Holly Chisa

By Holly Chisa, HPC Advocacy, UTA Washington State Lobbyist

Washington state did little with the Foreclosure Fairness Act (FFA) this session, or with the Deed of Trust Act as a whole.  The only significant change was the funding source for the FFA.  Under previous statutes, certain beneficiaries were required to pay a $250 fee for each Notice of Default issued to a homeowner.  This fee is only paid by those financial institutions that process more than 250 NODs in the previous year.  Funding collected by this fee is shared among a number of agencies.  The vast majority of that funding is used to pay for housing counsellors, provided free of charge to homeowners that don’t have legal representation.  Funding is also provided to the WA Department of Commerce to administration of the FFA, and to the Office of the Attorney General.  The OAG investigates complaints against financial institutions and trustees and other parties involved in the foreclosure process, and may bring legal action.

Because there is a significantly reduced number of NODs being processed by financial institutions, there has been a significant reduction in the fees being collected.  To manage the FFA and pay for housing counsellors, there is a baseline dollar amount needed by the agencies to run the program.  Under the current funding structure, the program would no longer be self-sustaining.  In an effort to keep the program afloat, the parties met to negotiate a new funding structure.  Under this new agreement, the involved agencies, financial institutions, and UTA have agreed to have the fee of $250 be applied to notices of trustee’s sale recorded, not NODs.  This fee does NOT apply to amended NOS.  The threshold for which financial institutions required to pay the fee is lowered to those who have less than 50 NOS’ per year.  This does NOT change the threshold for which financial institutions must participate in the mediation program, just which financial institutions pay the fee.

In exchange for this change, the agencies funded by these fees changed their allocation.  The bulk of the funding again is reserved for housing counsellors, a primary request for financial institutions.  The Department of Commerce also receives a significant contribution to ensure proper staffing levels and management of the FFA.  Other agencies, including the Office of the Attorney General, offered to reduce their budgets to allow for the funding of housing counsellors and Commerce.

So why should trustees care about this legislation?  The underlying bill was not the focus of the United Trustees Association this session.  It was the hearings in the House and Senate Committees on these bills that we focused on.  At EVERY hearing there were people testifying about losing their homes, that mediation doesn’t work, that the FFA still has barriers that prevent access to meaningful mediation.  Financial institutions are not genuinely participating in mediation, come unprepared, and should be further investigated by the Office of the Attorney General and the Legislature.  Lawmakers listened to this testimony and scheduled separate work sessions just on these issues.  These additional meetings provided the public with a specific forum to air their grievances with the system.  Add to this a number of relatively new lawmakers that aren’t familiar with the previous work done on the FFA and the DOTA, and you find a willing audience wanting to “fix” the programs with mediation and the FFA.

There will be work to do over the summer and fall to meet with lawmakers from these hearings to help them understand the intense negations that have gone on to build the FFA and mediation program as they stand today.  Additionally, more meetings will need to take place among the various stakeholders – advocates, financial institutions, UTA members, and agencies – as we continue to adjust the mediation program and DOTA.  This is a campaign year, and the UTA’s summer focus will be meeting with potential candidates and educating them on the role of the trustee in the foreclosure process.  Additionally, there will be significant number of hearings outside of the DOTA that involve the rent control and fair housing issues that may affect the FFA.  Any time there is a discussion around the cost of housing and/or rental properties, there is a conversation about how to make housing “affordable” and allow people to buy and STAY IN their homes.  All of these discussions will have to be monitored.  And, of course, there is always the issue of owner/holder/actual holder…

It’s going to be a busy summer in Washington, but hopefully a productive one for our members.  As always, please let me know if you are interested in engaging with lawmakers on these issues.