New Virginia Legislation Expands Consumer Protection Act Coverage of Foreclosure Avoidance Programs

To its great credit the Virginia General Assembly this 2009 session passed HB 2261, a bill  designed to expand the Consumer Protection Act's coverage of mortgage foreclosure prevention scams.  Unscrupulous foreclosure avoidance companies often require desperate consumers to pay in advance for their services and then do little or nothing to really help.  When the General Assembly first recognized this and other dangers in foreclosure prevention programs, which are often nothing more than schemes to milk consumers' last dollars before they take their homes, it treated them as illegal only if a fee was taken prior to a settlement on a sale of a consumer's residential real property.  The new provisions make  advance fees illegal even if there is no sale of the real estate.


Consumers should also be pleased that when the General Assembly passed the original legislation that brought prepaid foreclosure prevention schemes into the Consumer Protection Act, it prohibited mandatory arbitration clauses.  The legislature's recognition that all arbitration clauses are not good should give consumers hope that lawmakers will expand prohibitions or limitations of such clauses into other areas of consumer protection law.