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General Assembly Votes To Expand Foreclosure Protections

Woman standing
Sen. Jennifer McClellan (D-Richmond) at a 2018 event with the Virginia Legislative Black Caucus. (Photo: Craig Carper/VPM News)

The General Assembly has approved a bill providing more protections for people at risk of losing their home.

A bill from Sen. Jennifer McClellan (D-Richmond) and Del. Luke Torian (D-Prince William) bars courts from seizing someone's primary residence to satisfy a non-housing related debt of less than $25,000. The bill also requires mortgage companies to give homeowners 60 days notice ahead of an impending foreclosure auction. Virginia’s currently foreclosure laws only provide for two weeks notice. The bill passed both the House and Senate with bipartisan support.

Following the passage, McClellan said she hopes the measure can help homeowners facing foreclosure as a result of the pandemic and economic recession.

“For a lot of people facing foreclosure, that’s not the only bill they are trying to pay,” McClellan said. “They’re struggling to pay medical bills, buy food, just live. They may be trying to deal with kids at home. They’ve got a lot on their plates and it’s hard to find information about relief programs.”

In addition to providing earlier warning of a foreclosure auction, the bill requires creditors to tell homeowners about legal aid or other financial assistance programs.

The change was backed by both consumer advocates and lending industry groups. That drew the admiration of her senate colleagues as McClellan shepherded the bill through the committee process.

She said the key to getting wide-ranging support for the foreclosure law changes was getting all of the stakeholders at the table early.

“Lenders all recognize, realtors all recognize, ‘Okay we all want people to be able to stay in their homes and if the timing or lack of information is the problem, then let’s solve that,’” McClellan said.

Housing advocates have argued the changes could help homeowners find access to the right resources to stay in their homes.

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 told VPM last month that 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.

The bill from McClellan and Torian would also impact residents in mobile home parks. It requires landlords to provide “a copy of any written rental agreement and the statement of tenant rights and responsibilities” no later than one month after someone moves in. It also orders 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.”

Now that the bill has been approved by the General Assembly, it will head to Governor Ralph Northam’s desk to be signed into law.