By Holly Chisa
Over the next few months, lawmakers, interested parties, and state agencies will meet to discuss the future of foreclosures in Washington, and of mediation.
Why are we meeting now? As programs age, as the housing market changes, as new needs arise, improvements are needed. More importantly, the long-term viability of the program needs to be discussed. Is the Deed of Trust Act current in the “new” housing economy, and are the mediation programs (meet and confer and the Foreclosure Fairness Act) still effective to bring resolution for homeowners?
There have also been a series of court decisions that have complicated the underlying Deed of Trust Act. The Washington State Supreme Court has not clearly provided direction on issues around the beneficiary declaration, and the issues around owner/holder. The continual rulings have created uncertainty for the foreclosure process, and there needs to be a resolution of the statute by the Legislature to clear up these ambiguities.
Over the next several months, there will be both larger and smaller meetings to draft potential changes to both the Deed of Trust Act (DOTA) and the mediation programs. Additionally, there may be program modifications that won’t require statutory changes. These systemic changes can be done via the Washington Department of Commerce, which manages the mediation programs.
One of the more important meetings involves a large session of mediators coming together to look at the Foreclosure Fairness Act and bothmediation and meet and confer. While these programs do not directly impact trustees, their process and timelines – and success in resolving issues between a beneficiary and a homeowner –directly impacts the foreclosure process. Over the last several months, various parties have researched the effectiveness of the mediation process, and of specific mediators. They’ve found some systemic challenges and improvements that can be made. One of the key elements is working with more successful mediators to learn how they organize their meetings, what pre-mediation prep work they do with both parties, and how they bring resolution to their sessions effectively. These techniques would then ostensibly be used to train other mediators, bringing consistency to the mediation program. There also has been some discussion of whether the Washington Department of Commerce needs rulemaking authority for the mediation program. Rulemaking authority brings some risks, but would allow the Department to bring limited changes to the program without having to open the statutes.
The underlying Deed of Trust Act also needs some attention. As I mentioned before, several Washington State Supreme Court rulings have not provided the clarity we hoped for, and lawmakers have been asked to draft legislation to provide that clarity. Both sides have agreed to work to address the issues around owner/holder/actual holder. Additionally, the parties may willing to discuss the exemption provided under the Foreclosure Fairness Act for financial institutions of certain size. Originally intended to provide some recognition of the differences between smaller and larger financial institutions in resources and communication with customers, the exemption for small financial institutions from portions of the FFA may have created confusion as to the application of the FFA for some homeowners. Additionally, as service agreements have changed over the years, different financial institutions are qualifying or no longer qualifying, depending in circumstance. For the long-term, a productive conversation could lead updating the statutes to reflect the new markets that have emerged from the recession and changes to federal banking laws.
For the United Trustees Association and its members, the next several months offer an opportunity to pull both the FFA and the DOTA apart, to suggest necessary changes, and to improve the foreclosure process. UTA has been invited to all of the meetings being organized, and our members will be vital to this process. Members will be welcome to attend the discussions on the DOTA and owner/holder, and any other statutory changes to the DOTA. Also, if members have input on the Foreclosure Fairness Act and how mediations and meet and confer work, those comments will be welcome as well.
The Association looks forward to working with all of the stakeholders, and specifically trustees, as bill language is drafted over the coming months. If you are interested in participating, please contact me or the UTA, and we will include you in the communications as we move forward.