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VA Mortgage Law
This is December 19, 2009. I recently read in the Wall Street Journal about mortgage foreclosures in California. It described how homeowners just walked away from their homes. This means they stop paying their mortgage payment each month and then stay there until required to leave by law. After that they start renting another home, often times a better home, for a good deal less money.Well, it can't happen in Virginia. In California, the lender can not sue the defaulting home owner for its losses incurred after a foreclosure. Evidently, there are 10 states that forbid this. California is one of them. Virginia is not.
In Virginia, you can just walk away, but the lender may come after you.
This is how it works in the Commonwealth. If the mortgage company doesn’t get a monthly payment they can begin foreclosure proceedings. Here it's pretty simple. They tell the Trustee to begin sale procedures. This means, setting a sale date, notifying the home owner of the date of sale, etc., and putting a sale ad in the newspaper. One evening when you have difficulty sleeping, check the ad section of the paper and read one or two.
At sale, the property is sold to the highest bidder. These sales are pretty interesting. They are usually at the local courthouse. Not many attend. After foreclosure expenses are deducted from sale proceeds, the balance is applied to the mortgage balance. If it's not enough to pay that, then there is a deficiency. In Virginia, the lender will make an effort to collect the balance from the homeowner. This means a law suit and a judgment against the home owner, then garnishment, etc. Often the deficiency is quite large and it means Bankruptcy for the homeowner.
So here you should not "just walk away" without getting some sound legal advice.
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