Virginia Rocked by Foreclosures, Uses Settlement to Cover Budget Gap

Foreclosure is a huge problem in Virginia. The financial crisis caused an astounding number of people to lose their jobs or otherwise fall on hard times. As a result, many were not able to keep up with their mortgage payments.

As of January 2012, more than 3 percent of all Virginia homeowners were delinquent on their mortgages, and approximately 65,000 were "seriously delinquent." Approximately 15,000 homes throughout the state are now bank-owned.

In part, the high foreclosure rates are a natural consequence of a sinking economy. However, bad behavior by the banks also played a significant role. Many lenders attempted to force foreclosures through the process without sufficient documentation. Others refused to negotiate with borrowers who were making good faith efforts to stay in their homes. In the worst cases, mortgage lenders required their staffs to sign foreclosure affidavits without any knowledge of whether the information contained therein was actually true (a practice called "robo-signing").

Virginia Housing Trust Fund

This bad behavior led state Attorneys General to bring claims against unscrupulous lenders. Earlier this year, they negotiated a collective $25 billion settlement. Of that, $69 million was given directly to the state of Virginia.

The settlement funds were intended to help struggling homeowners. However, Virginia lawmakers unfortunately have decided to use most of the money to cover a preexisting budget shortfall.

However, lawmakers did use $7 million to create a "Housing Trust Fund" that will reduce homelessness and allow families to keep their home.

The fund will be run jointly by the Virginia Department of Housing and Community Development and the Virginia Housing Development Authority. It will provide loans and grants intended to help achieve numerous goals, including the following:

· The creation of affordable rental housing

· Reducing costs associated with home rental and home ownership

· Temporary assistance with rent payments

· Mortgage foreclosure counseling

· Housing stabilization services for the homeless

The first deposits to the fund will be made in 2014. However, there is a concern at the General Assembly that the trust fund was underfunded due to the budget shortfall. The impact that this will have on the fund's effectiveness remains to be seen. In the meantime, if you are facing foreclosure, contact an experienced foreclosure defense attorney who can protect your rights throughout the foreclosure process. In some cases, you may be allowed to stay in your home,