Chap Petersen explains what happened earlier today in the State Senate to his anti-fraud bill (SB 837) and mandatory recordation bill (SB 838), both of which aimed to protect consumers against the mortgage industry. Fortunately, SB 837 – which “gives a remedy to consumers who are the victims of fraudulently-obtained foreclosures” – passed the Senate, on a vote of 25-14. Score one for the people of Virginia. Unfortunately, SB 838 (“requiring recordation of mortgage assignments”) was defeated, 26-14, due to “the opposition of banks, who want to buy and sell mortgages on the seconday market without restriction.”
As Chap points out, it’s “ironic” that the same banks who “received billions in TARP relief in 2008” are now “lobbying against reform measures because they will ‘interfere’ with the banking industry.” Actually, I’d say more “predictable” and “anger-inducing” than “ironic,” but I guess all of those adjective apply in this case. Anyway, thanks to Chap and everyone else (e.g., Donald McEachin) who voted for SB 837, and for working to keep the “Big Boys honest.”
UPDATE: Chap’s press release is on the “flip.”
Virginia Senate Takes Action on Foreclosure Reform Bills
Richmond – Today at the Capitol, the Senate of Virginia passed Senate Bill 837 23-17 and failed to recommend Senate Bill 838 14-26. Both were patroned by Senator J. Chapman Petersen (D-Fairfax city).
Senate Bill 837 makes it illegal to use false or fraudulent documents in obtaining a Virginia foreclosure. The bill allows victims to recover compensatory damages and attorney’s fees if they can prove the case. Responding to concerns from banking industry representatives, Senator Petersen emphasized that the bill would not affect honest members of the banking industry, and would serve only to establish a remedy for wrongful actions committed against homeowners.
Senate Bill 837 was the only foreclosure reform bill to pass either the Virginia House or Senate this year, despite the massive publicity surrounding fraudulent “Robo-Signers” and “foreclosure mills” which led major banks like Bank of America to suspend their foreclosure processes in 2010. Virginia continues to have one of the lenient legal systems for obtaining foreclosure in the nation.
Senate Bill 838 would have required creditors to register the transfers of mortgages with the Clerk of Circuit Court. Since there is no law requiring the mandatory recordation of assignments, homeowners cannot identify the holders of their mortgages.
Homeowners are additionally vulnerable by the lack of safeguards against false claimants and documents in the procedures as well as a conflict of interest arising from the fact that mortgages are only registered with “MERS,” a privately owned firm that operates solely for the benefit of lenders.
“There is zero government oversight of this entity [i.e. MERS], which holds the records of millions of Virginians. The current law is not balanced and it gives no benefit to Virginia taxpayers or homeowners, who deserve and honesty and objectivity when their homes are being foreclosed. We need some checks and balances in this system,” says Senator Petersen in proposing SB 838.
Stated Tom Domonoske of the National Association of Consumer Advocates, “Senator Petersen’s bill would [have restored] integrity to the foreclosure sale which is not often not done properly.”
SB 837 will next be considered by the House of Delegates.