Senate Approves One Month Reprieve

Virginians with high-risk mortgages and facing foreclosure would get a one-month reprieve under legislation unanimously approved Monday by the state Senate.

Governor Tim Kaine introduced the measure last week to deal with a sharply rising foreclosure rate. Senator Mark Herring of Loudoun County says foreclosures in some areas are up more than 750 percent.

The problem stems largely from a boom in high-interest "subprime" loans and adjustable-rate mortgages. The bill is limited to borrowers who have those high-risk loans.

Under the legislation, borrowers in default would receive a letter from the lender ten days before a final acceleration notice. The letter must provide contact information for at least three counseling agencies and inform the borrower that a 30-day extension will be granted upon request. That extension is intended to give the borrower time to work out a deal to save the home.

The bill still needs House approval.


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