By Holly Chisa, HPC Advocacy, UTA Washington Lobbyist
Washington State has started its legislative session, and the foreclosure community continues to negotiate on legislation. We are expected to work for 60 days. A work session was held on January 13 providing an update to the Senate Financial Institutions and Insurance Committee on the progress of negotiations that took place over the summer months with advocates, financial institutions, trustees, and others.
Regretfully, negotiations on owner/holder have effectively shut down, in large part because of an inability to reach agreement on the definitions in the DOTA. Additionally, advocates wanted additional requirements as part of the delivery of the notice of default that were not acceptable to all parties in the negotiations. There are, however, two other issues still in play.
One is to resolve an issue raised by the cities to deal with abandoned properties. Financial institutions have offered to work with the Department of Financial Institutions to provide contact information for cities to get help with abandoned properties that are bank-owned. This would be in lieu of a database being developed by local governments or the state of bank-owned properties.
Second, there continue to be discussions around how to “right-size” the mediation program. The parties agree that housing counselors are very valuable to homeowners and want to be sure a new, lower funding structure supports that program. Agencies are working with financial institutions to see what the lower number will be for long-term funding of the program, and whether fees need to be charged to smaller financial institutions that process fewer notices of default to help pay for the program.
Tentative agreement has been reached on HB 2876. This legislation “right-sizes” the Foreclosure Fairness Act from the funding side of the program. Currently financial institutions with over 250 NODs in Washington pay $250 per NOD to the Washington State Department of Commerce to fund the program. With the steady decrease in foreclosures, there has been diminished revenue, and that has put aspects of the program in jeopardy. HB 2876 changes the percentages that various agencies receive from the fees collected on the financial institutions. The funding formula is also changed. Now, financial institutions with more than 50 NOTS are charged $250 per NOTS. The money will still be paid to the WA Department of Commerce. The large majority of the revenue will be paid to housing counselors, considered still to be an integral part of the success of the mediation program.
The bill had a hearing last week, and is likely to be voted from committee this week.
Lawmakers will not take any action on the issue of owner/holder this session. They are considering work on nuisance abatement. The cities are working with financial institutions to partner with the Department of Financial Institutions to create a contact list for financial institutions that cities can call when they identify properties that are bank-owned that are causing local problems.