In Virginia, lenders may foreclose
on deeds of trusts or mortgages in default using either a judicial or
non-judicial foreclosure process.
Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit
to obtain a court order to foreclose, is used when no power of sale
is present in the mortgage or deed of trust. Generally, after the court
declares a foreclosure, the property will be auctioned off to the highest
bidder.
The borrower has two hundred forty (240) days from the date of the sale
to redeem the property by paying the amount for which the property was
sold, plus six (6) percent interest.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale
clause exists in a mortgage or deed of trust. A "power of sale" clause
is the clause in a deed of trust or mortgage, in which the borrower
pre-authorizes the sale of property to pay off the balance on a loan
in the event of the their default. In deeds of trust or mortgages where
a power of sale exists, the power given to the lender to sell the property
may be executed by the lender or their representative, typically referred
to as the trustee. Regulations for this type of foreclosure process
are outlined below in the "Power of Sale Foreclosure Guidelines".
- Power
of Sale Foreclosure Guidelines
- If the deed of trust or mortgage contains a
power of sale clause and specifies the time, place and terms of sale,
then the specified procedure must be followed. However, additional
requirements must be met, as outlined below in section one (1).
- Even when the deed of trust makes allowances
for advertising the foreclosure sale, Virginia Statutes require
ads to be published no less than once a day for three days, which
may be consecutive days. These requirements are in addition to the
advertising terms stipulated in the deed of trust. If the deed of
trust does not provide for advertising, then the ad shall be run
once a week for four successive weeks. However, near a city, an
ad on five different days, which may be consecutive, will be sufficient.
A copy of the advertisement or a notice with the same information
must be mailed to the borrower at least 14 days before the foreclosure
sale.
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.
- Any time before the sale, the borrower may
cure the default and stop the sale by paying the lien debt, costs
and reasonable attorney's fees.
- The sale, which may be held no earlier than
eight (8) days after the first ad is published and no more than
thirty (30) days after the last advertisement is published, is to
be made at auction to the highest bidder. Any person other than
the trustee may bid at the foreclosure sale, including a person
who has submitted a written one-price bid. Written one-price bids
may be made and shall be received by the trustee for entry by announcement
of the trustee at the sale. Any bidder in attendance may inspect
written bids. Additionally, the trustee may require bidders to place
a cash deposit of up to ten (10) percent of the sale price, unless
the dead of trust specifies a higher or lower amount.
In the event of postponement of sale, which may be done at the discretion
of the trustee, advertisement of such postponed sale shall be in
the same manner as the original advertisement of sale.
- Once the sale is complete, the proceeds will
go to: 1) the expenses of executing the trust; 2) to discharge all
taxes, levies, and assessments, with costs and interest if they
have priority over the lien of the deed of trust; 3) to discharge
in the order of their priority, if any, the remaining debts and
obligations secured by the deed, and any liens of record inferior
to the deed of trust under which sale is made; 4) any remaining
proceeds go to the borrower.
Lenders may obtain deficiency judgments,
without limits, in Virginia.
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here for more information on Virginia foreclosure laws.
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