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The Associated Press January 18, 2011, 11:20AM ET

Va. bills slow foreclosures, tighten land records

Virginia House and Senate bills are taking aim at "drive-by foreclosures" by big banks without judicial review and aggravated by incomplete records.

Witnesses at a hearing on some of the legislation Monday told chilling, tearful tales of giant banks foreclosing on their homes, then had to deal with conflicting statements by an unconcerned bureaucracy when they tried to contact their lenders and reason with them.

The legislation is in the works because of the flood of foreclosures that resulted from the 2008 mortgage lending industry collapse.

The bills would slow the state's swift foreclosure pace. They would increase the time for required foreclosure notice from two weeks to 30 or 45 days. That would give borrowers time to locate records and hire attorneys to challenge foreclosures if necessary.

"Notice has got to be extended," Todd Condren, a title insurance lawyer from Vienna, told the House Courts of Justice Committee. He said 74 of his clients the past year lost homes to foreclosure because even with legal counsel, they had too little time to clear the confusing and frustrating legal and corporate hurdles in their way.

"We simply don't have enough time to stop a foreclosure because of the fact that it's in 10 days or seven days," Condren said.

Lenders for the first time would face court review before foreclosing and could be fined for basing a foreclosure on errant or fraudulent documents. It would require banks and those who service mortgages to maintain updated real estate loan records in county courthouses and give borrowers one last opportunity to avert losing their homes by paying off any delinquency.

Agonizing tales from grieving homeowners has united opposite poles of the political spectrum. Del. Robert G. Marshall, long among the most outspoken of House conservatives, pushed his bill before the committee Monday. Companion bills are being offered by Democratic Sens. Donald McEachin of Henrico and Chap Petersen of Fairfax, and Del. Robin Abbott of Newport News.

McEachin said giving people more of a chance to save their homes would expedite the economic recovery.

Petersen, noting that Virginia's foreclosure process is among the fastest in the nation, defended his "drive-by foreclosure" description, saying that "what the big banks are doing is crushing people."

Borrowers, sometimes in tears, told of being forced from houses after years of dealing with banks and being assured their mortgages would be modified and they would be safe.

Mustafa Rasuli of Springfield said he was able to muster more than $14,000 to bring his loan current two days before foreclosure, only to have it proceed anyway.

"I won't even begin to try to describe my frustration at this point," Rasuli told the committee.

"What ensued over the next 24 hours was countless phone calls, countless calls being dropped after waiting 30 minutes to an hour, computer systems being down and other incompetence," Rasuli said. "Nobody was able to give me a detailed accounting of what I owed, what payments I'd missed, nobody wanted to assist me in saving my home."

Virginia's muscular banking lobby has marked the reforms for death, arguing that slowing foreclosures and requiring updated county land record filings would only prolong the four-year slump in the real estate industry.

Banking interests over the past year gave more than $1.7 million to candidates seeking state office.

"It's an easy target," Virginia Banking Association lobbyist Matthew J. Bruning said in dismissing the legislation after a news conference by the bills' sponsors. "That's why you have people running on it statewide."

"The (county court) clerks want more court fees so Bob Marshall's put in a bill for them," he said of Marshall, who is exploring a 2012 U.S. Senate bid.

And there was skepticism among members of the committee, which postponed action on the emotional and complicated issue for at least a week.

Del. Terry Kilgore, R-Gate City, expressed concern to Marshall that Virginia would be the first state to enact his proposed reforms.

"Well, Virginia was the first to challenge Obamacare, too," Marshall replied, referring to Attorney General Ken Cuccinelli's lawsuit against health care reforms enacted by President Barack Obama and an allied Democratic Congress last year. Like other Republicans, Kilgore and Marshall oppose the federal law and applauded Cuccinelli's victory in U.S. District Court in Richmond last month.

Not only do banks and mortgage lenders oppose the bill, a Reston-based corporation known as MERS (Mortgage Electronic Registration Systems) is battling it. The company's database, set up to quickly track the sale and transfer of mortgages, acts as an agent for individuals or institutions that buy and transfer mortgages as investments and has been blamed for errors and incomplete data that have worsened the foreclosure crisis.

Corporate vice president Bill Hultman told the committee that the legislation would create more confusion. And he disputed claims by some who had suffered foreclosures and their attorney that MERS and others could not identify the owners of their mortgages.

"People make mistakes, but if someone had called me up and asked me -- which they didn't -- we would have helped them sort out that problem," Hultman said.

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