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McClellan, Torian Propose Foreclosure Protections For Virginians

Woman speaking into microphone
Sen. Jennifer McClellan speaking at a 2019 Democratic event. (Photo: Crixell Matthews/VPM News)

Sen. Jennifer McClellan (D-Richmond) filed a bill late Wednesday that would provide more protections for people facing foreclosure.

Under Virginia’s current foreclosure law, a mortgage company only has to give 14 days notice before it auctions off someone’s home. McClellan’s bill would increase the notice requirement to 60 days. It would also require companies to educate homeowners about legal aid and financial resources to avoid a foreclosure auction. Del. Luke Torian (D-Dumfries) will carry the House version of the bill.

McClellan said her hope in proposing the changes is that more people can work with creditors to stay in their home, something that is only more important during a public health crisis.

“There was an affordable housing crisis before COVID and COVID has only made it worse,” McClellan said. “There’s a fierce urgency now, because of both [the] health and economic crises that many homeowners find themselves in.”

While 60 days may still not be long enough to help some people get back in good standing with a lender, housing advocates say everything helps when you’re working on a tight deadline.

Sha’ri Williams, a housing counselor at Housing Opportunities Made Equal of Virginia, works with homeowners who have received notice of an impending foreclosure sale. She said many of her clients come to her within five to seven days of an auction. At that point, Williams says, there’s not much that can be done.

“That’s not allowing us enough time to provide them with even alternative options to liquidate the property, if mortgage assistance is not a viable solution,” she said. 

Williams said her organization could benefit from having more time to explain complicated legal proceedings to clients, and help them submit documentation to lenders for mortgage assistance or a payment plan. 

She said the requirement that creditors provide homeowners with a list of housing counseling organizations can also speed up the process of getting people help. 

“A lot of people just consider calling HUD, and then they get a runaround before they are even given a housing counseling agency,” she said. “I’m hoping that now they can know that housing counselors are right here, we are available to assist.” 

The proposed changes to Virginia’s foreclosure law would also make it harder for creditors to go after the homes of low-income residents. The bill would ban circuit courts from forcing the sale of a property to satisfy a debt if the property is less than the median single-family home in that area. These exemptions would only apply to a home being used as the person’s primary residence.

A spokesperson for the Home Builders Association of Virginia said he had not reviewed the draft legislation as of Tuesday and could not comment. The Virginia Realtors Association did not respond to a request for comment. 

As it is currently drafted, the bill from McClellan and Torian would also impact mobile home communities. The bill requires landlords to provide safe living conditions and puts a requirement on local governments to include the preservation and maintenance of mobile homes in their comprehensive plans “in recognition of the value of manufactured home communities as an important part of the stock of affordable housing.” It would also require landlords to provide notice to mobile home owners about their rights under law, and how they can set up a residents association.