Virginia Foreclosure Law

[Moe Bedard]

- Judicial Foreclosure Available: Yes

- Non-Judicial Foreclosure Available: Yes

- Primary Security Instruments: Deed of Trust, Mortgage

- Timeline: Typically 60 days

- Right of Redemption: Varies

- Deficiency Judgments Allowed: Yes

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

1. 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.
   
2. 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.
   
3. 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.
   
4. 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.

More information on Virginia foreclosure laws.

source http://www.foreclosurelaw.org/Virgin...losure_Law.htm

Virginia Foreclosure Day 1

Review of file, acknowledgment of receipt of referral and preparation and forwarding of Substitution of Trustee to lender for execution. With Absolute Wireless the referral acknowledgment the client will be advised of any missing documentation. Virginia foreclosure law requires that the Trustee receive a written request from the lender to proceed with foreclosure. The Trustee needs
(1) the original note and copy of the deed of trust,
(2) copy of default/breach letter and
(3) the tide insurance policy. Note: If the original note has been lost a copy with a lost note affidavit will suffice, but the lender, prior to the institution of the foreclosure, must give the obligor(s), including the property owner, written notice that the original note is unavailable and that a request for sale by the Trustee will be made upon expiration of 14 days from the date of the notice.

This notice must be sent certified mail, return receipt requested, to the last known address of the obligor(s) and must include the name and address of the Trustee and must further advise the obligor(s) that if he believes that he may be subject to a claim by a person other than the lender to enforce it he may petition the circuit court of the city or county wherein the property lies for an order requiring the lender to provide adequate protection against any such claim. The Trustee cannot proceed to sale without either the original note or the lost note notice (with the return receipt or returned envelope).
Virginia Foreclosure Days 2-14

Examination and review of title. The lender and title insurer are advised of any title defects and appropriate steps are undertaken to clear any title defects.
Virginia Foreclosure Days 15-20

Preparation of foreclosure notices to owners of record title and any others liable on the note. The minimum notice is 14 days prior to the date of the sale. Additionally, if there are IRS liens, homeowners' or condominium association liens or junior deed of trust, lien notice must be given to these lien holders as well. Simultaneously, with the foreclosure notice, the newspaper advertisement of sale is prepared and forwarded to the appropriate newspaper for publication.

The language of the deed of trust usually controls the advertising required. The minimum advertisement required for a Virginia foreclosure is, if weekly, once a week for 2 successive weeks, or if daily, once a day for 3 successive days. If the deed of trust is silent on the number of publications then it must be advertised once a week for 4 successive weeks. However, if the property lies within a city or in a county contiguous to a city, daily publication for 5 days, which may be consecutive, is deemed adequate.
Virginia Foreclosure Day 50

The Virginia foreclosure sale is held. The Trustee conducts the sale. Virginia foreclosure law allows the lender to submit to the Trustee a written one-price bid in advance of the sale. The Trustee cannot bid actively on behalf of the lender but can open the bidding at the one-price bid of the lender. A bidder's deposit of 10% of the successful bid is required at the time of sale. If the lender is the successful bidder this is waived. The lender is advised of the sale results immediately following the sale.
Virginia Foreclosure Days 51-65

Assuming the lender is the successful bidder, the proposed foreclosure deed, a copy of the proposed accounting, a "receipt" for the net sale proceeds and an invoice for the expenses of sale, including the cost of recording the foreclosure deed, is submitted to the lender. Upon receipt of the requested funds and the "receipt" the deed is recorded and costs are paid. At this point, except for the accounting, the foreclosure is complete. Except for the IRS lien situations, there is no right of redemption in Virginia. If a third party is the successful bidder the Trustee coordinates the settlement with the bidder's attorney and proceeds to closing. If the successful bidder defaults, the bidder's deposit is used to pay the expenses of the Virginia foreclosure with the excess funds forwarded to the lender and the process begins again.
Virginia Foreclosure Days 90-100

The Trustee is required to file an accounting of the sale with the Commissioner of Accounts within 6 months of the date of the Virginia foreclosure sale. Included in this report is the accounting, copies of the canceled checks for all sale expenses, the original note (or lost note affidavit and lost note notice with receipts) and a copy of the recorded foreclosure deed.
Insurer/Guarantor Requirements

FHA and VA regulations set forth specific time requirements for the institution and completion of the foreclosure process which must be met by the servicer in order to maintain the loan guaranty. The typical "time-line" previously set forth well exceeds these requirements. Daily monitoring of all pending foreclosures allows the firm to be ever cognizant of its time and reporting responsibilities.
How Virginia Foreclosure Deed of Trust Construed

Every deed of trust to secure debts or indemnify sureties is in the nature of a contract and shall be construed according to its terms to the extent not in conflict with the requirements of Virginia's foreclosure law. Unless otherwise provided therein, it shall be construed to impose and confer upon the parties thereto, and the beneficiaries thereunder, the following duties, rights and obligations in like manner as if the same were expressly provided for by such deed of trust:

1. The deed shall be construed as given to secure the performance of each of the covenants entered into by the grantor as well as the payment of the primary obligation.

2. The grantor shall be deemed to covenant that he will pay all taxes, levies, assessments and charges upon the property, including the fees and charges of such agents or attorneys as the trustee may deem advisable to employ at any time for the purpose of the trust, so long as any obligation upon the grantor under the deed of trust remains undischarged.

3. The grantor shall be deemed to covenant that he will keep the improvements on the property in tenantable condition, whether such improvements were on the property when the deed of trust was given or were thereafter placed thereon.

4. The grantor shall be deemed to covenant that no waste shall be committed or suffered upon the property.

5. The grantor shall be deemed to covenant that in the event of his failure to meet any obligations imposed upon him then the trustee or any beneficiary may, at his option, satisfy the same. The money so advanced, with interest thereon as provided in the deed of trust, shall be a part of the debt secured by the deed of trust, in the event of sale to be paid next after the expenses of executing the trust, and shall be otherwise recoverable from the grantor as a debt. In addition, to the extent not otherwise covered, the grantor shall be deemed to covenant that amount advanced or incurred by the trustee or any beneficiary under a deed of trust (i) with respect to an obligation secured by a lien or encumbrance prior to the lien of the deed of trust or (ii) for the protection of the lien secured by the deed of trust, together with interest as provided in the deed of trust, shall be a part of the debt secured by the deed of trust, to be paid next after expenses of executing the trust.

6. A covenant to pay interest shall be deemed a covenant to pay interest on the principal balance as such rate may vary or be modified from time to time by the parties under the original instruments or agreements or a written agreement of modification whether or not recorded, and all the interest on the principal secured by the deed of trust shall be on an equal priority with the principal debt secured by the deed of trust, in the event of sale to be paid next after the expenses of executing the trust.
Any covenant, otherwise authorized by law, that the lender shall be entitled to share in the gross income or the net income, or the gross rent or revenues, or net rents or revenues of the property, or in any portion of the proceeds or appreciation upon sale or appraisal or similar event, shall be on an equal priority with the principal debt secured by the deed of trust, in the event of sale to be paid next after the expenses of executing the trust, and shall be specified in the recorded deed of trust or other recorded document in order to be notice of record as against subsequent parties.

7. In the event of default in the payment of the debt secured, or any part thereof; at maturity, or in the payment of interest when due, or of the breach of any of the covenants entered into or imposed upon the grantor, then at the request of any beneficiary the trustee shall forthwith declare all the debts and obligations secured by the deed of trust at once due and payable and may take possession of the property and proceed to sell the same at auction at the premises or in the front of the circuit court building or at such other place in the city or county in which the property or the greater part thereof lies, or in the corporate limits of any city surrounded by or contiguous to such county, or in the case of annexed land, in the county of which the land was formerly a part, as the trustee may select upon such terms and conditions as the trustee may deem best.

8. If the Virginia foreclosure sale is upon credit terms, the deferred purchase money shall bear interest from the day of sale and shall be secured by a deed of trust upon the property contemporaneous with the trustee's deed to the purchaser.

9. The party secured by the deed of trust, or the holders of greater than fifty percent of the monetary obligations secured thereby, shall have the right and power to appoint a substitute trustee or trustees for any reason and, regardless of whether such right and power is expressly granted in such deed of trust, by executing and acknowledging an instrument designating and appointing a substitute. When the instrument of appointment has been executed, the substitute trustee or trustees named therein shall be vested with all the powers, rights, authority and duties vested in the trustee or trustees in the original deed of trust. The instrument of appointment shall be recorded in the office of the clerk wherein the original deed of trust is recorded prior to or at the time of recordation of any instrument in which a power, right, authority or duty conferred by the original deed of trust is exercised.
Notices Required before Sale by Trustee to Owners

A. In addition to the advertisement, the trustee or the party secured shall give written notice of the time, date and place of any proposed sale in execution of a deed of trust by personal delivery or by mail to (i) the present owner of the property to be sold at his last known address as such owner and address appear in the records of the party secured, (ii) any subordinate lien holder who holds a note against the property secured by a deed of trust recorded at least thirty days prior to the proposed sale and whose address is recorded with the deed of trust, (iii) any assignee of such a note secured by a deed of trust provided the assignment and address of assignee are likewise recorded at least thirty days prior to the proposed sale, (iv) any condominium unit owners association which has filed a lien, (v) any property owners' association which has filed a lien, and (vi) any proprietary lessees association which has filed a lien. Written notice shall be given pursuant to clauses (iv), (v) and (vi), only if the lien is recorded at least thirty days prior to the proposed sale. Mailing of a copy of the advertisement or a notice containing the same information to the owner by certified or registered mail no less than fourteen days prior to such sale and to lien holders, the property owners association or proprietary lessees' association, their assigns and the condominium unit owners' association, at the address noted in the memorandum of lien, by ordinary mail no less than fourteen days prior to such sale shall be a sufficient compliance with the requirement of notice. The written notice of proposed sale when given as provided herein shall be deemed an effective exercise of any right of acceleration contained in such deed of trust or otherwise possessed by the party secured relative to the indebtedness secured. The inadvertent failure to give notice as required by this subsection shall not impose liability on either the trustee or the secured party.

If a note or other evidence of indebtedness secured by a deed of trust is lost or for any reason cannot be produced and the beneficiary submits to the trustee an affidavit to that effect, the trustee may nonetheless proceed to sale, provided the beneficiary has given written notice to the person required to pay the instrument that the instrument is unavailable and a request for sale will be made of the trustee upon expiration of fourteen days from the date of mailing of the notice.

The notice shall be sent by certified mail, return receipt requested, to the last known address of the person required to pay the instrument as reflected in the records of the beneficiary and shall include the name and mailing address of the trustee. The notice shall further advise the person required to pay the instrument that if he believes he may be subject to a claim by a person other than the beneficiary to enforce the instrument he may petition the circuit court of the county or city where the property or some part thereof lies for an order requiring the beneficiary to provide adequate protection against any such claim.

If deemed appropriate by the court, the court may condition the sale on a finding that the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument. Adequate protection may be provided by any reasonable means.

If the trustee proceeds to sale, the fact that the instrument is lost or cannot be produced shall not affect the authority of the trustee to sell or the validity of the Virginia foreclosure sale.

Failure to comply with the requirements of notice contained in this section shall not affect the validity of the sale, and a purchaser for value at such sale shall be under no duty to ascertain whether such notice was validly given.

In the event of postponement of sale, which may be done in the discretion of the trustee, no new or additional notice need be given pursuant to this section.
Advertisement Required before Sale by Trustee

A. Advertisement of sale by a trustee or trustees in execution of a deed of trust shall be in a newspaper having a general circulation in the city or county wherein the property to be sold, or any portion thereof; lies pursuant to the following provisions:

1. If the deed of trust itself provides for the number of publications of such newspaper advertisement, which may be done by using the words "advertisement required" or words of like purport followed by the number agreed upon, then no other or different advertisement shall be necessary, provided that, if such advertisement be inserted on a weekly basis it shall be published not less than once a week for two weeks and if such advertisement be inserted on a daily basis it shall be published not less than once a day for three days, which may be consecutive days, in the same manner as if the method were set forth in the deed of trust. Should the deed of trust provide for advertising on other than a weekly or daily basis either of the foregoing provisions shall be complied with in addition to those provided in such deed of trust. Notwithstanding the provisions of the deed of trust, the Virginia foreclosure sale shall be held on any day following the day of the last advertisement which is no earlier than eight days following the first advertisement nor more than thirty days following the last advertisement.

2. If the deed of trust does not provide for the number of publications of such newspaper advertisement, the trustee shall advertise once a week for four successive weeks; provided, however, that if the property or some portion thereof is located in a city or in a county immediately contiguous to a city, publication of the advertisement five different days, which may be consecutive days, shall be deemed adequate. The Virginia foreclosure sale shall be held on any day following the day of the last advertisement which is no earlier than eight days following the first advertisement nor more than thirty days following the last advertisement.

B. Such advertisement shall be placed in that section of the newspaper where legal notices appear or where the type of property being sold is generally advertised for sale.

C. In addition to the advertisement required by subsection A above, the trustee shall give such other further and different advertisement as the deed of trust may require and in addition may give such additional advertisement as he may deem appropriate.

D. In the event of postponement of sale, which postponement shall be at the discretion of the trustee, advertisement of such postponed sale shall be in the same manner as the original advertisement of sale.

E. Failure to comply with the requirements for advertisement contained in this section shall, upon petition, render a sale of the property voidable by the court.
Contents of Advertisements of Virginia Foreclosure Sale

The advertisement of sale under any deed of trust, in addition to such other matters as may be required by such deed of trust or by the trustee, in his discretion, shall set forth a description of the property to be sold, which description need not be as extensive as that contained in the deed of trust, and shall identify the property by street address, if any, or if none, shall give the general location of the property with reference to streets, routes, or known landmarks. Where available, tax map identification may be used but is not required. The advertisement shall also include the time, place and terms of sale and shall give the name or names of the trustee or trustees. It shall set forth the name, address and telephone number of such person (either a trustee or the party secured or his agent or attorney) as may be able to respond to inquiries concerning the sale.
Powers and Duties of trustee in event of sale under a deed of trust

A. In the event of sale under a deed of trust, the trustee shall have the following powers and duties in addition to all others:

1. Written one-price bids may be made and shall be received by the trustee from the beneficiary or any other person for entity by announcement of the trustee at the sale. Any person other than the trustee may bid at the Virginia foreclosure sale, including a person who has submitted a written one-price bid. Upon request to the trustee or trustees, any other bidder in attendance at a foreclosure sale shall be permitted to inspect written bids. Whenever the written bid of the beneficiary is the highest bid submitted at the sale, such document shall be filed by the trustee with his account of sale. The written bid submitted pursuant to this subsection may be prepared by the beneficiary, its agent or attorney.

2. The trustee may require of any bidder at any sale a cash deposit of as much as ten per centum of the sale price (unless the deed of trust specifies a higher or lower maximum, which may be done by the words "bidder's deposit of not more than... dollars may be required," or words of like purport) before his bid is received, which shall be returned to the bidder unless the property is sold to him, otherwise to be applied to his credit in settlement or, should he fail to complete his purchase promptly, to be applied to pay the costs and expense of sale and the balance, if any, to be retained by the trustee as his compensation in connection with that foreclosure sale.

3. The trustee shall receive and receipt for the proceeds of sale, no purchaser being required to see to the application of the proceeds, account for the same to the commissioner of accounts and apply the same, first, to discharge the expenses of executing the trust, including a reasonable commission to the trustee; secondly, to discharge all taxes, levies, and assessment, with costs and interest if they have priority over the lien of the deed of trust, including the due pro rata thereof for the current year; thirdly, 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, with lawful interest; and, fourthly, the residue of the proceeds shall be paid to the grantor or his assigns; provided, however, that the trustee as to such residue shall not be bound by any inheritance, devise, conveyance, assignment or lien of or upon the grantor's equity, without actual notice thereof prior to distribution; provided further that such order of priorities shall not be changed or varied by the deed of trust.

B. Upon discharge (other than by sale by the trustee) of all debts, duties and obligations imposed by the deed upon the grantor, including any expenses incurred preparatory to sale, then upon the grantor's request the trustee shall execute and deliver a good and sufficient deed of release at the grantor's own proper costs and charges.

source http://www.foreclosureuniversity.com...s/virginia.php

[amiesheikh]

A few questions about VA foreclosures in relation to a scenario I'm going thru right now with a client i have a short sale with.

We sent in a complete short sale package including a contract to First Horizon and they acknowledged receipt of it (I have a list of about 8 names saying yes they have it) on Dec 23rd. Aucion date set for Dec 30th. Was told they were going to postpone it. Didn't trust them so I was on the phone with them the 28th, 29th and morning of the 30th. They played the "missing docuemtn game" wth us on the morning of the 30th, auction day.

Property goes to auction but no one buys it. It reverts back to the bank. We convince them to take another look at our short sale package. They agree and put a hold on recording the deed until after 1/15.

yesterday I got an email from a shady agent who said she was hired by the bank to list the property. She informs me that she's already changed the locks and has my lockbox. I inform her (as do the sellers) that she needs to call the bank because they are not the owners of the property yet. She's basically holding the property and my lockbox hostage. We are trying to get the police involved.

Questions are:
1) Since the deed hasn't been recorded yet in frst horizon's name and the current deed is still in the 2 sellers names (they pulled a deed today) who owns the property? I say it's the sellrs and the banks agent is tresspassing, destroying property and commiting theft (by removing my lockbox).

2) Is there an eviction process that has t be followed by the bank in VA after a forecosure sale? This is not a primary residence but there is 1 tenant living there.

3) There are 2 seperate owners to the property. The first trust is in 1 owners name and the second trust is in the other owners name. Owner 1 with the first is the one who stopped paying the mortgage 6 months ago. The firm hired by the bank to handle the foreclosure proceedings didn't send any notice to owner number 2 regarding the foreclosure except for sending the same letter they sent to owner numbr 1's home address with owner number 2's name on top (but they sent it to #1's address. #2 lives somewhere els). Is there some law that was violated there by the bank or it's attorney?