Help is on the way for some Washington homeowners facing foreclosure under a bill Gov. Chris Gregoire signed into law Thursday.
House Bill 1362, which goes into effect in July will give indebted homeowners more time, more counseling and third-party mediation with their lenders before losing their homes in a move that makes Washington the third non-judicial foreclosure state in the nation to pass a foreclosure mediation law.
“I’m very proud,” said Rep. Tina Orwall, a Des Moines Democrat and the measure’s primary sponsor. “It puts us out leading in the nation to help homeowners through this crisis.”
The final bill was the result of negotiations between banks and anti-poverty advocates in the state, said state Housing Finance Commission Director Kim Herman, and it should to give lenders and homeowners more opportunities to reach agreements that keep Washington residents in their homes.
Under the new law, homeowners who fall behind on their mortgage payments will have 30 days from the time that they get an initial letter from their lenders to respond and ask for a period of time called “meet and confer.” If they do, they’ll get 60 days to talk with their lender and counselors before the lender can issue a notice of default, followed by a notice of trustee sale.
Any time between the first letter and the notice of trustee sale, a housing counselor or a lawyer can refer a homeowner to a new third-party mediation process. If they get that referral, borrowers will be able to have in-person negotiations with their lenders and a third-party mediator who will make sure both parties bring the right documents and attend when they’re supposed to.
The new law lengthens the amount of time that homeowners who respond to their lender’s letter to trigger meet and confer will have before they can lose their houses.
Bruce Neas, an attorney with Columbia Legal Services and chief negotiator for homeowners during the bill-drafting process for House Bill 1362, said that strengthens the meet and confer process considerably.
“It’s very toothless as it is,” Neas said.
Neas also said the new law can benefit homeowners who are already going through foreclosure. As long as a person’s house has not been sold by the time the law goes into effect, they’ll be able to get a referral for mediation as well.
Another thing the law will do is add housing counselors, Herman said. Right now the state has just 45 counselors, but under the new law banks will pay a $250 fee every time they foreclose on someone, providing enough money to double or triple that number.
State housing counselor Marnie Claywell said those reinforcements were badly needed.
“The workload is crazy,” she said. “You want to help everyone.”
So far this year there have been about 12,979 foreclosures in the state, according to the Web site Realty Trac.
She said she thought the time extension would also help the people she works with because it takes a while for many of them to come to terms with their foreclosure and seek help.
Neas says the new law means Washington will join Nevada and Maryland, the other two non-judicial foreclosure states, or states where foreclosures don’t have to go through the courts, to have enacted a mediation process.
The Nevada mediation program has been in effect since 2009, said its lead program analyst, Michael Sommermeyer. He said Nevada continues to have high foreclosure rates, but about 46 percent of the 4,212 people who participated in mediation in the program’s first year were able to stay in their homes.