Notice of the Foreclosure

Before a foreclosure sale can occur, the lender or trustee has to serve (mail) a notice of sale to you (the homeowner) no less than 60 days (depending on the State. 30 days in Georgia). The lender or trustee also has to publish the notice of sale in a newspaper in the manner specified in the loan contract, though not less than once per week for two weeks or three days if published on consecutive days (4 weeks in Georgia). If the loan agreement doesn't give publishing requirements, the notice must be published once per week for four weeks, or on five consecutive days.

State Foreclosure Laws in GA and VA

Again, most Virginia and Georgia foreclosures are nonjudicial. The law doesn't require a lender to do much to complete an out-of-court foreclosure. The minimal steps required include: sending you one notice and publishing a notice of the sale in a newspaper.

What is a Deficiency Judgment?

Sometimes, a foreclosure sale doesn't bring in enough money to pay off the full amount owed on the loan. The difference between the sale price and the total debt is called a "deficiency balance." Many states, including Virginia, allow the lender to get a personal judgment, called a "deficiency judgment," for this amount against the borrower. To get a deficiency judgment, the lender has to file a separate lawsuit after the foreclosure sale.

What is a loan modification?

A loan modification is a written agreement between you and the holder of your mortgage to change the original terms of your mortgage (such as the length of the loan, principal balance, or interest rate). If you obtain a permanent loan modification, then your monthly payment may be reduced to a more affordable amount. You apply for a modification in much the same way that you apply for a loan, by providing personal and financial information, tax returns, proof of employment, etc. If your numbers meet the numerical formula used by the lender, then your application will be approved and your loan terms will be changed. If not, then your application will be denied, and you will still be bound by the terms of the original loan. Please be aware that in some cases, the length of the loan or the principal balance may be increased in return for a lower interest rate and monthly payment.

Some lenders allow homeowners to participate in a trial modification program while their application for a permanent modification is being considered. Please be aware that if your application for a permanent modification is denied, the lender may demand that you pay the difference between your original monthly payments and the trial program payments. Moreover, if the homeowner is delinquent in making payments under the trial modification program, it is almost certain that the application for a permanent modification will be denied.

But be warned: applying for a loan modification may not stop a foreclosure. There have been instances where homeowners have had their homes sold at foreclosure while their modification applications were still pending. You should take action immediately if you receive a notice that your home will be foreclosed on by the holder of the mortgage.

Is there a redemption period after the foreclosure sale?

Some states have a law that gives a foreclosed homeowner time after the foreclosure sale to redeem the property. Virginia and Georgia, however, DO NOT have a law providing a post-sale redemption period. So, you won't be able to redeem the home following a foreclosure.

When You Have to Move Out After a Virginia Foreclosure?

After a Virginia of Georgia nonjudicial foreclosure, the purchaser that bought the home at the foreclosure sale may start a separate unlawful detainer (eviction) action. The foreclosed homeowner might get a five-day notice to quit (leave). While you can stay in the property until you're forcibly removed through the eviction process, it's generally best to leave before the deadline to move out given in the notice to quit expires.

What happens after the foreclosure?

A valid foreclosure wipes out the borrower’s right to live in the house. The new owner of the property may file a dispossessory action to evict the borrower from the home. Some lenders have a “cash for keys” program, in which they will pay homeowners a small amount to voluntarily leave the property.

In most cases, the mortgage holder accepts the property in satisfaction of the loan, and foreclosure marks the end of legal proceedings against the borrower. However, the holder of the mortgage may file suit against the borrower to recover any difference between the amount paid for the property at the foreclosure and the amount remaining on the promissory note. This is called a deficiency proceeding. If this happens, the matter will go before the courts.

What is a short sale?

A short sale occurs when you sell your home for less than the balance remaining on your mortgage. It is important to understand that a short sale must be approved in advance by your lender. If it is approved, the holder of your mortgage agrees to accept the proceeds of the sale and to cancel the mortgage.

Will a short sale harm my credit?

Honestly, your credit probably has taken some hits because of the missed payments for the foreclosure sale. However, a short sale shows up as a paid off account on your credit report, instead of a foreclosure and you can purchase another home in as little as one day outside of your short sale. In some instances, the bank will even give you assistance to move into another home.

Will a foreclosure sale harm my credit?

Yes, a foreclosure sale will lock you out of the market for a period of 7 to 10 years. Additionally, it will show as an unsatisfied mortgage on your credit report which will have lasting implications.