Real Estate Law Article: Washington State Foreclosure Fairness Act
The Foreclosure Fairness Act, which was passed during the 2011 legislative session (SSHB1362, Chapter 58, Laws of 2011), mandates that lenders notify homeowners of the availability of foreclosure prevention counseling and the potential for mediation prior to foreclosing on their homes. More specifically, lenders must notify homeowners in writing or over the phone that they have a 60-day time period to request an in-person mediation with the lender. A lender must give the proper notice and wait the 60-days before filing a notice of default.
After the homeowner is given notice, they can request a mediation through the Department of Commerce. Homeowners must be referred to mediation by a housing counsel or an attorney. Homeowners do not have to provide a reason for requesting a mediation. After the housing counsel or attorney has requested a mediation, the Department of Commerce will notify the lender and homeowner that a mediation has been requested and the Department will select a mediator. The Department will then provide the homeowner a list of documents to bring to the mediation.
The Department of Commerce will schedule a mediation within 45 days from the date that a mediator is selected unless otherwise agreed. The mediator will notify the parties of the date, time and location of the mediation 15 days before the mediation is scheduled. The lender must attend the mediation in-person or over the phone with a representative that has the authority to modify the loan and/or negotiate an alternative agreement. During the mediation, the mediator will hear from both the lender and the borrower and help the parties reach a resolution and avoid foreclosure. Any resolution reached must be voluntarily agreed to by both parties.
Within 7 days after the mediation, the mediator will provide a written certification of the results of the mediation and whether each party participated in the mediation with good faith. If the mediator finds that the lender did not participate in good faith, the homeowner may enjoin the foreclosure in court or report that finding to the Washington Attorney General’s Office of possible violation of the Washington Consumer Protection Act.
To qualify for a mediation you must have an owner-occupied property and must not have received a Notice of Default. If you have received a Notice of Default on or before July 22, 2011 and your home has not been foreclosed upon, you can still qualify for a mediation. Your lender or servicer must have foreclosed on 250 or more properties in Washington in the last year to qualify. The homeowner must pay a $200.00 fee to schedule a mediation.
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