In the case Bayview Loan v. Simmons, 175 Va. 114 (2008), the Supreme Court of Virginia upheld a trial court’s ruling that a defendant loan servicing company was precluded from foreclosing because it had failed to send the property owner a pre-acceleration notice via certified mail.
The loan servicing company alleged that it had sent plaintiff a letter by first-class mail notifying her that the note would be accelerated and foreclosure proceedings would be begin unless the past due amount was paid within 30 days. Thereafter, a letter, via certified mail, was sent to the property owner advising her that the payments under her note had been accelerated due to her default and that her property would be sold at foreclosure. The foreclosure sale took place, and the property was sold to a bidder for an amount that significantly less than its market value. Thereafter, Plaintiff commenced a lawsuit against the loan servicer, alleging that the terms of her deed in trust had been breached because the pre-acceleration notice was not sent to her via certified mail. The Court ruled in favor of the Plaintiff, awarding her $156,000.00 for her loss of equity in the subject property.
The Virginia Supreme Court upheld the trial court decision, ruling that because the pre-acceleration notice was not sent via certified mail, the subsequent notice of foreclosure sale “was effectively a nullity.” Id. at 120. In summary, the loan servicer was not entitled to foreclose because it had not complied with a mandatory condition precedent under the contract.
The ruling by the Virginia Supreme Court in Bayview Loan offers property owners an important avenue for challenging foreclosures. Loan servicers are required to strictly comply with contractual obligations set forth in deeds of trust, and their failure to comply with those obligations may be grounds for challenging a foreclosure.
If you are confronted with the possibility of losing your property to foreclosure in Virginia, it is important that you take immediate action. We offer professionally prepared Virginia Foreclosure Defense Forms for download.