What Does It Mean to be a “Non-Judicial Foreclosure State”?

Depending on who you ask, the Commonwealth of Virginia is the second easiest state in the United States in which to foreclose on a deed of trust or mortgage. Along with about half of the states, Virginia is a “non-judicial foreclosure state”. That means that in most cases, a mortgage lender does not need to go to court or file any documents whatsoever with a judge in order to foreclose upon a home. The main legal protections for the borrower are that the borrower must receive notice that they are in default or that their loan has been “accelerated” and later a notice that a foreclosure has been instituted. If a borrower has, without informing their mortgage company, moved or changed mailing address, those notices may be deemed to have reached the borrower even when they are going to the wrong address! Military Service personnel may have some additional protections in that regard if they are deployed, but generally, the only safety net to not receiving mailed notices would be an advertisement in the newspaper. Generally, those ads may be required to run up to five times but under law may also be published as few as two times. In some parts of the state, the primary publication used for foreclosure notices are more or less business publications and are not “circulated” among average consumers. The result is that foreclosure and loss of legal title ownership of the property may happen to many homeowners with minimal or no actual notice! All homeowners who are in default on any covenant of their mortgage loan should make certain to keep the mortgage lender apprised IN WRITING of their current mailing address or should read all local publications – at least the Legal Advertisements –  daily!   Also, strongly consider giving your lender any new telephone (cell) numbers. What you don’t know can hurt you. Do not discard any notices received by mail from your lender, regular or certified, or notices posted on your door, especially those sent by attorneys claiming to serve as Trustee or attorney for the mortgage lender.   But you may also discover important information from other third parties such as process servers, real estate investors from their activities in the title records of your town or county, or inspectors.   Save all those documents and seek legal counsel on how to protect your title or pursue alternatives to foreclosure. The sooner a homeowner takes action, the more alternatives are available. Once the foreclosure auction occurs, also known as “once the gavel comes down”, eviction proceedings can begin shortly. The lender may also be able to pursue a borrower by filing a lawsuit to recover any moneys not recovered in the foreclosure auction. This is called “pursuing a deficiency judgment”. Not only is Virginia a Non-Judicial Foreclosure State, but we are NOT an election of remedies state, such as North Carolina, in which a lender must recover against a homeowner in default on their mortgage on their primary residence by EITHER foreclosure OR by lawsuit, but not by both.

Bottom line is that foreclosure in Virginia can occur relatively quickly, with relatively minimal notice, especially in this age of blocking calls to your cell phone. The consequences are serious enough with loss of your home, but the consequences can also linger for years with deficiency judgments and damage to your credit. Face the situation head on and get legal help!  You might be surprised to learn that quite often, attorneys specializing in foreclosure prevention are very affordable and have most or all of their legal fees paid by your lender!

Finally, never assume that because one part of your mortgage company is “working with you”, e.g., helping you apply for a loan modification; that the other part of the mortgage company is not also pursuing foreclosure against you at the same time!

A great example of a homeowner that was “misled” to believe that foreclosure had been suspended while they applied for a modification by a mainline mortgage lender is set forth in some detail in a video blog dated 5-23-12 : www.TBWSDailyShow.com.