In 2011, the Washington legislature passed the Washington State Foreclosure Fairness Act. The Act went into effect on July 22, 2011, making Washington State the third non-judicial foreclosure process state in the country with a program designed to help homeowners find alternatives to foreclosure.
The new law effectively forces mortgage lenders to enter into mediation with homeowners in a good-faith attempt to avoid foreclosure. The enactment of this new law is great news for homeowners that have fallen behind on their mortgages and are or could be facing foreclosure. Prior to the Act, many lenders simply refused to consider loan modification or other work-outs with struggling homeowners and simply went straight into the foreclosure process. This is no longer an option for the bigger mortgage lenders. (Lenders that foreclosed less than 250 mortgages in 2010 are exempt from the Act. For a list of exempt lenders, visit http://www.commerce.wa.gov/site/1367/default.aspx
The Act applies to homeowners facing foreclosure who are in default on their mortgages, but have not yet received a Notice of Trustee’s Sale. Homeowners may request mediation only through a housing counselor or an attorney. The homeowner is not required to prove any reason for the request for mediation. Homeowners can reach a free housing counselor at 1-877-894-HOME. Both the homeowner and the lender will be required to pay a $200 fee for mediation. A mediator will be selected within 10 days of the homeowner’s request, and mediation will be scheduled within 45 days of the request. Prior to mediation, the homeowner is obligated to provide financial information to the lender and the lender is required to provide detailed loan information to the homeowner. Both parties are required to participate in mediation in good faith.
Although not a guarantee that foreclosure will be avoided for every homeowner, the Act creates some additional hope for struggling homeowners in the battle to save their homes. It is also a step in the right direction towards reducing foreclosures in Washington State, thereby serving to help stabilize the housing market and boost our local economy.
The foreclosure mediation program is being overseen by the Washington State Department of Commerce. For more information on the mediation program, or to contact a housing counselor, visit http://www.commerce.wa.gov/site/1367/default.aspx
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