Under West Virginia foreclosure laws, foreclosures can take place in or outside of court. Most West Virginia foreclosures proceed out of court, making them nonjudicial. Uncontested, nonjudicial West Virginia foreclosures may take a year or longer, and the pre-foreclosure process can extend the overall timeline further. If the homeowner contests the foreclosure or if the foreclosing party opts to pursue a judicial foreclosure, then the process may also take longer.
Investors should be aware that West Virginia, like most states, may enact foreclosure and/or eviction moratoriums in response to public health threats or widespread financial crises. Unlike most states, West Virginia did not elect to pass statewide protections for renters or foreclosed homeowners that prevented eviction, foreclosure, or both during the COVID-19 global pandemic in 2020. However, the state’s governor does have the ability to order these types of bans and moratoriums. Real estate investors must check all foreclosure forbearance and eviction moratorium guidance in the state and locally when planning to buy West Virginia foreclosures and prior to implementing eviction procedures.
The West Virginia pre-foreclosure process begins when the servicer attempts to contact the homeowner about delinquent loan payments and options for avoiding foreclosure. However, most real estate investors consider pre-foreclosure to start when a homeowner first misses a mortgage payment, since this is the beginning of the mortgage delinquency and frequently the time at which a homeowner begins to consider selling their property.
In West Virginia, as in most states, lenders are usually required to wait until payment is 120 days delinquent to begin the foreclosure process. If the homeowner applies for loss mitigation during this time period, the loan servicer cannot begin the official foreclosure process until the loss-mitigation period has expired, the homeowner has violated one of the terms of the loss-mitigation or loan-modification agreement, or the homeowner has been notified they are not eligible for loss mitigation.
In West Virginia, an out-of-court foreclosure (nonjudicial) process is most common. Before initiating the foreclosure process, the lender sends a letter to notify the borrower of the impending foreclosure. This letter also serves to inform the borrower of the option to pay off the default and stop the foreclosure proceedings, including the right to reinstate the loan by making all past-due payments and paying all fines and fees in full. The lender cancels the foreclosure if the borrower does this.
According to state code, the lender can’t accelerate the loan (make the full loan balance due immediately) or take action to possess the property until 10 days following the letter to the borrower. Once the time period passes, the lender can set a date for the foreclosure sale and begin the notification process. This involves sending the borrower a notice of sale via certified mail within what West Virginia foreclosure laws describe as “a reasonable amount of time”. A foreclosure attorney can advise on whether correspondence has been sent in such a time frame. Notice is completed when the notice of sale is mailed even if the document is refused or classified as undeliverable and returned. A copy of the notice of sale must be published in a local paper once a week for two weeks before the foreclosure sale.
Foreclosure sales in West Virginia are conducted as public auctions, and bids are usually a minimum of two thirds to three fourths of the estimated value of the property. The property is sold to the highest bidder at the auction, and a trustee’s deed transferring ownership to the purchaser is usually recorded within 30 days.
In some cases, the foreclosure sale may be conducted online. Check with local government offices to find out what type of platform will host the West Virginia foreclosure sale.
Under West Virginia foreclosure laws, the homeowner facing foreclosure can reinstate the loan by paying off all late payments, fines, penalties, interest, and late fees, within 10 days of receiving the notice of default on the loan. A borrower may lose the right to reinstate the loan if they default more than three times. Borrowers may have the right to reinstate for a longer time period, depending on the terms of their loan. Check the loan documents to find out, and remember that lenders have the discretion to allow reinstatement even if it is not required.
Once the 10-day period has passed, borrowers can pay off the entire loan balance and any applicable fees at any time prior to the pending sale of the property. If the borrower does this, the foreclosure process terminates and the sale is canceled.
West Virginia foreclosure laws do not permit redemption of the property after the sale, but the terms of some mortgage notes do permit this. Check the terms of the loan on the property to find out if a homeowner’s loan requires a redemption period.
West Virginia foreclosure laws do not usually permit deficiency judgments. Depending on the terms of the note, foreclosing parties may obtain deficiency judgments by filing a lawsuit after the conclusion of a nonjudicial foreclosure, but only if the note permits and overrides West Virginia legislation on the matter.
After the West Virginia foreclosure sale, the new owner works with the foreclosing party to complete the transaction. The buyer must leave an earnest money deposit at the courthouse the day of the action. County-specific rules and lender-specific rules govern the amount of this earnest money, so refer to local government offices or the foreclosing party to find out what will be needed. Buyers sign a purchase and sale (PSA) agreement and submit a deposit the day of the auction, then close on the property within a predetermined time period – usually 30 days.
In some cases, the new owner will find that the foreclosed homeowner has remained in the property after the sale. West Virginia foreclosure laws do not have specific guidelines for the eviction of foreclosed homeowners other than stating that the foreclosing party can request an eviction notice. There are no formal guidelines on the amount of notice that is required or how quickly a former homeowner must vacate the property. In many cases, new owners may offer residents “cash for keys,” wherein the new owner provides residents with some amount of money in exchange for a smooth, timely exit. Real estate investors must remember that West Virginia foreclosure laws deal with tenants living in foreclosed homes and former homeowners differently and familiarize themselves with all aspects of West Virginia foreclosure laws before investing in a West Virginia foreclosure.
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