Whereas HAMP and other modifications alternatives that are offered by most banks operate based upon “guidelines” that the banks voluntarily comply, or don’t comply with, at will; the Washington Foreclosure Fairness Act (FFA) is a Washington State specific legislative Act which provides homeowners with an alternative to the frustrating and endless mortgage modification process under such other programs like HAMP.
Because this is a Washington State specific act, you may find that if you ask your bank about this program that they will tell you that it “does not exist” or that “they do not participate” or that they have “never heard of it”. Do not be surprised as you are likely speaking to a representative that handles calls from many if not all 50-states and they have no idea about this new law (just in our state) up here in our soggy little corner of the country. But it does exist and it is real! And no they cannot “opt out” or elect to “not participate”, they must participate, it is just that your friendly $12.00 an hour representative has no clue as to anything about it, so do not take their word for it.
Also, you should be aware that while the banks will issue many “Notices” trying to scare or warn homeowners, like “Notice of Intent to Accelerate” or “Notice of Intent to Foreclose”. These notices have little or no legal significance and are only designed to scare homeowners. While they do reflect a serious situation, under the FFA there are really only three important notices to be looking for.
The first is the “Notice of Pre-Foreclosure Options”. This Notice is the triggering event under the current law which provides the homeowner the option to elect to enter into mortgage mediation starts. Once received, the homeowner will have 30-days, from the date of the letter, to respond to elect to request a face-to-face meeting with the bank to discuss the situation. Homeowners may attend this meeting alone or they may go with a housing counselor or attorney if they choose. The purpose of this meeting is to see if an agreement can be reached as to a modification or other options before going to mediation under the FFA. During this time frame the homeowner can also choose to enter into mortgage mediation. Homeowners cannot request mortgage mediation themselves. Mortgage mediation can ONLY be requested through and by either a HUD counselor or an attorney. If mortgage mediation is requested, the foreclosure process is stopped pending the outcome of the mediation.
Mortgage mediation is conducted at a location chosen by the mediator. Usually at the mediator’s place of business. In attendance at the mediation is the mediator, who may be an attorney or retired judge, along with the homeowner’s and their attorneys or housing counselor. The bank is usually represented by their attorney(s) who will either have the authority to finalize a modification, or other solution, or be in a position to have a person with such authority available by telephone during the mediation. The goal being to work out a loan modification, short sale timeline, or other agreeable alternative to foreclosure. You are not locked into any one of these options going into the mediation and can elect which option works best for you up to the day of mediation, or you may decide to choose which way to go based upon the mediation outcome. It is a very flexible process that provides many alternative options.
If after the issuance of the “Notice of Pre-Foreclosure Options” the homeowner(s) do not elect to enter into mortgage mediation, the bank can then proceed to issue the second important notice, “Notice of Default” 90-days after the issuance of the “Notice of Pre-Foreclosure Options” if you have elected to have the face-to-face meeting. If the homeowner does not request the face-to-face meeting offered in the “Notice of Pre-Foreclosure Options” within the 30-day time limit, then the bank may issue the “Notice of Default” any time after 30-days from the date of the “Notice of Pre-Foreclosure Options”. Once the “Notice of Default” is issued, the homeowner can still request to do mortgage mediation under the Washington Foreclosure Fairness Act. Again, mortgage mediation cannot be requested by the homeowner and can only be requested by either a HUD counselor or an attorney.
Once the “Notice of Default” is issued, the bank can then post and serve the third notice, “Notice of Trustee Sale”. The bank can serve that notice any time after 30-days have elapsed since the issuance of the “Notice of Default”. Under the current law, once the “Notice of Trustee Sale” is issued, a homeowner’s right to request mortgage mediation is terminated and the foreclosure will proceed to foreclosure . (However, Bankruptcy will stop a foreclosure from proceeding. Or, the bank may voluntarily continue a foreclosure sale for a variety of reasons, included further consideration for a modification or for a short sale. But, this is voluntary and they can, and often do, tell homeowners they will continue the sale, and then conduct the sale anyway. Also, if a homeowner were to file a chapter 13 bankruptcy, we can stall the foreclosure and restart the timeframe to request mortgage mediation once the Notice of Trustee Sale expires. This is a highly complex area and you should consult with an experienced bankruptcy attorney before proceeding.)
At the Mediation, there is generally one mediator, who is an attorney or retired judge, but may also be an experienced mediator approved by the Department of Commerce. In our mediations, our client is represented by one or two attorneys and a mortgage professional. The bank is then represented by their attorney(s) and they must have present (or by telephone) a bank representative who has the personal authority to negotiate and sign off on a modification, short sale, deed-in-lieu, or other agreed to alternative to foreclosure.
Ten days prior to the mediation the homeowner is required to provide their last two years of tax returns, 60-days of pay stubs and other documentation of income, plus two months of bank statements. The bank is required to provide, amongst other documentation,