an auction. Once the property is sold, the sheriff issues an eviction notice, forcing the borrower to vacate immediately. Sometimes there are ways to remain in the property after the property has been sold but we will address this in another article.
Under Power of Sale (or Non-Judicial Foreclosure):
Here, the lender serves the borrower with papers demanding payment, and the courts are not directly involved, although there may be judicial review. After the waiting period specified in the foreclosure notice, a deed of trust is drawn up, and control of the property is transferred to a trustee. The trustee can then sell the property to the lender at a public auction, with prior notice given. All interested parties, including contractors or banks with liens against the property, must be informed during either type of foreclosure.
What Happens After A Foreclosure Auction?
Once the foreclosure process is complete, the sale proceeds are used to pay off the outstanding loan amount. However, in some cases, the auction may not generate enough funds to cover the debt fully. This results in a deficiency judgment issued against the borrower, holding them responsible for the remaining loan balance after the sale.
It’s important to note that deficiency judgment laws vary from state to state. Some states limit the amount owed to the fair value of the property at the time of the sale, while others allow the full loan amount to be assessed against the borrower. Homeowners should familiarize themselves with their state’s laws to understand their potential liabilities.
Here’s a great resource that lists the state by state deficiency judgment laws, since every state is different.
Seeking Alternatives to Foreclosure?
Avoiding foreclosure auctions is generally beneficial for homeowners. Instead, they can reach out to their lender or collaborate with reputable real estate firms that specialize in assisting distressed homeowners. These experts can negotiate with the bank to reduce the amount owed or even eliminate it, particularly if the home’s value has declined.
If you find yourself in a challenging situation near Reston, where you need to sell your property quickly, we can help. At Sell Simpli, we buy houses in Reston, Virginia, providing a solution for homeowners in need of a fast sale.
Call us anytime 703-544-7516 or
fill out the form on this website today! >>
Another Foreclosure Resource For Reston Virginia HomeOwners: