Can Washington’s Foreclosure Fairness Act Help You Avoid Foreclosure?

The Emotional and Financial Toll of Foreclosure

But for many homeowners, their house can also become a tremendous source of anxiety and stress when they are worried about the possibility of losing their home to foreclosure. The terms of a traditional 30-year fixed home loan can be unforgiving during a rough time. Many of my clients over the past 20 years have been homeowners who, through no fault of their own, fell on hard times and were unable to keep up on payments.

Divorce, health issues leading to unpaid medical bills, unemployment or underemployment – these things are part of the rhythm of life. Many innocent homeowners have been victimized by mortgage servicing errors and a monolithic servicer where it’s impossible to get ahold of someone who has answers to even the simplest questions. An unexpected death can leave family members reeling, grieving but also needing to figure out how to deal with the mortgage to keep a roof over their heads.

What Is Washington’s Deed of Trust?

“Trustee” sounds like a nice word – I mean, it has the word “trust” in it, right? But the trustee has a very specific role, and that is to move a foreclosure forward as quickly as possible, within the bounds of the law. It’s important to consult with an attorney so you have someone on your side.

The Unfair Reality of Trustee’s Sale Foreclosures in Washington

Clients often bring a large stack of papers to my office, and many times hand each document to me one by one. Confused by the various notices, they weren’t sure which ones to pay attention to (quick answer – all of them!). Sadly, many times clients have come to me too late, and their homes were already foreclosed on, and there is not much I can do.

A Not-So-Secret Weapon for Homeowners: Washington’s Foreclosure Fairness Act

The FFA brought about a number of homeowner-friendly changes to the deed of trust foreclosure laws, including a homeowner hotline with free housing counselors available. One important requirement is that lenders issue a “Notice of Preforeclosure Options” notice allowing homeowners an additional 30 days of respite, if the homeowners contact their lender within the first 30 days after the date of the preforeclosure notice. The homeowner can request an in-person “meet and confer” with a real, live human being from their lender. The “meet and confer” requirement can be a significant “pause” button for my homeowner clients. Many homeowners facing foreclosure need additional time to review and understand their options, but once the formal foreclosure process starts, the timeline is much faster.

One little known procedure to slow the trustee’s sale process down is the foreclosure mediation program created by the FFA. Homeowners whose circumstances qualify them for FFA mediation can be referred to foreclosure mediation before a notice of trustee’s sale is recorded, but only a housing counselor or an attorney can make the referral. The FFA sets a 45-day deadline after a mediator is chosen, and within that 45 days, an in-person mediation must occur. Homeowners and lenders both have to produce documentation; a homeowner’s responsibility is essentially to put together a mortgage modification (“loss mitigation”) application, including all financial documents.

Many homeowners have difficulty pulling together voluminous documents within the quick turnaround times of the FFA. Lenders must disclose information about the loan and about the “net present value” (NPV) of a modified loan. If the NPV is more than what a lender would get by going through the foreclosure process, there is sufficient cause for the homeowner to stop the foreclosure.

How Certain Lenders and HOAs Can Bypass Foreclosure Laws

The Department of Commerce maintains a current list of financial institutions exempt from the FFA. Some smaller lenders who do not file enough foreclosures each year are exempt from the provisions of the FFA and can proceed directly to issue a notice of default which begins the formal foreclosure process; many credit unions and several other surprising financial institutions are exempt.

A significant exception is homeowner and condo associations, which are not subject to the FFA. While most homeowner and condominium associations in Washington foreclose “judicially,” or via a lawsuit filed in court, many can also foreclose nonjudicially if the association’s governing documents expressly provide for nonjudicial foreclosure.

New Law Extends Mediation Time. Make It Count!

In July 2023, a new law took effect that allows referral to FFA mediation up until ninety (90) days before the scheduled trustee’s sale. This recent change gives most homeowners an extra ten (10) days, and keeps another option viable for a little longer for homeowners working with attorneys and housing counselors.

The Right Foreclosure Attorney in Washington Can Be the Difference Between Keeping or Losing Your Home

Navigating foreclosure is overwhelming, and the legal complexities can make it even harder for homeowners to find a path forward. Washington’s foreclosure laws are highly technical, deadline-driven, and often favor lenders over homeowners. While the Foreclosure Fairness Act (FFA) provides essential protections, accessing them requires quick action and an understanding of the intricate legal process.

This article has only scratched the surface of the options available to homeowners facing foreclosure. The reality is that every situation is unique, and the right strategy depends on your specific financial circumstances, lender policies, and the rapidly changing laws surrounding foreclosure prevention.

From loan modifications to mediation, from legal defenses to negotiating with servicers, an experienced foreclosure attorney can help you explore every possible avenue to save your home. If you’re facing foreclosure, contact Navigate Law Group to speak with an experienced foreclosure defense attorney in Vancouver, Washington!