Holly Chisa

For several years homeowner advocates, financial institutions, trustees and others have worked to develop a program to help bring closure to homeowners facing foreclosure. But what do you do when your program works TOO well? In additional to the discussions around continued changes and “tweaks” to the Foreclosure Fairness Act (FFA) and mediation programs in Washington, there have been continued discussions around the larger issue facing the mediation program – as the numbers of foreclosures continue to drop, what is the future of the mediation program long-term?

The conversation moves beyond just a visioning of the program as it would be applied to foreclosures as the market normalizes. There are significant conversations around what to do with the trained housing counselors seeing reduced workloads, mediators in communities that are already over served, and a budget funded by the number of NODs that continues to decline. As the need drops, the focus moves off of the distressed homeowner to the program itself, a program that has been built up that may now need to be scaled down. There is general agreement that Washington is slowly finding a new “normal” level of foreclosures, and that over the next few years the market will stabilize. Even as the numbers decline now, mediation centers are being closed, and cases are being shifted to other regions. There is push back, however, from the employees of these centers that want to keep these centers opened, and keep the revenue coming from the FAA. This will be a significant issue over the summer to determine how to fund the program going forward, what the real needs are for the next few years, and what aspects of the FFA are truly necessary as the economy stabilizes.

In the meantime, the Washington Legislature continues to make small changes to the FFA, and leave most of the Deed of Trust Act unchanged. There have been efforts this session to run legislation that we’ve seen in years past, including legislation requiring property transfers be recorded, and criminal charges for false declarations by a beneficiary. These bills failed to pass from the House committee, and didn’t even receive a hearing this year. This demonstrates that lawmakers are beginning to understand that these issues have already been addressed without any legislation needing to be passed, and the industry can make these changes internally and successfully.

For the first time the United Trustees Association hosted a Day on the Hill in Olympia. Trustees from throughout the Pacific Northwest and California met with lawmakers from the House and Senate and talked about the issues of concern to the industry. Most lawmakers are unfamiliar with the work of trustees, and these meetings were important to educate lawmakers on the industry, and the role of the trustee in the foreclosure process. My sincere thanks for those who were able to join us for a very productive afternoon at the Washington capitol, and I hope more are able to join us in 2015.

Finally, the City of Seattle continues to examine whether eminent domain can be used to address foreclosure issues within the City boundaries. As of this writing, City staff was directed to study the issue, and whether passing eminent domain language in Seattle would be a useful tool against foreclosures. There is a group of attorneys who have met with staff to help explain the issues with eminent domain, and the lawsuits that are already pending in other cities. While it is unlikely that Seattle will simply study this issue and take no further action, it is clear that the Council may not have all the information before them of what has already been done on a statewide basis to the DOTA. If the Council takes up the issue, it is likely later this summer.