Starting this summer, Virginia will have a new law against so-called "zombie mortgages."
They're called zombie mortgages because critics say they were dead but then came back to life when predatory lenders bought them for pennies on the dollar and then tried to collect huge interest rates. Now, the governor is driving a stake through the heart of zombie mortgages by signing a bill introduced by Delegate Marcus Simon, a Democrat from Falls Church.
"If you're going to foreclose on somebody's mortgage and take their house, you've got to provide some evidence that you've actually been trying to collect on the debt, and that you've been sending them bills, they haven't been paying them and there have been interest and fees," Simon says. "It's meant to deter predatory lenders and predatory debt buyers from trying to steal people's homes."
Senate Majority Leader Scott Surovell says the new law is aimed at making sure debt buyers will not be stealing equity.
"Federal law requires you be invoiced monthly if you’re owed money, and when these companies charge off debt, they stop issuing their invoices and these consumers think they don't have a debt anymore because they haven't gotten an invoice in five years, and that creates the problem," he says. "And that's what this is trying to fix."
The governor also signed a bill cracking down on predatory probate lending and another bill limiting the collection of medical debt.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
