"For Profit" Foreclosure Rescue To Be A Felony, Says Proposed Virginia Statute

In Richmond, Virginia, the Daily Press reports:

• Del. G. Glenn Oder has introduced legislation to prohibit people from participating in or servicing foreclosure rescues for profit. A violation would be a felony. Oder, R-Newport News, said he is working with the lenders, real estate investors, HOME [Housing Opportunities Made Equal of Virginia Inc.] and other stakeholders to ensure that the legislation doesn't unwittingly outlaw legitimate efforts to help financially squeezed homeowners. [...] The bill likely will be considered by a House of Delegates committee next Tuesday. It's one of several introduced in the 2007 General Assembly as a result of problems in the housing market, including the subprime mortgage collapse that has led to a spike in foreclosures.

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• One of the most common foreclosure rescue scams is a lease-buyback arrangement, according to HOME. The troubled homeowner surrenders title with the aim of renting the home and buying it back later. But the rent is usually so high that the deal is unworkable, and the homeowner loses the property to the "rescuer."

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• Del. Sal Iaquinto, R-Virginia Beach, also has introduced legislation addressing the problem. His bill would require foreclosure rescuers to fully disclose their services, allow homeowners to rescind a contract and authorize the attorney general to enforce violations. Iaquinto's bill is well-intended but does not go as far as Oder's, which is modeled after a Massachusetts law, [HOME spokesperson Helen] O'Beirne said. She said the two bills may be merged before reaching the House floor.

For more, see Bill would make foreclosure scams a felony.

For Del. Oder's proposed law, see HB 408 (summary and status report) (full text),

For Del. Iaquinto's proposed law, see HB 947 (summary and status report) (full text).

March 13, 2008 update:

Go here for the current version of HB 408 (summary and status report) (full text), which, as of 3-13-2008, has been passed by the House and Senate and awaits the Governor's signature.