Virginia foreclosure law

Virginia foreclosure law allows both judicial and non-judicial foreclosures, and considers both mortgages and deeds of trust as primary security instruments. The average wait time is 60 days, although this can vary depending on the contract and the nature of the default.

Judicial foreclosure
If the contract does not contain a Power of Sale clause, the lender has to use a judicial foreclosure process. The Power of Sale serves as an authorization for the lender to sell the home as payment for the loan if the borrower commits a default. In the absence of such a clause, the lender has to file a lawsuit against the borrower and get a court order before he or she can foreclose.

Once the court confirms the default, the foreclosure is declared and the home is sold off via public auction. This type of foreclosure gives the borrower a 240-day Right of Redemption, which means he or she has 240 days after the foreclosure sale to regain possession of the home. This is done by paying the foreclosure sale price plus a 6% interest.

Non-judicial foreclosure
The non-judicial process is used when the contract includes a Power of Sale. The power may be exercised by the lender or the lender’s representative, who is referred to as the trustee. The foreclosure generally follows the terms specified in the clause. If the time, date, and place of the sale are not specified, the foreclosure proceeds as follows:

First, the lender publishes an ad announcing the foreclosure sale in a locally circulated newspaper. Any publishing terms stated in the contract will be followed. In addition, state laws the ad to appear at least once a day for three days, which may or may not be consecutive.

If the contract does not set any parameters for the ad, it will be published once a week for four consecutive weeks. Ads published near a city can appear on any five consecutive or non-consecutive days.

The ad must contain the following information:

-the time, date, and place of the sale
-the name of the trustee/s
-an address or phone number where one can get more information about the sal
-a legal description of the home
-information on the home’s location, such as a street address or tax map identification
-any other information required by the mortgage or deed of trust

At least 14 days before the sale date, a copy of the notice containing the same information will also be mailed to the borrower. The borrower can cure the default and stop foreclosure any time before the sale itself, by settling the lien debt and paying associated costs, such as attorney’s fees.

The sale is held at least 8 days after the first ad is published and at most 30 days after the last. During the sale, anyone except the trustee may make a bid. The trustee may also accept written one-price bids by announcing them at the sale. Unless the contract specifies otherwise, the trustee has the option to require a cash down payment of up to 10% of the sale price.

The proceeds of the sale will be distributed as follows:
-the costs of executing the trust
-the levies, taxes, and assessments, including interest
-the payment of any remaining obligations secured by the contract

Any remaining amount will be forwarded to the borrower. However, lenders can file deficiency suits, which are additional claims against the borrower for any balance not paid off by the foreclosure sale. Unlike most states, Virginia does not put limits on deficiency claims, which means lenders can sue the borrower for any amount.

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