By Holly Chisa, HPC Advocacy, UTA Washington State Lobbyist
With the 2022 Washington legislative session in the rear-view mirror, the United Trustees Association now works with stakeholders and lawmakers on the 2023 agenda. But first, we must resolve out a trustee study in 2022 and get through a general election.
First, let’s review the policies passed in 2022. Washington lawmakers voted to codify the definition of first-time home buyer (HB 2097). This allows home buyers under this definition to apply for benefits under the Housing Trust Fund Program to purchase homes in economically challenged communities. It also empowers individuals with different abilities and lower-income households to purchase their own home. The Legislature also discussed a bill that would require sellers to disclose animal damage to the home. While the underlying issue – animal damage – isn’t notable, the bill sets a new precedent. The bill shifts disclosure requirements from buyer to seller. Under current Washington law, buyers have the responsibility to determine defects of a home; this burden would be shifted to the seller. The bill would go further to remove the ability for a seller to declare that they “don’t know” if there is damage, leaving the seller vulnerable to that liability. UTA did not engage on the bill, but it did monitor the bill because of the shift in responsibility of disclosure. The bill didn’t pass but could come up again in 2023.
Lawmakers also discussed HB 2088, which was given the vague title, “Protecting Homeowners Navigating the Foreclosure Process.” While UTA did not expect significant policy changes during the 2022 session, we were concerned that the broad title of the bill could open the door to a LOT of policy changes by homeowner advocates. The underlying legislation would have changed two portions of the Deed of Trust (DOTA) statute:
– A borrower would be referred to mediation after the NOD “has been issued but no later than 90 days prior to the date of sale listed in the notice of trustee’s sale” – change from 20 days from the date a notice of trustee’s sale is recorded
– The referral to mediation may be made any time after a NOD has been issued but no later than “90 days prior to the date of the sale listed in the notice of trustee’s sale” – change from 20 days after the date NOTS has been recorded
However, there were discussions to add additional language to the bill to change other timelines. This included a delay in the transfer of title after the final trustee’s sale to 15 days to allow for legal challenges. This concept was generally opposed, and the stakeholders could not reach agreement on whether a compromise could be reached. The bill died.
What did pass was a study of the work of trustees in Washington State. This includes a survey, out now, from the Washington Department of Financial Institutions (DFI). This will be followed with interviews and discussions with trustees that operate in Washington State. Questions include your company structures, data around NOD and NOTS, including foreclosure sales, and basic business practices. This data, along with additional one-on-one discussions with firms, will be the basic building blocks for the DFI study. This study will be shared with lawmakers January 1, 2023. It is critical that UTA members provide comments and interact with DFI during this time. Your responses to the survey and research questions will help DFI better understand the work of trustees. This, in turn, will educate lawmakers and form future policy. If you are interested in participating in the study, or have questions, please contact our Washington lobbyist, Holly Chisa firstname.lastname@example.org
As trustees fill out the survey and meet with DFI, UTA will continue to monitor elections. The entire Washington State House and half the Senate are up for election this year. With over 20% of the House and Senate retiring or seeking other office, we will have many new lawmakers to educate about foreclosure law and trustees. While the housing market remains strong enough to help with alternatives to foreclosure sale, lawmakers are already commenting on the increase in foreclosures in Washington. (This was, of course, expected after the COVID-19 prohibitions expired.) UTA is already meeting with lawmakers about the Foreclosure Fairness Act (FFA) and mediation. We’re asking questions about potential policy changes in 2023. One legislator is interested in modifying the FFA to include foreclosures of homeowner and condo association HOAs/COAs in the mediation process. Others want to review the trustee study to see if any legislation is necessary. And a group continues to watch foreclosure rates and housing to determine if we are anywhere near the same circumstances as 2008/2010 and if an intervention of the Legislature is necessary. (It’s not, but we’re all watching just the same.)
UTA is also monitoring whether legislation from California will make its way north. So far we haven’t seen HB 1079 from the California 2021 session, or HB 1323 from 2022. The latter – HB 1323 – is less likely as Washington has mediation. The offerings through the mediation process, including short sales and review of property value, may help offset the likelihood of HB 1323 being introduced. We’ll keep watching, however, as these ideas tend to migrate North.
It’s been a busy summer for UTA in Washington, and the fall will be likely even busier. We look forward to the ongoing discussions with WA DFI to complete their survey and research questions. We’ll stay on the road meeting with lawmakers throughout the state to talk about the work of trustees and the foreclosure process. And we’ll prep for whatever 2023 will bring us in the Washington Legislature.