Good news! No,wait – Great news!
Our real estate market continues to show signs of real improvement. Homes are selling, selling in less time, pricing is firming up and foreclosures are declining!
In addition Washington State legislators passed an exciting new law called the Mortgage Foreclosure Fairness Act. This law can help folks who are unable to keep up with their mortgage to stay in their homes. This should further reduce the number of foreclosures and bank owned properties. The law is effective July 22, 2011. I have attached more information about how the law works.
If you know anyone who may be in an awkward position with their mortgage, pass my name along and I will be happy to explain the new legislation which might be or great help to them!
New Foreclosure Law, how it Works
Washington State Mortgage Foreclosure Fairness Act SHB 1362
- Notification. Lenders must first properly notify a borrower if they are subject to foreclosure and to advise them to seek the assistance of a lawyer or mortgage counselor. With or without this assistance, the borrower has the right to have a face to face meeting with a lender decision maker to try to work out a solution. The notifications are a series of letters and phone calls. If the borrower fails to respond, the lender can proceed with foreclosure. If the borrower requests a meeting, the lender must refrain from foreclosure filing for 90 days from the date of the first notice.
- Mediation. Mediation is administered by the State Department of Commerce. If the mediation is initiated by the borrower, a lawyer or housing counselor must request the mediation and notify the Department of Commerce. The Department will appoint a mediator. Mediation is a different from a borrower requested meeting with a lender. Mediation with the involvement of a representative is preferred. A fee of $400 will be split between lender and borrower.
- Solutions. During the 90 day stay, lender and borrower are to meet to work toward a solution including loan modification, short sale, deed in lieu or other solutions. If these meetings occur in the context of mediation, the lender must appoint a representative to attend the meetings, if the representative does not have the power to negotiate; such a person must be available by telephone.
- Exceptions. Not all borrowers will benefit from the legislation. Only lenders who have foreclosed on 250 owner-occupied deeds of trust in the State during the prior year will be subject to the law. Lenders operating in the State are required to report the number of foreclosure notices to the Department of Commerce each quarter.
- Bad faith negotiations. The biggest benefit of the program is that the lender is forced to discuss with the borrower options that may help the borrower stay in the home. If these options will not work the lender is required to discuss how to dispose of the property in some fashion other than foreclosure. This is a good time for the buyer to negotiate how the lender reports to credit bureaus and how to do a deed in lieu with a discharge of the deficiency and perhaps the funding of relocation costs. If the mediator finds the lender negotiated in bad faith, a pending foreclosure can be denied and the lender will have to start over. Bad faith on the part of the borrower will result in the foreclosure proceeding.
- Cautions and warnings. Borrowers should pay close attention to all paperwork received from the lender and should be very cautious about signing anything sent to them. Rights under the law can be waived by the signature of a borrower.
- Free Housing Counselors. Owner-occupied residential borrowers in Washington have access to free housing counselors. Even if they think their situation is hopeless they should review their case with a counselor by calling 1-877-894-HOME (4663)
Courtesy of Linnea Jones – Windermere Real Estate / Northeast, Inc. 425-765-2211
