VA Foreclosure Information
Virginia is a title theory state. This means that the state's foreclosure laws are based on the title theory of property ownership. This theory states that the lending agent is the owner of any property that is secured by a mortgage. The trust deed legally transfers ownership to the lender until the mortgage is paid in full.
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Foreclosure Methods
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Virginia allows two methods for the lender to foreclose on property. The judicial method requires the lender to file a lawsuit against the borrower for payment of the delinquent amount. The court generally establishes a date by which the borrower must make these payments. If the payments are not made, then the court will order the home to be sold to the highest bidder. The lending agent also has the ability to insert a power-of-sale clause into the mortgage contract. This clause allows the lender to foreclose on property, once the loan defaults, without the need for a court order. This is referred to as a nonjudicial foreclosure.
Power of Sale
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The power-of-sale clause establishes the guidelines for the foreclosure process. In the event any details are missing from the clause, Virginia's regulations will take effect. The lending agent must take out an advertisement for the sale in the local paper at least once per week for four consecutive weeks and a copy of this advertisement must be mailed to the borrower at least 14 days before the sale. The auction must be held between eight and 30 days after the first advertisement appears in the paper.
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Deficiency
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If the home sells for less than the balance due on the mortgage loan, then a deficiency has occurred. In Virginia, the lending agent has the right to file a lawsuit against the borrower for payment if the deficient amount.
Right of Redemption
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The state of Virginia allows the borrower one final chance, in some circumstances, to reclaim the property after the foreclosure has been completed. This is accomplished by paying the full balance of the loan, plus any associated foreclosure costs. Virginia allows this right of redemption for some judicial foreclosures. If the lending agent invoked the power-of-sale clause, then no right of redemption exists.
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