Holly Chisa
Work in Washington ramps up as we prepare for the 2022 legislative session. After a great UTA conference in November, the input we received from members gives us good direction for policy proposals in Washington State.
We continue to meet with various stakeholders to discuss the surplus funds bill and other policy proposals. Interestingly, we were rebuffed for not providing the language sooner on our proposal to reform the surplus funds system (language that was shared in October), but have yet to see draft language for any of the potential proposals coming from others. UTA is moving forward with the bill. We’ve shared the language with various parties including financial institutions, lawmakers, and advocates. We have a sponsor in the House and believe we have solidified our sponsor in the Senate as well. It is my hope to have a hearing in the second week of our 60-day session to get the bill moving quickly through the process. Washington State has agreed to cut off dates to move bills through committees and floor action. Bills must be heard and passed from the committee within the first weeks of the session, which makes it critical that we move the bill forward as quickly as possible. Negotiations will likely be ongoing during the session as advocates provide feedback and likely some opposition to the proposal.
From the other side, we expect to see proposals regulating trustees – similar to what we’ve addressed in past years. As I shared at the convention, there is a long laundry list of proposals that the advocates want to address during the 2022 session. This includes licensure of trustees, an issue we’ve rebuffed in previous years. Licensing trustees could be considered except that many UTA members are already attorneys and members of the Washington Bar. To license only those trustees NOT currently licensed as attorneys would require a license that costs thousands of dollars per trustee and would not allow for a financially stable program. Lawmakers have looked into this issue previously, and a decision was made NOT to pursue this idea by the regulators. Nothing has changed since this discussion – if anything the industry as a whole is more regulated since the last debates on this idea. Should a bill be introduced UTA will work against the policy as it creates an unnecessary bureaucracy that won’t actually help borrowers and will put a specific burden on trustees not covered by the Bar and who do this work.
We have to look at other proposals put on the table by the advocates as well. In addition to proposing that the Notice of Default should expire, they want the statute of limitations to apply to non-judicial foreclosures. The trustee’s deed should not be issued until 11 days after the sale which leads me to wonder if this isn’t shadowing an effort to bring some provisions of the new California law to Washington. They also want the local contact for the trustee must know everything about the individual foreclosure when a borrower calls the trustee’s office. This last point is impractical at best, but also raises some privacy concerns for borrowers. Having everyone know everything about every foreclosure in the office in case someone answers the phone leaves personal borrower information vulnerable.
We do agree on one point they’ve raised – we need to address challenges to the deceased borrower provisions. As is common with changes to statute, it’s difficult to know if a law is correctly written until after implementation. A few years into the implementation of the deceased borrower statutes, we see that some adjustments are warranted. For example, notifications must be sent to surviving children; we didn’t set an age floor for that requirement. Opening the statute to set an age floor and allowing for the notice to be sent to an alternative individual or legal representative for that minor would be appropriate. We have yet to see language for this change offered by the advocates as part of their list of proposals.
As stated previously, we are waiting for the text of these proposals to be shared with us to provide comments.
It’s worth noting that UTA fully expects to see other proposals related to the DOTA, FFA, and taxes during the 2022 session. As the housing market cools in Washington State, we do expect an uptick in legislative proposals to help homeowners who may be underwater due to COVID, layoffs, or other issues. After last year’s broad expansion of the Homestead Act, it is possible we’ll see attempts to further expand bankruptcy protections. As federal and state renter protections end, we’ll finally see the effect of all the renter protections on the housing market. It’s unclear just how many landlords will file for mediation under the newly-expanded provisions of the mediation program. It’s also unclear whether lawmakers will further include landlords with more than four units into the program.
Finally, we need to prepare for additional taxes and fees on foreclosures and document filings in general. It’s hard to believe we’d see anything in addition to the $100 per document filing fee already included in the 2021 budget. However, I do expect to see other fees included in the 2022 supplemental budget. I also expect there to be a second tax package. 2021 included a tax on capital gains; 2022 will likely include policy groundwork for a long-desired income tax in Washington. While previous Washington State Supreme Court rulings have determined that an income tax is unconstitutional, there are cases working their way through the courts to challenge these previous decisions.
As we prep for what 2022 will bring us, UTA will continue to represent your interests in the Washington State Legislature. Using the feedback we received during the 2021 convention in Reno, we know that you watch Washington closely – and for good reason. We’ll continue to fight policies that would affect trustees’ autonomy in Washington, and your ability to appropriately administer the provisions of the DOTA. For a 60-day session, the Washington 2022 session is gearing up to be a challenging eight weeks.