Avoiding Foreclosure in Richmond: How Virginia Foreclosure Works and What You Can Do

If you’ve missed mortgage payments or received a letter about a trustee’s sale, you likely have more time and more options than it feels like right now. This guide to avoiding foreclosure in Richmond explains how the process actually works in Virginia, the notice rules lenders and trustees have to follow, and the choices you have at each stage, from catching up to selling on your own terms. I’m Joe, owner of Richmond Property Buyers. I buy houses for cash, and that’s one option among several, so I’ll cover all of them. This is general information, not legal advice. For your own case, talk to a foreclosure attorney or a HUD-approved housing counselor, and you’ll find how to reach both near the end of this page.

How foreclosure works in Virginia

Most Virginia home loans are secured by a deed of trust. When you signed it, you gave a trustee the power to sell the property if the loan goes into default. That’s why most Virginia foreclosures are nonjudicial: no lawsuit is filed, and no judge approves the sale. The lender (or the company servicing the loan) asks the trustee to sell, and the trustee follows the steps set out in the deed of trust and in Virginia law. Judicial foreclosure is allowed in Virginia, but it’s uncommon.

Nonjudicial doesn’t mean there are no rules. The rules just come from the statute and your loan documents instead of a court schedule, which is why it’s worth knowing them.

The usual timeline, step by step

Every loan is different, but a typical Virginia foreclosure on a home you live in moves through these stages.

1. Missed payments and the 120-day line. After a missed payment, expect late fees, calls, and letters from your servicer. Under the federal mortgage servicing rules, a servicer generally can’t make the first notice or filing required to start foreclosure until the loan is more than 120 days delinquent. Those four months are the best time to act, because every option is still open.

2. Acceleration and a substitute trustee. Once the lender decides to foreclose, it typically declares the whole loan due and appoints a substitute trustee, often a law firm that handles foreclosures. The appointment has to be recorded in the land records where the deed of trust is recorded.

3. The written notice of sale. Virginia requires written notice of the time, date, and place of the sale. For owner-occupied residential property, mailing it to the owner by certified or registered mail at least 60 days before the sale satisfies the requirement. For other property, like a rental or a vacant house, the minimum is 14 days. Notice also goes to certain junior lienholders and, where they’ve recorded liens, to owners’ associations. If the owner has died, the notice goes to the last known address, to any personal representative recorded with the circuit court, and to heirs on a recorded list of heirs. For an owner-occupied home, the trustee can’t sell without an affidavit confirming the owner notice was sent.

4. Newspaper advertisement. The trustee also advertises the sale in a newspaper with general circulation where the property is located. If the deed of trust sets the number of ads, weekly ads must run at least once a week for two weeks, or daily ads at least three days. If it doesn’t, the default is once a week for four successive weeks, or five days if the property is in a city or a county next to a city. Either way, the sale has to take place no earlier than eight days after the first ad and no more than 30 days after the last one.

5. The auction. The sale is a public auction, usually held at the property, in front of the circuit court building, or at another place allowed by the deed of trust. The trustee may require bidders to put down a deposit of up to 10% of the price, unless the deed of trust sets a different amount. The lender often bids.

6. After the sale. The trustee pays out the proceeds in a set order: first the costs of the sale, then taxes with priority, then the loan being foreclosed, then junior liens in order of priority. Anything left over goes to the former owner. The trustee also has to account for the sale to the commissioner of accounts. Virginia has no statutory right to buy the house back after a completed sale.

7. A possible deficiency. If the sale brings in less than you owe, Virginia allows the lender to sue for the difference, which is called a deficiency judgment. It isn’t automatic. The lender has to file a separate lawsuit. This is one reason a sale or workout before the auction can matter even when there’s little equity.

Your options, from keeping the house to leaving on your own terms

Reinstatement. Reinstatement means paying everything that’s past due, plus the lender’s allowed fees and costs, to stop the foreclosure and resume your normal payments. Virginia law itself doesn’t guarantee a right to reinstate, but the standard Fannie Mae/Freddie Mac Virginia deed of trust gives borrowers this right up to five days before the sale. Your loan may say something different. Separately, paying off the entire loan before the sale, by refinancing or selling, ends the foreclosure. Ask your servicer for a written reinstatement quote with a good-through date.

Repayment plan or forbearance. If the problem was temporary, like a job loss, a medical event, or a gap in income, your servicer may agree to spread the missed amount over future payments, or to pause or reduce payments for a period. Get any agreement in writing, and make sure you understand what’s owed when it ends.

Loan modification. A modification permanently changes the loan terms, for example by adding missed payments to the balance or extending the term, so that the monthly payment is something you can keep up with. Timing matters here. Under federal rules, if your servicer receives a complete loss mitigation application more than 37 days before a scheduled sale, it has to evaluate you for every option it offers within 30 days, and it can’t conduct the sale while the application is pending, with limited exceptions. Send the complete package as early as you can, keep copies, and write down who you talked to and when.

Short sale. If you owe more than the house can sell for, your lender may agree to accept less than the full payoff. That’s a short sale, and it needs the lender’s written approval before closing. Ask whether the lender will waive the remaining balance or reserve the right to collect it. Get that answer in writing and have an attorney review it. Forgiven debt can also have tax consequences, so talk to a tax professional.

Deed in lieu of foreclosure. In some cases, the lender will accept the deed to the property in place of foreclosing. Like a short sale, it requires the lender’s agreement, and the terms about any remaining balance matter.

Selling before the sale date. If you have equity, selling pays off the loan from the proceeds and puts the rest in your pocket, instead of leaving it to an auction. You can list with an agent if there’s enough time for a buyer’s loan to close, or sell for cash if the clock is short or the house needs work. Either way, the settlement agent needs a payoff statement and time for title work before the sale date. A signed contract doesn’t automatically stop a scheduled sale, so tell your servicer and the trustee’s office as soon as you have one, and ask in writing about postponing.

Bankruptcy. Filing a bankruptcy case triggers an automatic stay that generally halts a foreclosure while it’s in place. It has serious long-term consequences, and the rules differ by chapter. It’s a decision to make with a bankruptcy attorney.

Servicemembers. Under the federal Servicemembers Civil Relief Act, a mortgage taken out before military service generally can’t be foreclosed without a court order during service or for one year afterward. If that could apply to you, tell your servicer and get legal help. Veterans with VA-guaranteed loans can also get help from a VA loan technician. Contact details are on VA.gov’s “VA help to avoid foreclosure” page.

Where to get free or low-cost help

• HUD-approved housing counselors. Call (800) 569-4287 to find one near you, or search the CFPB’s “Find a housing counselor” tool. HUD says foreclosure counseling from participating agencies is always free.
• Virginia Legal Aid. For free civil legal help if you qualify, call 1-866-534-5243 or visit VaLegalAid.org.
• Virginia Lawyer Referral Service. Run by the Virginia State Bar. Call (804) 775-0808 in the Richmond area or (800) 552-7977 statewide.
• Virginia Housing. The state housing agency’s website has a foreclosure prevention page with resources for homeowners.

Avoiding foreclosure in Richmond without falling for a scam

People facing foreclosure are a favorite target for scammers. The Federal Trade Commission warns about a few common patterns:

• Upfront fees for loan help. It’s illegal for a company offering mortgage relief to charge you before you’ve received, and accepted, a written offer from your lender. Licensed attorneys doing real legal work are treated differently.
• “Stop talking to your lender.” A legitimate helper never tells you that.
• “Sign the deed over and rent it back.” Transferring your deed doesn’t transfer your mortgage. You can lose the house and still owe the loan.
• “Sell to us cheap and buy it back later.” That’s the equity-skimming pitch the FTC describes.

A legitimate cash sale looks different. It’s a sale at a price in writing, closed by a title company or attorney. The loan is paid off at closing, the remaining proceeds go to you, and nobody promises to sell the house back to you.

Where a cash sale fits, honestly

If you want to keep the house and can afford it going forward, start with your servicer and a housing counselor. Reinstatement or a modification may be the better answer, and selling may not be necessary at all. If you have time and the house is in good shape, a listing may bring a higher price. My comparison of a cash offer and a listing can help you weigh that.

A cash sale tends to make sense when the sale date is close, when the house needs repairs a financed buyer’s lender wouldn’t accept, or when you simply want a firm date and a known number. I buy as-is, with no commissions or fees charged by me, I pay the closing costs, and with clear title I can close in about seven days, which can matter when a trustee’s sale is on the calendar. If your balance is more than an as-is sale would bring, I’ll tell you. In that case the lender’s approval for a short sale would be needed first.

To find out where you stand, call me at (804) 293-0208 or request a cash offer, and I’ll get back to you within 3 hours. You can also read how the process works first, or see which situations suit an as-is sale. Questions about liens, taxes, and settlement statements are covered in my FAQ.

Questions about Virginia foreclosure

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