Safeguard Properties has recently come into some new information that may be of interest to our clients. 
 
We received an inquiry about limitations placed by West Virginia law on the type of default-related charges that can be passed on to the mortgagor or added to the unpaid principal balance of the loan upon reinstatement.  In response to some preliminary inquiries into this matter, we have been advised that in West Virginia, a mortgagee may NOT charge back inspection fees to the mortgagor or add such fees to the principal balance upon reinstatement. 
 
A summary of the relevant law appears below:
 
W.VA. Code Section 46A-2-115 limits permissible fees on a residential mortgage loan originated by a bank or savings and loan association and their affiliates, and NOT solicited by an unaffiliated broker, held by FNMA, FHLMC, or GNMA, or insured by HUD, if the loan agreement includes a reinstatement period that begins with the trustee's notice of foreclosure and ends prior to the foreclosure sale.  Default charges are limited to actual, reasonable reinstatement period expenses paid or owed to parties for: (a) publication costs paid to the publisher of the foreclosure notice; (b) appraisal fee when required by the circumstances or by a regulatory authority, and ONLY after the loan has been referred to a trustee for foreclosure; or (c) title check and lien holder notification fee not to exceed $200.00, as adjusted by the CPI.  These specific charges may be added to the unpaid principal balance if they arise during the reinstatement period.  Partial amounts received during a reinstatement period do NOT create an automatic duty to reinstate and may be returned by the creditor.  Other permissible charges are described at W.VA. Code Section 46A-3-115 and include the amounts advanced to obtain property insurance when the mortgagor's policy lapses or has been cancelled due to non-payment.
 
We recommend that all of our clients review this matter with counsel to make a decision about how to proceed with respect to inspections in West Virginia.  In addition, if you wish to instruct Safeguard to implement any procedural changes, please contact me directly at robert.klein@safeguardproperties.com. 

To view additional All Client Alerts, please click on news.