As recently as 2005, West Virginia had one of the highest rates of homeownership in the country at just above 81%. By 2016, that had dropped to just under 75%, still high enough to be ranked as the highest in the country. But the Mountain State has since put several programs in place to try and turn that downward trend around. Sometimes, people will seek out special financing to purchase property or a home. One of the more popular alternatives to a standard mortgage loan with a big bank is known as a "hard money" loan. If a buyer is willing to use their own property as collateral, private hard money lenders will sometimes help fund the purchase. These are popular because they often fund faster than a standard loan and usually require much less paperwork.
West Virginia Foreclosure Laws
The primary method of foreclosure in West Virginia involves what is known as non-judicial foreclosure. This type of foreclosure does not involve court action but requires notice commonly called a sale under the power of sale. When the mortgage is initially signed it will usually contain a provision called a power of sale clause, which upon default allows an attorney to foreclose on the property in order to satisfy the underlying defaulted loan, which is sometimes referred to as a note. Because this is a non-judicial remedy, there are very stringent notice requirements and the legal documents are required to contain the power of sale language in order to use this type of foreclosure method.
Property Redemption after Foreclosure Sale
In West Virginia, borrowers have no guaranteed right to reclaim of "redeem" the property after a foreclosure sale has happened. Some states have a period of time, even after a foreclosure sale, for the homeowner to reclaim or "redeem" the home by paying past due payments and other fees. But this is not an option in West Virginia. Once the foreclosure sale is finalized, the property must be vacated.
In cases where a foreclosure property is sold in West Virginia, but it does not bring in enough money to cover the debt, a borrower will be held responsible for any additional monies owed with what is called a deficiency judgment. If a borrower is assigned a deficiency judgment, they will have to make additional payments to the lender to take care of that remaining debt.
Deed in Lieu of Foreclosure
Sometimes, lenders and borrowers are able to workout an agreement known as a Deed in Lieu of Foreclosure, when homeowners are unable to keep up with their monthly mortgage payments. This special type of arrangement is available to homeowners in the state of West Virginia and it involves both parties agreeing to “call it even” and avoid the lengthy legal foreclosure process. While it doesn’t necessarily protect borrowers from deficiency judgments, this is something that can be arranged in this agreement. Borrowers may also be able to negotiate for a small cash settlement to help cover their moving costs in exchange for helping the bank avoid costly foreclosure proceedings.
Grace Period Notice
West Virginia does not have a guaranteed foreclosure grace period on place. However, once a lender has provided the initial notification of default, the homeowner does have ten days to remedy the situation by making up past payments or working out a payment arrangement or loan modification with the lender. After that ten days, if no agreement is in place, the lender can begin the process of foreclosing.
Protections for Military Personnel
While there are federal protections provided to all active duty military servicemembers, West Virginia does not have any state-specific programs or protections in place to further assist military families that are dealing with the threat of a foreclosure.
High Risk Mortgage Protections
Some states have special protections in place to help homeowners with a mortgage that is considered high risk, because of a high interest rate or negative credit history. West Virginia does not have any special protections in place for these borrowers.
Do You Have a Mortgage or a Deed of Trust?
West Virginia is a Deed of Trust State. A deed of trust has a crucial advantage over a mortgage from the lender's point of view. If the borrower defaults on the loan, the trustee has the power to foreclose on the property on behalf of the beneficiary. In most U.S. states, a deed of trust (but not a mortgage) can contain a special "power of sale" clause that permits the trustee to exercise these powers. It is important to note that the foreclosure process in West Virginia can move very fast. Homeowners may only have a few weeks to save their home before it is sold at auction.
Additional State Laws
The maximum legal interest rate on a personal loan in West Virginia is 6%. However, consumers often unknowingly agree to waive the limit and pay higher rates by clicking "I agree" online or by signing a contract that outlines a higher interest rate than is outlined by the law. In West Virginia, lenders, sellers, and other creditors are authorized to charge, as an alternative to other rates under any provision, up to a maximum rate fixed by the Lending and Credit Rate Board (18% in June 2006). No law limiting interest rates may be applied to any debt incurred by a loan, installment sale or similar transaction primarily for a business purpose.
West Virginia is a homestead state. This means that property owners can file their primary residence as a homestead and will enjoy some protections designed for homeowners to keep them from losing their house or property as a result of economic hardship. State homestead laws vary in the amount of acreage or value of property they allow to be designated as a homestead. West Virginia statutes limit the homestead exemption to $5,000 of real estate and $1,000 of personal possessions. Exemptions can occur if:
- there was a pre-existing lien on the property before the establishment of homestead;
- if the homestead property was specifically pledged as credit for a mortgage;
- if you owe past due taxes to the State of West Virginia and West Virginia counties or municipalities;
- or if you owe money to mechanics, contractors, or builders for work performed in repairing or improving the property.
Additionally, homestead protections are state laws, and therefore may not apply to federal income tax liens. If there is an overlap or a conflict of state and federal law, the Constitution's Supremacy Clause, demands that federal law will apply.
Lender Licensing Requirements
In West Virginia, anyone engaged in the business of brokering, funding, originating, servicing or purchasing residential mortgage loans or residential real estate in the state, is required by law to hold a Residential Mortgage License issued by the state. The Mortgage Broker and mortgage lender license is required of any entity which for a fee, commission or other consideration, negotiates, arranges, originates or processes any West Virginia mortgage loan. Entities engaging in table funding activity must also obtain the Mortgage Broker license.