Foreclosure Fairness Act: Links and Resources

Posted on September 23, 2011 by Robert Dickson

Here are some useful links to assist those wanting more information about the Foreclosure Fairness Act:

Department of Commerce, FFA timeline

Washington State Department of Commerce, foreclosure page

Washington State Housing Finance Commission (good resource for home ownership issues)

US Department of Housing and Urban Development (housing counselor search)

Dickson Steinacker, PS (law firm short sale and loan modification expertise...and the sponsor of this great blog, of course.)

Department of Financial Institutions - Home ownership page

 

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Foreclosure Fairness Act Guide

Posted on September 23, 2011 by Robert Dickson

Credit: jscreationzs Recently, I've had the privilege to address some professional groups regarding the latest developments on foreclosure law in Washington State.  A lot has changed in the world of foreclosures due to the July 22nd passing of the Foreclosure Fairness Act (FFA).  The Department of Commerce has published a helpful timeline which traces the path of the new foreclosure procedures and homeowner mediation rights created by the law.  Using that as a starting point, I've created my own table which outlines the step-by-step process of a foreclosure under the FFA: 

Step

Action

Notes

1

Notification of Rights/Initial Meeting Option:

60-days prior to Notice of Default: lender must notify homeowner by letter and telephone of right for in-person meeting (must notify mediation right—must be requested before Notice of Trustee Sale). 

Meeting: if borrower elects to have an in-person meeting, the parties will discuss

(i) the borrower’s financial ability to modify or restructure the loan, and

(ii) Explore options to avoid foreclosure, such as a short sale or deed in lieu of foreclosure. 

Must be both a phone call and letter. This is interesting because it requires bank to make two forms of contact.  If the borrower does timely respond, the lender must wait to send the Notice of Default until ninety (90) days after the FFA Notice was sent. 

2

Mediation Request:

Request Mediation through attorney or housing counselor through the Department of Commerce.

This is an option up until the Notice of Trustee Sale is recorded.  Once the Notice of Trustee Sale is recorded, the option expires.

Mediators are largely from non-profit dispute resolution centers (“DCRs”)

3

Mediation Notification:

Within 10 days after getting mediation request, Dept. of Comm. Notifies all parties and selects a mediator.  The Deed of Trust Trustee will also be notified. 

Dept. of Comm. will also notify the parties of the required documentation.

4

Mediation Schedule:

Scheduled no less than 45 days after mediator selected.  This can be agreed-upon by the parties, but 45 days is the default.

Mediator sets time at least 15 days prior to mediation.

 

Homeowner may be represented by an attorney of other advocate, including a housing counselor.  At the mediation, the lender must have someone of authority to modify or negotiate an agreement (can be by phone)

5

Documents:

Homeowner – (1) Financial statements, (2) current/future income, (3) debts/obligations, (4) 2 years tax returns.

 

Lender – (1) Loan balance, (2) list of fees/charges, (3) payment history, (4) net present value and loan inputs (5), (6) copy of note/deed of trust

Not providing documents in a timely manner is often the trigger-point for negotiating in bad faith.  It is vital the individuals provide those documents on time and as completely as possible.  If they are NOT complete, the party must have an explanation.

6

Mediation:  

During the mediation, mediator will encourage the parties to look at all options, and provide a written certification within 7 days after mediation that the parties acted in good faith.

 

Considerations:

1.      Borrower’s economic circumstances

2.      Net present value of modified loan vs. anticipated recovery at foreclosure

3.       Loan mod and net present value calculations are established by the FDIC or other programs

4.       Other loss mitigation guidelines (fed. insured loans)

 

Mediation fee maximum of $400; and can last up to three (3) hours.  It is also split equally between the parties (borrower/lender). 

Parties are obligated to act in good faith.  Mediator will adjudge whether parties acted in good faith towards a resolution. 

Bad Faith:

(i) failure to participate in the mediation,

(ii) failure to timely share required information,

(iii) failure to pay the party’s share of the mediation fee,

(iv) failure to send an authorized representative to the mediation, and

(v) a request by the lender that the borrower waive future claims. 

Good Faith:

(i) Communicate openly and understand/listen to borrower

(ii) Flexibility

(iii) Commitment to keep agreements

7

Conclusion:

Parties come to an arrangement (loan mod, short sale, etc.). The mediator will establish terms of the resolution and provide the FFA certification on the Dept. of Commerce’s form.  

Homeowner may enjoin the sale of the property if the bank did not mediate in good faith. 

Picture credit: jscreationzs,

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What can a tenant do when a landlord breaches the rental or lease agreement?

Posted on February 5, 2010 by Robert Dickson

For a tenant to exercise his or her remedial rights under the Landlord-Tenant Act (RCW 59.18), the following requirements must be satisfied:

1.  Tenant must be current on rent

2.  Tenant must give landlord notice of any defective condition in writing (the landlord then has statutorily-outlined time requirements in which to correct the defects.  RCW 59.18.070).  If the landlord is not given notice, the court will not expect him to have fixed the defect(s). 

3.  Tenant must not prevent or thwart the landlord's attempt at remedying the defect

4.  If the landlord still does not correct the defect, the tenant may elect one of the following remedies: 

(a) terminate rental agreement, and vacate; (b) commence action in court; or (c) fix the defect and deduct the cost from the required rental payment; (d) seek a third party arbitrator or court determination which assesses the reduction of rental value of the property; (e) in the case of substantial danger to the health and safety of the tenant, he or she can request that a government conduct an inspection on the premises.  The inspector will then certify whether in deed the property is sufficiently dangerous, thus verifying whether withholding rental payment is justified; (f) seek authorization from a court or arbitrator to end the tenancy -- this is only authorized when the defects are so drastic that they cannot be corrected. 

For a more detailed description of the above guide, look to RCW 59.18.  It is important to note that tenants must follow these requirements strictly.  If a landlord can show that the RCW was not followed, he may defeat the tenant's actions in attempting to correct the deficiency -- meaning that the tenant may have violated the lease and is liable for subsequent damages. 

Above all, if you are a tenant, be sure to keep paying rent!  The court will not go along with your actions IF it is shown that you are either deficient in the rent owed, or have unnecessarily withheld amounts that you rightfully owe. 

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Landlords -- don't forget about the deposit!

Posted on February 2, 2010 by Robert Dickson

In a recent case, I encountered an interesting issue regarding deposits held by landlords.  Specifically, what happens to a tenant's deposit once the landlord/tenant relationship has ended (either the tenant has moved out or abandoned the property, or, the landlord has removed him or her)?  In the Landlord-Tenant Act, RCW 59.18.280 outlines what needs to happen --

"Within fourteen days after the termination of the rental agreement and vacation of the premises or, if the tenant abandons the premises as defined in RCW 59.18.310, within fourteen days after the landlord learns of the abandonment, the landlord shall give a full and specific statement of the basis for retaining any of the deposit together with the payment of any refund due the tenant under the terms and conditions of the rental agreement. No portion of any deposit shall be withheld on account of wear resulting from ordinary use of the premises. The landlord complies with this section if the required statement or payment, or both, are deposited in the United States mail properly addressed with first-class postage prepaid within the fourteen days.

     The notice shall be delivered to the tenant personally or by mail to his last known address. If the landlord fails to give such statement together with any refund due the tenant within the time limits specified above he shall be liable to the tenant for the full amount of the deposit. The landlord is also barred in any action brought by the tenant to recover the deposit from asserting any claim or raising any defense for retaining any of the deposit unless the landlord shows that circumstances beyond the landlord's control prevented the landlord from providing the statement within the fourteen days or that the tenant abandoned the premises as defined in RCW 59.18.310. The court may in its discretion award up to two times the amount of the deposit for the intentional refusal of the landlord to give the statement or refund due. In any action brought by the tenant to recover the deposit, the prevailing party shall additionally be entitled to the cost of suit or arbitration including a reasonable attorney's fee.

     Nothing in this chapter shall preclude the landlord from proceeding against, and the landlord shall have the right to proceed against a tenant to recover sums exceeding the amount of the tenant's damage or security deposit for damage to the property for which the tenant is responsible together with reasonable attorney's fees."

The important thing to remember is that the landlord has a mere 14 days to provide either an explanation of why the deposit has not been tendered (or to ask for more time).  After that 14-day window, the landlord is functionally barred from making any defenses to keeping the money and may actually have to pay more.  So, to all those landlords out there: be sure to take care of the deposit issue within that 14-day deadline.

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