In Virginia, where banks can foreclose on a homeowner in
less time than it takes to evict a renter, at least one state legislator is
trying to slow the process down.
Sen. Chap Petersen (D-Fairfax) said he plans to introduce
legislation at the upcoming General Assembly session that would extend the
notice period for a foreclosure sale to 30 days.
Current law requires that a homeowner be notified of an
impending foreclosure within 14 days of the sale -- one of the shortest in the
nation, according to the National Association of Consumer Advocates.
"All of this happens so quickly in Virginia, by the
time a homeowner figures out what's happening, their stuff is out on the
curb," Petersen said.
Broken process
Talk of changing the system comes as attorneys general in
Virginia and 49 other states investigate foreclosure practices. The probe was
prompted by revelations that some mortgage lenders cut corners in their haste
to reclaim homes from the growing number of borrowers behind on their payments.
"The process is obviously broken, and I think they need
to do something," said Jay Speer, executive director of the Virginia
Poverty Law Center, which plans to push for reforms in the upcoming legislative
session.
Petersen has two other bills in the works. One would make it
a crime to use a false signature or fabricated document to obtain a
foreclosure. The other would require investors who purchase home loans to
record the transaction in local land records, making it easier for homeowners
to keep track of who owns their loan in the complicated business of mortgage
bundling.
Others join in
Del. Bob Marshall (R-Prince William County) plans a similar
bill that would require filing fees and a record of when a loan is transferred
between lenders, according to Virginia Statehouse News.
At least one more lawmaker may introduce legislation, Speer
said.
"Zero," Speer said when asked what efforts the
General Assembly has made in recent years to reform the foreclosure process.
"It's only been in the past several months that people
have realized something is wrong with the foreclosure process," Petersen
said.
Foreclosure halt
Shortly before the national investigation began in October,
some mortgage lenders halted foreclosures amid revelations that their officials
submitted affidavits or other documents without personal knowledge of facts.
The practice, in which a single bank official would approve
up to 10,000 forced sales a month, came to be known as "robo-signing."
Fraudulent documents are of greatest concern in the 23
states that require judicial approval of a foreclosure. Although Virginia is
not one of those states, homeowner advocates say the process is still subject
to shortcuts.
Banks and mortgage servicers have argued that any mistakes
didn't change the fact that the homeowner being foreclosed upon was ,in fact,
delinquent.
Although it's possible for foreclosures to be carried out in as little as 15 days in Virginia, most take 45 days, according to RealtyTrac, which tracks foreclosures. The process can take six months or longer in states where judges must sign off.
