A new law takes effect today that will help prevent foreclosures in Virginia. It gives homeowners more time to catch up on late mortgage payments and seek legal assistance and housing counseling.
Mortgage companies now have to provide 60-day notice of a pending foreclosure sale and the notice must include information for the homeowner on available assistance. Previously state law only required a 14-day notice period. The law also provides some protections for tenants of mobile home parks.
Sha’ri Williams is a foreclosure prevention specialist with Housing Opportunities Made Equal. She said homeowners will have to provide documents to prove the nature of their hardship.
“With the mortgage assistance, it's really not funding,” she said. “It’s more so the mortgage lender providing you with modification options, whether that be to modify your original terms to something more affordable based on your household income. They’re doing loan deferrals where they will defer your delinquent amount.”
However, Williams said federal funding is expected to be available this fall for homeowners who are struggling.
The bill was brought by Sen. Jennifer McClellan during the 2021 special session of the General Assembly earlier this year. It’s referred to as the “Preserving the American Dream Act” because she said “home ownership is synonymous with the American dream.” She pointed to an increase in foreclosures due to the pandemic.
The law had broad support from Democrats, mortgage lenders, banks and realtors, and some Republicans.
A spokesperson for the Virginia Bankers Association said during the session that the law strikes the appropriate balance of strengthening consumers' ability to fully understand the process and their options without complicating the process to the detriment of the lender.
Commercial real estate is exempted from the foreclosure provision.
