After a non-judicial foreclosure sale in Virginia, the property sells for $180,000, but the outstanding loan balance is $210,000. The foreclosure costs are $5,000. The lender wants to recover the remaining $35,000 from the former borrower. What legal remedy can the lender pursue in Virginia?
Correct Answer
B) The lender may file a lawsuit to obtain a deficiency judgment against the former borrower for the $35,000 shortfall
Virginia is not a strict non-recourse state. After a non-judicial foreclosure sale, if the sale proceeds are insufficient to cover the outstanding debt and costs, the lender (beneficiary) may file a separate lawsuit in circuit court to obtain a deficiency judgment against the former borrower for the remaining balance. In this case, the deficiency is $210,000 + $5,000 - $180,000 = $35,000. The lender must pursue this through the courts; it is not automatic.
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