Is That Your Final Offer? The Foreclosure Fairness Act

Real Estate Agent


Things are about to change in the Foreclosure landscape, and the Lenders/Investors will have to start handling things differently starting on July 22, 2011.

If you receive a Notice from your Lender, IT IS ABSOLUTELY IN YOUR BEST INTEREST TO RESPOND TO THEM within the time frame they give you, or you may lose your right to even talk to them about your problems, and it seems that would shorten the time before they can foreclose on you, if I read this right! 

On the other hand, if you DO respond to them within their timeframe for doing so, it can actually give you extra time to try to work out your problems with them.

Read the following Blog by Debbie Atwood and pay attention to the details described!  She explains it very well!

Original content by Debbie Atwood

Foreclosure Fairness ActDebbie Atwood Is Making A Splash In Snohomish County!

Homeowners will no longer be able to say, "If only the bank would have talked to me, we could have worked something out."  The foreclosure fairness act goes into effect July 22, 2011 and will allow homeowners the opportunity to mediate with a bank representative and a DECISION MAKER.  The Act substantially modifies the Deed of Trust Statute, Ch61.24 RCW.

"Meet and Confer" Provisions.

Prior law required the lender on owner occupied property 30 days before commencing the non-judicial foreclosure via a Notice of Default to contact the borrower and advise the borrower of the various means available to avoid foreclosure.  This provision only applied to loans entered into between January 1, 2003 and December 31, 2007 and was scheduled to sunset on December 31, 2012.


The new revisions do not sunset and require that the for ALL loans for owner occupied property, the lender must:

1. Advise the borrower that it has 30 days to respond to the lender, and it should contact a Housing Counselor or attorney and that failure to do so may result in losing the opportunity to meet with the lender or mediate the matter before a neutral party.  If the borrower fails to respond, the lender may proceed with the Notice of Default.


2. If the borrower responds within the 30 day notice period, a Notice of Default cannot be issued in less than 90 days from the date of initial contact by the lender.  If the borrower responds and requests a meeting with the lender, a meeting will take place with the lender before an Notice of Default can be issued and the meeting will cover the borrower's ability to modify the loan or other options to avoid a foreclosure, for example, a short sale or deed in lieu.  The meeting must be in person unless the borrower waives this and the lender's decision maker MUST be available.  They can be available by phone.  Both parties will need to attempt to meet no more than 90 days after the initial contact is made and if not, the lender can issue the Notice of Default but only if it can show that it used "due diligence" to schedule the meeting with the borrower and their representative.


The MediationDebbie Atwood Is Making A Splash In Snohomish County!

Prior to the recording of a Notice of Trustee's Sale, an attorney or Housing Counselor may refer the borrower to mediation with the lender through the Department of Commerce.

The Dept of Commerce will appoint the mediator and advise the lender and trustee of the request within 10 days.

The mediation will occur within 45 days after the appointment of the mediator

The lender's decision maker must attend the mediation or be available by phone

The parities have to provide documentation including on the borrower's side, its current and future projected economic circumstances and on the lender's side, net present value calculations to show whether the lender is better served by a foreclosure or modification.

The parties must negotiate in good faith and if the mediator finds tht the lender failed to negotiate in good faith, this is defense to a non-judicial foreclosure action.

If the lender has previously denied a modification, it must explain its reasons for denial in the mediation and it must provide its most recent BPO or appraisal.

Within 7 business days of the mediation, the mediator must advise the Dept of Commerce and trustee of the results of the mediation and if the parties participated in good faith.

The mediation provisions do not apply to seller financed Deeds of Trust, community associations foreclosing Deeds of Trust (condo associations), or lender with fewer than 250 trustee's sales on owner occupied property during a preceding calendar year.


Consumer Protection Act -

It is a violation of the Consumer Protection Act for the lender to fail to mediate in good faith or make the initial contact with the borrower.


Debbie Atwood Is Making A Splash In Snohomish County!

These changes will be beneficial to a borrower with only one loan, and in particular will require the mortgage insurer to participate through the servicing entity

If the second is not foreclosing, it is not affected by these changes, and borrowers will be encouraged to consider making the payments on the seconds to keep the referral of the file from loss mitigation to collections.

These changes will result in a pre-approved short sale if the parties reach an agreement on a short sale, including net to be received by the lender either in the meeting with the lender or the mediation

The lender is required to provide the the note and deed of trust to the borrower at the mediation and certify that it is the owner of the debt, which will  assist in eliminating claims that the lender is not the owner of the debt. 

The duty to mediate in good faith may force lenders to agree to short sales without requiring the borrower to go through a fruitless attempt at a modification when it doesn't have enough income to qualify for a modification, as long as the borrower meets the HAMP eligibility requirements.

Borrowers will now be able to challenge the lender's appraisal or BPO in the mediation.

The mediation process will lengthen the period that the borrower has to avoid foreclosure IF the borrower exercises his rights to a meeting.


If a potential Seller contacts you prior to or when they receive their Notice of Default, the Broker should advise them to seek legal advice and take advantage of these remedies.


Posted by

Paula Burt, REALTOR®      Keller Williams Keystone Realty, York, PA   (717) 755-5599, Ext 3055

Comments (2)

Kristin Hamilton CA REALTOR
Berkshire Hathaway California Realty - Beaumont, CA
(909) 557-6966- Specialize 55+ Communties Banning

I respect your article and believe in the past banks have not always done as much as they could to help homeowners in trouble but this has been a huge problem and the number of defaults and foreclosures has been beyond belief. But when previous mortgagees tell me"the bank wouldn't help me" or "I have never had notice that there was going to be a trustee sale" or "No one sent me a letter that my home foreclosed". Then the neighbors tell me later yes they knew the house foreclosed or I find all the Fed EX envelopes in the trash can unopened so they are not always up front about what they know and don't know. Plus if you are 1 year behind in payments and are not working, how can you save your home. So is that really the banks fault that they couldn't or wouldn't help you. It is a sad situation nationwide.

Jun 17, 2011 12:27 PM
Debbie Atwood
Century 21 Real Estate Center Everett, WA - Everett, WA
Real Estate Broker

Paula= Thank you for the re-blog.  I hope the information helps! BTW this is a WA State Law that is coming in to effect.  I don't know about other states.

Jun 17, 2011 08:05 PM