Delegate Steve Shannon joined Governor Timothy M. Kaine and consumer advocates to support legislation designed to protect and preserve homeownership for Virginia’s working families and communities.  The legislation is designed to address current foreclosure trends that have been occurring as a result of subprime loans.

In the first quarter of 2006, Virginia’s foreclosure increased over 100%.  According to the Office of the Governor, subprime loans made up 28% of mortgages originated in the Commonwealth in 2005 and 30% of new loans in 2006. Because interest rates are now increasing on those loans, there is a significant risk that the foreclosure rate will continue to rise. In the third quarter of 2007, a total of 9,200 homes were foreclosed, 5,900 of which involved subprime loans. Subprime lending was heavily concentrated among minority borrowers. In 2005, 47% of loans to African Americans in Virginia were subprime, as were 38% of loans to Hispanics.

The Governor’s bill would provide homeowners who have subprime loans on their homes with avenues to counseling information prior to receiving an acceleration notice.  It would also give them the option of suspending their foreclosure for 30 days while they attempt to work out ways to avoid foreclosure. The bill was drafted with input from the Virginia Foreclosure Prevention Task Force.