Recently, I’ve had the privilege to address some professional groups regarding the latest developments on foreclosure law in Washington State. A lot has changed in the world of foreclosures due to the July 22nd passing of the Foreclosure Fairness Act (FFA). The Department of Commerce has published a helpful timeline which traces the path of the new foreclosure procedures and homeowner mediation rights created by the law. Using that as a starting point, I’ve created my own table which outlines the step-by-step process of a foreclosure under the FFA:
Notification of Rights/Initial Meeting Option:
60-days prior to Notice of Default: lender must notify homeowner by letter and telephone of right for in-person meeting (must notify mediation right—must be requested before Notice of Trustee Sale).
Meeting: if borrower elects to have an in-person meeting, the parties will discuss
(i) the borrower’s financial ability to modify or restructure the loan, and
Scheduled no less than 45 days after mediator selected. This can be agreed-upon by the parties, but 45 days is the default.
Mediator sets time at least 15 days prior to mediation.
Homeowner – (1) Financial statements, (2) current/future income, (3) debts/obligations, (4) 2 years tax returns.
During the mediation, mediator will encourage the parties to look at all options, and provide a written certification within 7 days after mediation that the parties acted in good faith.
1. Borrower’s economic circumstances
2. Net present value of modified loan vs. anticipated recovery at foreclosure
3. Loan mod and net present value calculations are established by the FDIC or other programs
4. Other loss mitigation guidelines (fed. insured loans)
Bad Faith:
(i) failure to participate in the mediation,
(ii) failure to timely share required information,
(iii) failure to pay the party’s share of the mediation fee,
(iv) failure to send an authorized representative to the mediation, and
(v) a request by the lender that the borrower waive future claims.
Good Faith:
(i) Communicate openly and understand/listen to borrower
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Read through and enter the discussion with the form at the end
