If you are having difficulties making your mortgage payment in Virginia, there are several questions that you will want answered about foreclosure and short sales. You may also have several questions about how foreclosure laws apply to your situation, and what can be done to avoid foreclosure. Our law firm has answered some of the most common questions regarding foreclosures and short sales in the State of Virginia in an effort to help you with this issue.
Will I Still Owe On My Mortgage If I Sell My Home In A Short Sale?
The answer to this question is maybe. Since you are selling your home for less than what you owe on the mortgage, there will be a remaining balance. This balance is referred to as a deficiency balance, and the mortgage lender has the ability to handle this balance in one of three ways. The lender may:
- Offer a Waiver of Deficiency which will forgive the remaining debt
- Require that the balance be repaid in full through an unsecured loan
- Request the Court to grant a judgment against you and then seek collections
Unlike many other states, Virginia does not require that the lender grant a Waiver of Deficiency to the borrower when a short sale is completed. The borrower will have to request this and negotiate with the lender to ensure that they do not face a large debt after the sale of their home has closed.
Is It Common For Lenders To Waive The Balance Of A Mortgage After A Short Sale?
In many cases, if the lender is a first mortgage holder, they will waive the balance of the mortgage as part of their negotiations with the borrower. However, if there is a second mortgage on the home when it is sold in a short sale, this lender may not be as gracious. Second mortgage holders receive a very small portion of the proceeds from a short sale, if any. Because of this, they may use aggressive measures to collect on the debt.
Is It Required To Use A Real Estate Agent To Sell A Home In A Short Sale In Virginia?
Virginia state law does not require that you use a real estate agent to conduct a short sale on your home. However, your lender can require you to list your home for sale with a real estate agent for its full value while you have it listed as a short sale. The lender may request this to see if you are making every effort to get as much as possible for your home when you make the sale. This requirement will not force you to use the agent as part of the short sale.
Is The Bank Going To Demand My Financial Information To Approve A Short Sale?
In most cases, the lender will want to see financial documentation showing that you can no longer afford to make your monthly mortgage payment. In many cases, this will include pay stubs, bank statements and possibly tax returns. These papers will be in addition to the financial hardship letter you must submit to the lender requesting permission to sell your home in a short sale.
Are Foreclosures In Virginia Judicial or Non-Judicial?
A majority of foreclosures that take place in Virginia are non-judicial foreclosures. This means that the foreclosure does not require a Court hearing to process. In most mortgage documents there is wording that states the lender has the “power of sale.” This gives the lender the right to sell the property if the borrower fails to make payments on the loan. Most non-judicial foreclosures move through the system very fast, making it preferable to the lender.
Will The Homeowner Owe The Remaining Balance On The Property After A Foreclosure Or Short Sale?
In most cases, if a foreclosed home is sold at auction for less than what is owed on the loan, the borrower becomes responsible for the remaining amount. This is a deficiency balance, and most lenders will seek payment from the former home owners. In a short sale, the borrower may negotiate with the lender to absolve them of any remaining balance on the loan as part of the short sale contract. However, this is not automatic and must be asked for by the borrower and the lender must agree to these terms.
We Are Here To Help
Our firm understands that facing foreclosure can be very upsetting and that you may feel as if you are facing these problems alone. We encourage you to speak to someone within our firm to learn about the options and rights you have in Virginia when facing foreclosure or trying to process a short sale. Call our office or contact us online today and learn about the many ways we can help.