Judicial/ Non-Judicial Foreclosure: Judicial & Non-Judicial Foreclosure
Right of Redemption / Deficiency Judgment: Depends / Yes
Timeline: 60 Days, Can vary depending on individual cases
Deed of Trust / Mortgage as Security Instruments: Deed of Trust, Mortgage
Judicial Foreclosure process:
If a power of sale clause is not present in the Deed of Trust/ Mortgage documents, the Judicial foreclosure process can be followed. The Judicial foreclosure process requires the lender to file a lawsuit against the borrower in case the latter happens to default on their mortgage payments. The court verifies the default and authorizes the foreclosure sale where the property is sold off to the highest bidder through a public auction.
The borrower can exercise their right of redemption for up to 240 days after the sale date and reclaim the property by paying the amount paid by the highest bidder along with an interest cost of 6%.
Non-Judicial Foreclosure process:
If the power of sale clause is present in the Deed of Trust/ Mortgage documents, the Non-Judicial foreclosure process can be followed. The power of sale clause authorizes the lender or their authorized representative (known as the Trustee) to conduct the foreclosure proceedings, in case the borrower happens to default on their mortgage payments. The following guidelines can be followed for the same.
If the power of sale document mentions the time, location and other foreclosure sale terms, the same can be followed. But, the following procedure should also be followed, in addition to the terms mentioned in the document.
If the Deed of Trust mentions the terms of advertising for the foreclosure sale notice, the same is followed. But, in Virginia, this notice should be advertised for three (maybe consecutive) days in addition to whatever is required by the Deed of Trust.
If the Deed of Trust does not mention the terms of advertising, the notice needs to be advertised on one day every week, for four successive weeks. But in and around cities, the ad can be carried on any five days (which maybe successive days).
This notice needs to be mailed to the borrower at least before 14 days of the actual sale date.
This foreclosure sale notice should include all the details about the borrower, lender, their correspondence address, phone numbers, details of the property including the address, location, general description etc, foreclosure sale date, time, location, terms of sale, etc.
The borrower may stop the foreclosure process by paying up all their dues along with interest and other costs, anytime before the sale is completed.
The foreclosure sale can happen between eight days after the first ad is published and thirty days after the last ad is published. Anyone can bid for the property by submitting a closed price bid to the lender. The lender cannot participate in the foreclosure sale, in Virginia.
During the foreclosure sale, the property is auctioned off to the highest bidder. The bidders participate by giving a written one-priced bid to the lender, which can be inspected by anyone during the sale. The bidder will also have to provide a cash deposit of 10% of their bid value, unless a different value is specified by the deed of trust document.
The lenders may postpone the foreclosure sale by placing advertisements similar to the process followed earlier. Lenders can file for a deficiency judgment against the borrower, in case the value offered by the highest bidder is less than the total amount due by the borrower.
After the sale is complete, borrower may get the additional amount (over the amount of their loan value) only after deducting all taxes, legal and other expenses, interest costs, costs of executing the trust, the remaining debts and obligations secured by the deed (if any).