Yes, The Bank Can Take Your Home!
Generally, yes if you have not been making your mortgage payments!
The laws in the Commonwealth of Virginia (as in most states) favor banks over financially stressed homeowners. The Deed of Trust (which is the mortgage instrument in Virginia) controls what happens when payments are delinquent. Some states force banks to take a delinquent borrower to court, which can delay the process for several months. Lenders in Virginia have access to a non-judicial process allowing them to avoid many of the delays typically associated with going to court. The process simply involves providing notice of a sale to the homeowner and notice to potential buyers at an auction. This notice is generally through a newspaper ad.
Although the state law favor lenders, federal bankruptcy law can trump the state processes allowing you to possibly retain your home and paying the arrearages. understanding them may help you to decide when it’s time to consult with Yorktown bankruptcy attorneys for Chapter 13 or Chapter 7 representation.
Types of Foreclosures
When you borrower money from a bank or other lender to purchase a home, a mortgage document called a Deed of Trust) is filed with the clerk of the county in which the property is located. The recorded document is a public record, and constitutes a lien against your property. It is this recorded lien that prevents you from selling your home without the debt owed on the property being paid in full. This same document also gives the bank the right to foreclose on (or repossess) the property in the event you fail to make all required payments.
Virginia allows banks to bypass the courts with a non-judicial foreclosure because the deed of trust contains a clause allowing its sale by the trustees name in the Deed of Trust. This power of sale clause contains your consent to the bank selling your home without first filing a lawsuit as long as the bank follows the following steps:
- Comply with federal rules regarding how long banks must wait before beginning the process to foreclose on your home.
- Send a notice at least 14 days before a sale informing you of the default and the impending sale of the property.
- Publish the notice of sale of the property in a local newspaper.
Once the date of sale arrives, your home is sold to the highest bidder. The proceeds of the sale are applied toward repayment of the debt you owe plus unpaid taxes and the expenses associated with taking and selling the property. Any leftover funds would go to you. There rarely are leftover funds.