West Virginia Revises Provisions Regarding Deeds of Trust and Modification Charges
By Paul McSheffrey, J.D.
Trustee Real Estate Sales
With Senate Bill No. 418, the West Virginia legislature has enacted provisions regarding the sale of real estate by a trustee under a deed of trust. Section 38-1-7(b) of the Code of West Virginia, 1931 now provides that a defendant in a civil action to recover a deficiency after a sale under a deed of trust may not assert as a defense that fair market value was not obtained for property sold at foreclosure sale.
These changes are effective June 11, 2015.
Deed of Trust Form
West Virginia has recently revised section 38-1-2 related to the required form of a deed of trust. This section now permits the recording of a memorandum in lieu of the deed of trust. The memorandum must be executed by all grantors under the deed of trust and acknowledged such that the conveyance can be recorded. The statutory amendments list and require that the memorandum include, at a minimum, eleven pieces of information related to the transaction.
A properly completed memorandum is as valid against creditors and purchasers as if the complete deed of trust were recorded on the date that the memorandum is recorded. However, prior to commencing a foreclosure action, the original deed of trust must be recorded. Additionally, section 40-1-9 provides that a memorandum of a deed of trust is void as to creditors and subsequent purchasers without notice prior the recordation of the memorandum.
These provisions are effective June 8, 2015.
Modification Charge Limits
With House Bill 2926, the West Virginia legislature has recently adopted provisions regarding modification charges. Section 46A-3-114 of the Code of West Virginia now provides for a maximum modification charge that may be collected in a real estate secured consumer credit sale or consumer loan.
Under 46A-3-114(4), the parties to a real estate secured consumer credit sale or consumer loan may adopt a written modification agreement before or after default on the transaction. If the parties reach a modification agreement, the seller or lender is permitted to collect a maximum modification fee of $250 or one percent of the outstanding balance at the time of the agreement, whichever is greater. However, a modification fee must not violate any federal law or regulation.
These changes become effective on June 12, 2015.
Paul McSheffrey, JD, is a senior regulatory compliance consultant with CLA. He is a graduate of Northeastern University and earned his juris doctor at the New England School of Law. He is admitted to the Bar in both Massachusetts and New York.
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