Virginia's foreclosure rate has more than doubled since the beginning of 2006. On Wednesday, Governor Tim Kaine announced a plan that may help keep that rate from increasing.
While some mortgage lenders agree with Kaine's bill, they say potential home owners still have a lot to look out for. Gloria Wright, a mortgage loan officer and branch manager for the C&F Mortgage Corporation, says people are unaware that predatory lenders can offer subprime loans with teaser rates or rates that are subject to change.
"The statistics show that predatory lending has caused most of the problem," says Wright. "The majority of them have an arm rate that probably started out with some type of initial low rate, and it's increased maybe after six months, maybe after a year and the house became unaffordable to them."
Kaine's bill would provide counseling to homeowners with subprime loans prior to receiving an acceleration notice. Lenders send out acceleration notices to warn homeowners that foreclosure is the next step if past due payments are not made. The bill would also allow homeowners to pause their foreclosure for 30 days while they try to find ways to avoid it.
Wright says, while she thinks the bill will help, she hopes people will ask for assistance at the first sign of trouble.
She says, "When they first get in trouble or they feel they are in trouble making the payments, they need to contact that lender immediately."
With Virginia's current foreclosure rate, lenders offer some tips that may also help homeowners avoid foreclosure. First, homeowners should avoid predatory lenders, should not spend more than they can afford, and should be aware that their loans may have an adjustable rate mortgage.