After you Fight the Good Fight and Finally Succumb to Foreclosure What is the Worst Case Scenario (WCS)?

After you Fight the Good Fight and Finally Succumb to Foreclosure What is the Worst Case Scenario (WCS)?

Having suffered through financial hardship, failed modification attempts and/or attempts to short-sell your home and/or bankruptcy filings or attempts to get injunctive relief against illegal or fraudulent or legally deficient foreclosure auctions, what remains to be done and to be done to you? What is the WCS?

Foreclosure is just one step in a series of legal steps the lender must take in order to take ownership of your house to try to sell it and have their mortgage paid off. You should have already received numerous computer generated notices and certified mail letters “accelerating” your entire obligation and giving you notice that your house would be sold in an auction either in the office of the Trustee under your deed of trust or at the steps of the courthouse. It is very important for you or a representative to be present at that sale if possible. The requirements for “calling” a legal foreclosure sale are fairly minimal, but they must be followed and if no one friendly to you is there to witness the sale, then the lender’s trustee may be inclined to take some illegitimate short cuts at the auction. Technically, in Virginia, each foreclosure must go through a very minimal government review by certain delegated quasi-governmental accountings with “Commissioners of Account”. The Virginia foreclosure structure has been bolstered through the years by a strong lender lobby and lacks consequences or “teeth” for failures to follow all the required steps and to report accurately to the Commissioner the steps and moneys that have changed hands in the process of foreclosure. In most cases, what this means for you as a victim of foreclosure in Virginia is not that you have any greatly enhanced hope of having the foreclosure set aside by the court, but that you can perhaps use some of the irregularities in the process to buy more time in
your house before you must move out.

If you wish to stay in your house after it sells at a trustee’s auction, you force the lender or the successful third party bidder at the foreclosure auction to evict you. In Virginia, this process is known as filing an “Unlawful Detainer”. The unlawful detainer process is the same as would be used by a landlord to evict a tenant. You have been in fact converted by foreclosure from an owner-occupant to a holdover tenant!

The first step in the Unlawful Detainer process required by Virginia law is a certified mail notice or a “Five Day” Notice to “Pay or Quit”. If you have not paid the entire sum due to the lender within five days of receiving your “Pay or Quit” notice the court will then allow the Trustee or other attorney acting on behalf of the lender to file the eviction lawsuit papers against you. A sheriff or a paid independent private process server will come by to serve those papers on you which will give you notice of the court date for the judgment of eviction to be entered. The sheriff or process server prefer to place the notice in your hands but it is also legally sufficient for them to simply post it on your door in order for the court to take jurisdiction over you.

As if your delinquency under your mortgage and the foreclosure were not bad enough for your credit, having an eviction lawsuit on record at the court will do some additional damage to your credit. In some cases it may be better to move out than to force the lender to complete the Unlawful Detainer. If it save a few points on your credit score or allows you to participate in a “cash for keys” program, it may be worth your consideration to discuss a voluntary move out date with your lender. In general, remaining in contact with the lender is the better course of action. Although your credit may seem like the least of your concerns at this point, keep in mind that if you have to rent a place to live, some landlords will overlook bad credit and even foreclosures or bankruptcies on a credit report but find it really hard to accept a tenant that has forced their landlord(s) to evict them in the past.

If you have not communicated well with your lender during the final stages of the foreclosure and the start of the eviction process they must assume the worst. But if you communicate with them that you are taking great care of the house and protecting it from vandalism and you need a few extra weeks to workout alternate living arrangements, they will be more inclined to work with you. The market is flooded with bank “REO” properties and the lender is often not in a hurry to start paying caretakers, realtors, and other professionals to take care of your property. WCS, if you simply play hardball and do nothing, the lender’s trustee or other legal representative cannot generally evict you at least 45 days from the date of the foreclosure auction! After the order or decree of possession is entered on the Unlawful Detainer court date, it will still take the sheriff at least 10 more days to come out and serve you with a Writ of Possession. The Writ of Possession is used by the lender to physically remove you from the property after the court has awarded a judgment in favor of the lender or new owner from the foreclosure. The sheriffs generally dislike putting their fellow citizens on the street but that is what the law may require! On this 10th day after the sale, if a sheriff is serving with a writ of possession, they may literally allow persons hired by the lender or new owner to start moving your furniture and belongings to the curb! Again, this should not happen in less than 55 days from the auction date!

If you have not filed bankruptcy within the past 5 years (Chapter 13) or within the past 7 years (Chapter 7), you may wish to avail yourself of the right to file before the Writ of Possession is served. This would gain you more than a month of additional possession time in your house. All of this should be accompanied by genuine efforts on your part to resume your normal life, make money, and accumulate a cushion to start over in a new home.

Not all lenders offer “cash for keys” programs but you should look into this option. Presumably, you’ve lived in your house without making a mortgage payment for at least four months by the time you are facing eviction. In exchange for your promise to move out on a date certain and to leave the house clean and in good repair, the lender may pay you money (sometimes several thousand dollars) to move out voluntarily. This saves them the expense of hiring an attorney to evict you. This cash plus the cash you have saved from your unpaid mortgage payments will hopefully be available to help you get back on your feet.

It usually beats the alternative of having sheriff assisted removal to the curb.

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