Washington Foreclosure Bill Passes Into Law

Modified Mediation Bill
Signed Into Law In Washington

In Washington, Governor Christine Gregoire signed HB 1632 into law. Holly Chisa, UTA’s Washington State Lobbyist provides a summary:

Read UTA’s letter to the Department of Commerce

• Legislation applies to all owner-occupied property (limitations of homes sold between January 2003 and December 2007 are removed.)
• Mediation requirement only applies to beneficiaries with more than 250 trustee sales for the preceding calendar year
• Financial institutions with more than 250 NOD is posted and mailed in a calendar year are required to pay one $250 charge per property on which they file an NOD
• Money is placed into the Foreclosure Fairness Account to pay for housing counselors for homeowners

Step One:  Homeowner defaults on loan
First contact by beneficiary

• Written notice provided to the borrower
  
• Last known address by both first-class and registered or certified mail
  
• The language that is included in this letter is changed significantly, and must include specific, statutory language that the homeowner must contact the beneficiary within 30 days or the date of the letter, or a NOD may be issued.  It must also state that if they do respond, they will have an additional sixty days to meet with the lender before a NOD may be issued.  The letter also must include information on how a borrower can meet with their lender and a housing counselor at no cost in an attempt to resolve and work out an alternative to foreclosure. 
  
• Post of notice on property - There is no change to the language the notice must contain on the house
  
• All the requirements for the beneficiary to attempt to contact the borrower – phone calls, mailing requirements – must be done during the 30 day initial contact period.  This is the same as current law.

Step Two: Borrower fails to respond within 30 days – NOD is posted and mailed, foreclosure proceeds with no requirement for meet and confer or mediation.

Step Two: Borrower responds to beneficiary within 30 days

• Triggers 60 day time-out before NOD can be filed
  
• Meet and confer required between beneficiary and borrower
  
• Meeting must be in person
  
• Borrower can have a person of authority attend via video conferencing or phone, but there must also be someone there in person as well
  
• In person requirement can be waived by the borrower only
  
• Borrower must give beneficiary contact information about the housing counselor or attorney if they are represented
  
• Borrower must set the meeting for homeowner and beneficiary to meet; there is no specific timeline given for when the meeting must occur, but the meeting must be completed within 90 days from the initial contact by the beneficiary
  
• There is new language required by the bill in the loss mit form to reflect the new meet and confer requirements.

Step Three: NOD can be filed 90 days after initial contact by the beneficiary, but there MUST be confirmation that the meet and confer meeting has taken place before NOD can be filed

Step Four: Mediation

• Only allowed for those borrowers who have met with a housing counselor or attorney
  
• Cannot be requested by the borrower; only by the housing counselor or attorney

The Department (of Commerce) sends notice to the housing counselor or attorney, beneficiary, borrower, and trustee of the election to go to mediation

The notice includes:

• The statement that the borrower can be represented by attorney or housing counselor
  
• The statement that the beneficiary must have someone present or on the phone that has the authority to agree to resolution
  
• The list of documents that must be brought to the mediation
  
• The good faith duty statement

Mediation must take place 45 days from the date the mediator receives the referral from the Department

Mediation must consider

• The NPV of receiving payments pursuant a loan mod vs net recovery from a foreclosure sale
  
• Loan mod programs available through HAMP, the VA, Rural housing service, and other, similar programs within the FDIC
  
• Documents that must be provided by the beneficiary include
  
• Accurate loan balance as of the first of the month the mediation occurs in
  
• Copies of the note and deed of trust
  
• Proof that the entity claiming to be the beneficiary is the owner of the promissory note (a copy of the declaration in RCW 61.24.030 is allowed)
  
• Best estimate of arrearage and an itemized statement of those arrearages
  
• Best estimate of fees and charges outstanding
  
• Payment history and schedule for the preceding twelve months, or since default whichever is longer, including a breakdown of fees and charges claimed
  
• Borrower-related and mortgage-related input data used for the calculation of the NPV
  
• An explanation of a denial for a loan modification, forbearance, or other alternative to foreclosure
  
• Recent appraisal
  
• Excerpt of the pool and servicing agreement that prohibits the beneficiary from implementing a loan mod

Step Five: Post-mediation

The report must be issued by the mediator seven days from the date of the meeting, and given to the beneficiary, borrower, attorney or housing counselor, and trustee

• If the report is not received within 10 days, the notice of sale can be filed by the trustee
  
• If the report contains a certification that the beneficiary did not act in good faith, the trustee cannot go forward with the sale

Reports are to be sent by the Department of Commerce beginning in 2012 on the success of the mediation program, with specific details on how many mods were allowed, loans restructured, and if possible, how many defaults occurred within a year of restructuring of the debt.

Read the bill