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Business & Tech

Agent: State Foreclosure Fairness Act Provides Steps for Homeowners Before Foreclosure can Start

The bipartisan state law aims to help those who face foreclosure - but homeowners need to start the process.

Tired of maneuvering your way through the endless maze of requirements, delays, uncertainties and surprises in getting a short sale accepted or working to prevent a foreclosure? Have you been able to actually speak to one person consistently to get answers to all of your questions or have you kept a record on how many different people that you spoke with that each asked for the same information, promised you results then never heard from again?

According to statistics on RealtyTrac, there were 932 new foreclosures in August in King County. Many short sales have received offers that fall apart at the last minute because of endless paperwork requirements or lack of communication, forcing many homes into unnecessary foreclosure. Many homeowners received a Notice of Default before ever having the opportunity to discuss the situation with their lender.

The Washington state Legislature finally listened to your complaints and those from Realtors and enacted new legislation during the 2011 session designed to protect your rights. The Foreclosure Fairness Act seeks to provide a step-by-step process that offers foreclosure counseling to homeowners and requires lenders to discuss potential mediation options before initiating foreclosure procedures. Distressed homeowners must initiate the process and be aware of the law and requirements and follow the timelines.

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The Foreclosure Fairness Act mandates that lenders negotiate with homeowners in a face-to-face meeting but homeowners must ask for the meeting. A lender will not initiate the process. Calls that homeowners receive that offer foreclosure assistance should be investigated thoroughly to verify that they are not some type of scam. 

The lender must send a Notice of Pre-Foreclosure letter 30 days before starting any procedures which includes the homeowners’ right to request mediation. They will then follow up with at least three phone attempts to contact the borrower. Mediation can only officially be requested by a housing counselor or by an attorney. A free housing counselor can be reached by calling Washington state’s homeownership information hotline at 1-877-894-4663. No cost attorney services have been made available through funds provided through the state Attorney General’s office. Contact the legal aid hotline, available to people in the state, at 1-800-606-4819. As a benefit, the lender is to provide one contact person.

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The state Department of Commerce website offers information on which lending institutions are bound by this legislation and has links to approved mediators and a Foreclosure Mediation Timeline that covers all of the elements on the required timeline. 

The mediation meeting must include the borrower and his representative, a mediator appointed by the Department of Commerce and a representative of the lender authorized to make decisions. This meeting must take place within 45 days. All parties must negotiate in good faith and come to an agreement during the meeting. If the borrower does not provide valid information, the process will proceed to foreclosure. If the lender does not negotiate in good faith, the borrower may file a complaint with the Consumer Protection Agency to stop the proceedings in court. A $400 payment is required before negotiating can be scheduled. This is split between the lender and the homeowner.

The Foreclosure Fairness Act went into effect on July 22, 2011 and applies to all owner-occupied homes. Homes facing foreclosure before that date will not receive a Pre-foreclosure letter but may be eligible for mediation. 

Although the lender will require verification of income and other documents, it is wise for the homeowner to come to the mediation with detailed information on the property and a market analysis of homes in the area.

Joan Probala is the managing broker for Issaquah Windermere (Windermere Real Estate/East Inc.). She has 30 years of experience in real estate, construction and sales. She is president-elect (2013) of the Seattle King County Association of Realtors.


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