Foreclosure Law in Virginia
In Danville, Virginia is a process allowing a lender of a mortgage to take possession or ownership of the property that secured the mortgage in the first place, to cut their losses when a borrower defaults on his or her loan.
If an ordinary consumer faces foreclosure, it usually involves a home that was purchased with a mortgage from a bank. The bank will usually try to sell the house at a public option, with the hope of at least covering the remaining debt, to avoid taking a large loss.
Like every other state in the U.S., Virginia allows homeowners facing foreclosure to opt for a foreclosure by judicial sale. This is a process through which a court oversees the sale of the house by the lender. The purpose is to see that the lender takes reasonable steps to notify the public of the auction, and other steps to ensure that the house sells for the highest price possible. This is meant to protect the borrower, making it less likely that they'll have to pay a large deficiency judgment (the remaining amount due on the mortgage if the house sells for less than the remaining balance).
In some states, original mortgages are known as "non-recourse" loans, making the above problem a non-issue. This basically means that once the mortgaged property is sold by the lender, the debt is discharged, even if the sale nets less than the remaining balance on the mortgage. The borrower will simply have to write this off as a loss. However, this usually does not apply to refinanced or second mortgages.
How to Possibly Avoid Foreclosure in Danville, Virginia
It's very important that you engage in continued communication with your bank. Lenders are surprisingly willing to make accommodations if it means they still get paid something, but in order to accommodate your situation, they have to know about it.
You should remember that the bank doesn't really want your house. They approved a mortgage hoping to make a profit from interest, and that's what they'd much rather do. They aren't in the business of buying and managing real estate. Therefore, banks will sometimes go to surprising lengths to accommodate your financial hardship, especially if it's temporary.
If you experience a sudden change in your financial situation, your lender, in an effort to prevent you from defaulting, might be willing to accept lower monthly payments, at least temporarily.
Finally, there is the "short sale." Usually considered a last resort, a short sale results in the borrower losing their home, but discharges almost all of their remaining mortgage debt. If the house is worth far less than the balance of the mortgage, this might be a good option. In Virginia, when a house is sold in a short sale, the proceeds go to the lender. If it sells for less than the mortgage balance, whatever's leftover is forgiven. If it sells for more, the surplus goes to the homeowner.
Can a Danville, Virginia real estate attorney help?
If you live in Danville, Virginia and believe that your house is in danger of being foreclosed, you may have more options and protections than you think. You may not know what all of them are, but an experienced real estate lawyer probably will.