The Foreclosure Mediation Program
New alternatives for homeowners in distress
As of Friday, July 22 The Washington State Foreclosure Fairness Act Mediation Program began. Washington is the third non-judicial foreclosure process state in the country with a program designed to help homeowners resolve and find solutions to foreclosure proceedings with their lender or servicer. To read the actual law, click here.
The Foreclosure Fairness Act requires lenders and servicers conducting more than 250 foreclosures in Washington State in the previous year to pay $250 for each Notice of Default issued. The fee provides funding for free homeownership counseling, attorneys to prosecute violations of the Washington Consumer Protection Act and foreclosure prevention outreach.
Some lender are exempt from The Foreclosure Fairness Act because they have certified under penalty of perjury that they were not the beneficiary of deeds of trust in more than 250 trustee sales of owner-occupied residential real property between January 1, 2010 and December 31, 2010. To see a list of exempt lender click here.
Foreclosure Mediation Timeline
1. Lender must notify homeowner by letter and telephone of the right to a 60-day window of opportunity for an in-person meeting before lender issues a Notice of Default. The notice must also indicate the homeownerï¿½s right to request mediation through a housing counselor or attorney. Mediation may be requested up until the Notice of Trustee Sale is issued.
2. Mediation is requested ONLY by a housing counselor or attorney sending a request for mediation to the Department of Commerce. The homeowner does not have to establish or prove reasons for the request. Once mediation is requested, the foreclosure process stops until mediation is completed.
3.. Within 10 days of receiving the request for mediation, Commerce will notify all parties that mediation has been requested, select a mediator, and notify the parties of documents that are required for the mediation.
4. The mediation will be scheduled no later than 45 days after the mediator is selected, unless otherwise agreed. The mediator will set a time, date and place for the mediation 15 days before the mediation session. The homeowner may be represented by an attorney or other advocate such as a housing counselor. The lender must have a person with authority to modify the loan or negotiate an agreement either at the mediation or available by telephone.
5. At least 10 days prior to mediation session: Homeowner will prepare and exchange with the lender: a financial statement with current and future income information, debts and obligations, and last two years of tax returns. Lender will prepare and exchange with the homeowner: loan balance, an itemized list of fees and charges, payment history, net present value and loan modification inputs, and other required documents.
6. At the mediation, both the homeowner and the lender must participate in good faith. The mediator will encourage the parties to examine all options, including loan modification, to avoid foreclosure. Within seven days after mediation, the mediator will make a written certification of the results of the mediation and whether the parties participated in good faith.
7. The parties either come to an agreement (a loan modification or other alternative) or the parties do not come to an agreement, and the foreclosure process will proceed. If the lender does not mediate in good faith, the homeowner may be able to stop the foreclosure sale in court.
Homeowners who received a Notice of Default on or before July 22, 2011 and their owner occupied house has not yet been sold at foreclosure sale.
Homeowners who received the Notice of Pre-Foreclosure Options and requested mediation before the Notice of Trustee Sale has been recorded.
The homeowner is responsible to pay a $200 fee and the lender will pay a $200 fee for the mediation. The fee must be paid prior to mediation.