With all this talk out there about foreclosure you may be wondering just how the process works here in Virginia? What requirements are imposed on the lender before foreclosing on your home? Surely, before someone can take your house there is bound to be some court intervention right? After all, this is the country that holds the term “due process” in very high regard. There is bound to be at least some administrative hearing as would be the case with a parking ticket that you sought to challenge right? And if nothing else, you are entitled to be served with the foreclosure documents as would be the case with a civil lawsuit where you are being sued for $5,000.00 right? Regretfully, the answers to the foregoing questions is no! The fact of the matter is that the foreclosure process in Virginia, from the lender’s stand point is fast, cheap and easy. Here is why:
- Shocking as it may sound, a lender in Virginia is not required to sue you in court prior to foreclosing on your home. That power is derived from that huge document that you singed at closing when you purchased/refinanced your house called the deed of trust. This document states that the home is to serve as collateral for the loan that you are receiving form the bank. It also states that in the instance of a default (such as not paying your mortgage) the bank has the right to sell your home in order to satisfy the mortgage they gave you. That is the “power of sale” clause that is enforced by the trustee appointed by the lender. The trustee is acting as the agent for the lender.
- Advertising requirement- If the deed of trust contains a power of sale clause that specifies the terms of the foreclosure sale and the time and place of the sale, then the specified procedures must be followed. More often than not the deed of trust is silent on the details of how and where the foreclosure is to be conducted. Ditto on the need to advertise the foreclosure sale in the local paper. Virginia law states that if the deed of trust does not provide for advertising, then the ad shall be run once a week for four successive weeks. This is why homeowners receive the unsolicited offers in the mail from bankruptcy law firm, realtors and scam artist to help them with their upcoming foreclosure of their home. The fact that your home is going up for foreclosure must be advertised in the local paper.
- Notice of Trustee Sale Letter- This is the 14 day rule. The trustee, the agent for the lender, typically the attorney conducting the sale, simply has to send you a letter advising you that on such and such date and time, in front of the court house steps, your home will be sold at foreclosure. A copy of the advertisement or a notice with the same information must be mailed to the homeowner at least 14 days before the foreclosure sale. That’s it. A lousy 14 day advance notice is all they have to give you. Most law firms will mail you this final letter by certified mail and regular mail, but are not required to personally serve you as would be the case if you were being sued in just about any other kind of situation.
The foreclosure sale ad must include anything required by the deed of trust and may include a legal description of the property, a street address and a tax map identification or general information about the property’s location. The notice must include the time, place and terms of sale. It must give the name of the trustee and the address and phone number of a person who will be able to respond to inquiries about the foreclosure sale. Granted, this letter is typically preceded by one other letter advising you that you are in default and the loan has been accelerated.
That’s it. That is all it takes to foreclose on a property in Virginia. Put an ad in the paper for 1 month, mail out a couple of letters and the bank now owns the house. Other draconian measures:
- No right to reinstate loan prior to sale- You would think that if you could come up with the –for example- 7 months of unpaid mortgage debt plus the other junk fees tacked on top of that the day prior to the foreclosure sale date that you can stop the foreclosure of your home. But, in Virginia, in order to cure the default at this point you would have to win the lotto first since the bank can require you to pay off the loan in its entirety before they call off the foreclosure.
- Deficiency judgments- Talk about adding insult to injury. Lenders may obtain deficiency judgments, without limits, in Virginia. If the house ends up selling for less than what is owed on the mortgage(s), the lender can pursue you for the balance. A separate lawsuit must be file with the court.
- Redemption after sale- About half the states in the country give the homeowner a period of time after the foreclosure sale occurs to buy back their home, but not in Virginia. Once the hammer falls at auction the house is gone.
Va. Code Ann. §§ 55-59 provide the key foreclosure statutes in Virginia at this time.