Homeowners in West Virginia (and every other state) who are behind on a mortgage payment get a breathing period of 120 days before a foreclosure can start. After the waiting period expires, the bank can foreclose using one of two methods allowed by state law—a judicial process that proceeds through the court system and a faster, less expensive nonjudicial foreclosure. In this article, you’ll learn about these procedures and your rights as a homeowner.
(General foreclosure matters, as well as options to avoid foreclosure, are covered in Foreclosure and Your Home.)
Foreclosure Can Start 120 Days After Mortgage Default
A bank or mortgage company can take your home through a foreclosure if you don’t make the monthly payments required by the loan contract. In 2014, a new federal law went into effect that provides homeowners with a few months to work out a way to avoid losing the home before the foreclosure can start.
Now, the loan servicer (the company that collects the monthly payment) cannot begin the foreclosure process until the payment is delinquent by more than 120 days. This waiting period gives the borrower time to submit a loan workout or “loss mitigation” application. If approved, you might receive a loan modification or another loss mitigation option that will allow you to avoid a foreclosure altogether.
(You’ll find additional details about the 120-day loss mitigation period in Delaying Foreclosure: The Dodd-Frank Act 120-Day Rule.)
West Virginia Foreclosure Procedure
In West Virginia, the bank can foreclose using either a judicial or nonjudicial process. Here’s a brief synopsis of each.
Judicial foreclosure. A bank opting to use the judicial foreclosure procedure will start by filing a lawsuit in the state court. The complaint will ask the court for permission to sell the property and use the proceeds to repay the loan. If the borrower fails to answer the lawsuit, the bank will get a “default judgment, ” and the sale will move forward. By contrast, if you file an answer asserting a defense, the court will decide the winner after reviewing all of the evidence.
Nonjudicial foreclosure. Courts don’t play a role in this foreclosure type. Instead, the bank must follow procedures explained in state law. For instance, most states require the bank to mail the borrower a series of foreclosure notices. Once done, the bank can hold the sale. Most foreclosures in West Virginia are nonjudicial because it’s simpler and cheaper than using the court system.
(Read about foreclosure in What Are the Differences Between Judicial and Nonjudicial Foreclosures?)
The Nonjudicial Process
A homeowner will receive two notices before losing the home to foreclosure. First, the bank must issue a notice of default before the foreclosure starts. Additionally, a notice of sale must go out during the foreclosure. The trustee will also publish the notice of sale in a newspaper.
Pre-foreclosure notice of default. Before the foreclosure officially begins, the bank must personally deliver or mail a notice of default. (A mortgage “default” occurs when the borrower fails to comply with the loan terms, such as by not making payments.) The notice gives the borrower ten days to “cure the default” (bring the account current). Under West Virginia law, a borrower loses the right to cure after three defaults.
Notice of sale. The trustee—the person or entity that manages the foreclosure process—must mail the borrower a notice of sale within a “reasonable amount of time” before the foreclosure sale takes place. To learn what time frame is considered reasonable, you’ll want to confer with a foreclosure attorney.
Deficiency Judgment Following a Nonjudicial Foreclosure
If the sales proceeds received from the foreclosure sale aren’t sufficient to pay off the total debt owed, the bank can ask a court for a deficiency judgment. The judgment will allow the bank to collect the outstanding balance from the borrower. The bank must file a separate lawsuit once the nonjudicial foreclosure is complete.
If you find yourself facing a deficiency judgment, you might be able to discharge it (wipe it out) in bankruptcy. For further information, consult with a local bankruptcy attorney.
No Redemption Period After the Foreclosure Sale
Some states let a foreclosed homeowner “redeem” (repurchase) the home after a foreclosure sale. In West Virginia, foreclosed homeowners cannot redeem a home after foreclosure.
West Virginia Foreclosure Laws
To find the law governing nonjudicial foreclosure in West Virginia, go to the West Virginia Code (sections 38-1-3 through 38-1-15).
Questions for Your Attorney
- Can I apply for loss mitigation after receiving a notice of sale?
- What are the differences between the various loss mitigation options?
- Will I have to leave my home after the foreclosure sale?