Do you ever feel like some mystical spirit changes shape and form, in order to confuse and bewilder you about the foreclosure process in Virginia?
Then you will appreciate the information we present below as we explore how to demystify the foreclosure process in Virginia, so you understand how the process works.
What is a foreclosure?
A foreclosure is the legal proceedings taken by a creditor to repossess a property that is in default. In the case of home foreclosure, the bank or lender is foreclosing against the property and land as collateral. This is in response to a default on the property due to missed payments over a period of time.
Step By Step Foreclosure Process In Virginia
Below is the systematic process of the actions banks generally take in the foreclosure process. Note: Banks also have specific procedures, which sometimes confuse the matter even more. The information below covers Virginia state laws on the foreclosure process.
Step 1: Delinquent Payment– Traditionally the first step in the foreclosure happens when the borrower becomes delinquent in their payments.
Most banks provide a 2-week window for late payments before they charge a late fee. At two weeks, expect the lender to start calling you for collection of the delinquent payment.
Step 2: HUD-1 Breach-The bank contacts you after 15-20 days to let you know that your payment is delinquent. Also at this time, banks send out a letter called a HUD-1 Breach. The HUD-1 is the mortgage settlement statement you signed with your bank when you closed on your property.
The bank sends out the HUD-1 Breach statement for two reasons. 1) They want their money. With only one missed payment, helping the borrower catch up is relatively easy. This is why they send you a reinstatement plan from the bank as well as the HUD 1 and the HUD brochure. 2) The bank must give you up to three written notifications before starting the foreclosure process. In case of default, they want to send you a written notice as soon as possible, to keep the foreclosure process moving.
Step 3: Bank Communication- The bank then calls and emails you for next month to help you get back on track. Be prepared to receive calls from the bank almost every day. If you do not answer, they will call 2-3 times per day to find out what is happening with your payment.
This is when the bank takes an active interest in your loan, because this is the point where they get nervous about the status of your loan. Communication with your bank is vital at this point in the process, because they need to know how to help you.
Step 4: Loss Mitigation: Loss mitigation generally takes over around the 60th days. They contact you to change terms of loan to get back on track. Your bank is attempting to mitigate any potential losses from your loan.
Part of the loss mitigation process for the bank involves modifying the loan. In some cases, changing the interest rate or providing a lower monthly payment for a certain period of time is all that is necessary to stop a foreclosure. The bank wants to avoid foreclosures as much as you do, because Freddie Mac and Fannie Mae rank them for their ability to provide quality loans to buyers. Every foreclosure they receive means less money they can lend in the following year. Additionally, it is very expensive for the bank to foreclose.
Step 5: Foreclosure Filing: Attorneys work on filing a motion to the courts to foreclose on property. This is their last resort. If all else fails, the bank starts the foreclosure proceedings. The attorney will take around 45-60 days to file the foreclosure papers.
Most foreclosure procedures in Virginia take over a year from the time of the first missed payment to the banks repossession of your home. Unfortunately, the buyer has no rights to redemption after the auction. The buyers can be forcibly removed from their home after the foreclosure auction – it can be a very messy and embarrassing time for the homeowner.
What are your options to avoid the foreclosure process in Virginia?
If you are facing foreclosure, you have three options:
1. Work out a payment plan with the loss mitigation department.
2. Sell your home.
3. Let the property go into foreclosure.
4. Use legal proceedings, such as Bankruptcy and court actions to stall the process for time.
Determine which process sounds best for your needs. You need to take some course of action, or the bank will reclaim your property. Have a plan of action to avoid this scenario, based on the information above.
I Do Not Want To Deal With the Foreclosure Process in Virginia
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