After a non-judicial foreclosure sale in Virginia, the sale proceeds are $285,000. The outstanding loan balance is $260,000, and the trustee's fees and foreclosure costs total $8,000. How will the remaining funds be distributed?
Correct Answer
C) The surplus of $17,000 is paid to the former borrower (trustor) after all valid liens are satisfied
Under Virginia law, after a non-judicial foreclosure sale, the proceeds are distributed in a specific priority order: first, costs and fees of the sale (including trustee fees); second, the outstanding debt owed to the beneficiary (lender); and third, any surplus proceeds go to the former borrower (trustor) after all valid liens are satisfied. In this scenario: $285,000 - $8,000 (costs) - $260,000 (loan) = $17,000 surplus returned to Patricia. If junior lienholders exist, they would be paid before the borrower.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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