Senator Petersen's bill was an attempt to bring some order to the legal framework that governs mortgage transfers -- a framework which, according to critics, is insufficiently regulated and may have contributed to the housing industry crisis.
SB 838 would have provided for public notice (by virtue of requiring the recordation of a "certificate of assignment" in the County Clerk's Office) as a prerequisite for a bank or other lending entity to transfer a promissory note to another institution.
Petersen's bill makes good sense, for the same reason that requiring recordation of the original deed of trust makes sense: public notice provisions facilitate order and structure by enabling all interested parties to search the public records and determine the status of a real estate-backed loan.
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According to the Virginia Lawyers Weekly (here), Petersen did not mince words in arguing for the bill: “This is a bill whose time has come. The mortgage-backed security industry damned near bankrupted this country.”
The defeated bill would have amended the current statute as follows:
§ 55-66.01. Duty of assignee of debt secured by real estate to record certificate of assignment; form.
Effective July 1, 2011, whenever a debt or other obligation, or partial interest therein, that is secured by a deed of trust, mortgage or vendor's lien on real estate is assigned, the assignor or the assignee of the debt or other obligation shall (rather than "may") cause a certificate of assignment to be recorded in the clerk's office of the circuit court where such deed of trust, mortgage or vendor's lien is recorded ...
Albemarle County's Circuit Court: The Clerk's Office and its helpful staff are on the second floor -- but you won't find any mandatory certificates of assignment, there or elsewhere.
