Home is most certainly where the heart is, and in America in particular homeownership is an aspiration for most people and something to be preserved, if at all possible. While there isn't space in this article to go into all of the historical reasons for the emphasis on homeownership in America (it has a lot to do with immigrants who could not own land and a home in their native lands) or the shifts in perspective and lifestyle that are causing millennials to reconsider that proposition, the fact is that Americans still consider preserving homeownership to be an important goal.
This idea is borne out in Washington statutes and case law surrounding nonjudicial foreclosures - the most common way that real property is foreclosed in Washington. Statistics indicate that approximately 95 percent of all foreclosures are done non-judicially.
In an effort at giving homeowners an opportunity to preserve homeownership in the face of the most recent financial crisis, the Legislature passed the Foreclosure Fairness Act (FFA) in 2011.1 The statute went into effect on July 22, 2011, and it permits owners of residential real property (owner-occupied) to request participation in a mediation program designed to allow the homeowner an opportunity to avoid foreclosure.2
This may come in the form of loan modification, in most instances, which allows the homeowner to retain the home. It may also involve a homeowner entering into a short-sale agreement whereby the property is sold for less than the amount owed on the debt or entry into a deed in lieu of foreclosure. The mediation referral must be made by a HUD-certified housing counselor or an attorney, and while the mediation is open the foreclosure auction may not occur.
Under RCW 61.24.030–.031, the referral to mediation cannot be initiated until the issuance of the notice of default. The right to mediation is available to the homeowner until 20 days after the next document issued in the process - the notice of trustee's sale - has been recorded.3
The program is funded by fees paid by those who utilize the nonjudicial foreclosure process and is administered by the Washington Department of Commerce. The latest statistics indicate that the program is largely a success for the people who participate in an FFA mediation, but the number of participants is still lower than the legislation's drafters had hoped.
The consensus seems to be that many people receiving the notices regarding FFA mediation do not really understand the options available under the program or that it offers a meaningful way to get through the morass of communicating with mortgage loan servicers.
In the last few years, we have seen a significant number of cases interpreting the parameters and requirements of the Washington Deed of Trust Act (DTA) - the nonjudicial foreclosure statute.4 This makes sense given the significant rise in nonjudicial foreclosures following the financial crisis in 2008, and many of the issues relating to the explosion in the sale of mortgage loans played out in the context of foreclosures.
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