This is a guest post by Amy Weiss. Amy is originally from Richmond, Virginia and is a second year law student at the University of Richmond. She graduated from the College of William and Mary in 2007 where she studied history and anthropology.
HOME’s recent report on foreclosure problems revealed an alarming increase in the number of foreclosures when the homeowner was either in the process of negotiating loss-mitigation agreement or thought their proposed loss-modification agreement had already been approved. An alarming 87% of housing counselors across Virginia responded that their clients had been foreclosed upon, while in the middle of a loan modification.
The results also revealed that the foreclosure crisis is deepening in rural Virginia. From 2008 – 2010 the foreclosure rate in rural Virginia more than doubled. The report also revealed that servicing errors like loss of paperwork are compounded by the quick turnaround of foreclosure in Virginia.
The housing counselors surveyed suggested the involvement of a third party mediator and better communication to prevent servicing errors would help make loss mitigation negotiations more successful. Eliminating these types of service errors would significantly cut down on the number of Virginia families who lose their homes to foreclosures.
The Brookings family of Greene County, Virginia experienced firsthand the injustices of the current mortgage foreclosure process. When Robert Brookings, husband and father of two, lost his job in 2008, he applied for modifications to the loan on his family’s home to reflect his new financial situation. After lengthy discussions with the lender, Robert thought his requested loan modifications had been approved.
After several months of paying the modified amounts, Robert received a letter informing him the modifications had not been approved. To avoid foreclosure, Robert would have needed to resume regular payments while paying the difference from the past several months. Unable to afford to front that much money or hire an attorney, the Brookings family lost their home and were forced to move in with sympathetic relatives.
Much needed reform to the foreclosure process would help families like the Brookings work with their loan servicer without worrying about the servicer not honoring their agreements. There are several bills in the General Assembly that would help paying Virginia property owners from losing their homes.