This blog focuses on real estate, land use and construction-related topics affecting Virginia and the Washington, D.C. metro area. With topics ranging from contract drafting and negotiation to local and regional land use project updates, the attorneys at Bean, Kinney & Korman provide timely insight and commentary on the issues affecting owners, builders, developers, contractors, subcontractors and other players in the industry. If you are interested in having us cover a specific topic, please let us know.

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Posts tagged foreclosure.

John KellyWe are very pleased to have a post today from one of our colleagues here at Bean, Kinney & Korman that focuses his practice on real estate related matters, John Kelly.  We are looking forward to John's contributions here on the blog moving forward and believe John may become a regular mainstay here shortly!

Given the present economic climate, it is no surprise that many real estate developers are having difficulty paying back their lenders. The lender may agree to waive the existing defaults and restructure the loan by modifying the terms of the loan or adding additional collateral or the lender may instead proceed immediately to foreclosure. After conducting its distressed loan due diligence, however, the lender may determine that neither extreme is the right choice. Restructuring the loan may be impractical given that economic circumstances make foreclosure inevitable, but the lender may want to avoid the expense and time needed to foreclose. This post will discuss in detail the compromise position where the borrower averts foreclosure by agreeing to convey the property back to the lender via a deed-in-lieu-of-foreclosure, typically in exchange for the cancellation of the indebtedness. This will be a two part series, with the first part discussing the key aspects of a deed-in-lieu transaction, and the second part of this post will review in brief the related tax and bankruptcy issues.

In 2002, Brenda Kersey received a $71,397 mortgage loan to purchase a home in Richmond, Virginia. The loan was a Federal Housing Administration (“FHA”) loan governed by FHA regulations. PHH Mortgage Corporation was the holder of the note in connection with Ms. Kersey’s loan.

Like so many unfortunate homeowners, Brenda Kersey fell behind on her mortgage payments. PHH appointed the Professional Foreclosure Corporation of Virginia (“PFC”) as substitute trustee on the Deed of Trust securing the mortgage and instructed PFC to foreclose on Ms. Kersey’s home. PFC scheduled a foreclosure sale without having or attempting to arrange a face-to-face meeting between PHH and Ms. Kersey.