Legislators propose foreclosure changes

By Heather Sullivan - bio | email

RICHMOND, VA (WWBT) - The mortgage mess revealed that thousands of homeowners nationwide may have lost their homes through improper foreclosures. Now some state leaders are proposing bills to change the foreclosure process in Virginia.

Virginia is one of 28 states that allows non-judicial foreclosure, meaning a trustee handles the foreclosure rather than a court. But some consumer advocates and state Senator Don McEachin say some homeowners are losing their homes without due process.

Senator McEachin says he's hearing from homeowners, "People are being foreclosed on and they don't even know who the person is that's foreclosing on them, or I should say the entity that's doing the foreclosing, because it's not in the chain of title, the names don't appear in court records, sometimes they don't even have the physical note."

McEachin is proposing two bills. The first would require the forecloser to be in the chain of title, make sure the mortgage is not in modification, and give homeowners more notice that their home will be sold at auction.

Said McEachin, "Right now they can send you a notice that says they can sell your house in 14 days, and that's the end of that. You're just scrambling to get your life together, either to move or to try to figure out how to modify the loan or whatever."

McEachin's second bill would change Virginia from a non-judicial to judicial foreclosure state so that all foreclosures would be handled by the courts rather than a trustee. But Bruce Whitehurst, CEO of Virginia Bankers Association, says those changes are not necessary.

Explains Whitehurst, "There is regulatory oversight from Fannie Mae, Freddie Mac, the banking agencies, from HUD already on the mortgage and foreclosure process. So I don't know that adding more documentation does anything more than add more cost to the entire system."

Whitehurst says adding more time to the system wouldn't help either, saying the average Virginia homeowner in foreclosure is a year behind on payments.

As for becoming a judicial foreclosure state, the Virginia Bankers Association takes a firm stance. Said Whitehurst, "The process is more complex and more costly and interestingly enough, that's where we're hearing the problems are coming from, out of the judicial states. I'm not sure moving this process to where we interject the court system, which no one really believes moves very quickly anyway, is the answer."

If the General Assembly, which convenes on Wednesday, passes these bills, they would take effect on mortgages written after July 1st of this year.

Meantime, the state offers tips for homeowners to avoid foreclosure. You can read more at http://www.virginiaforeclosureprevention.com.

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