How long does a homeowner have to remain in the home after a foreclosure sale takes place?

A common question we get is how long after a foreclosure has taken place can the owner of the property expect to stay in the home? The answer can be found in the RCW:

The purchaser at the trustee’s sale shall be entitled to possession of the property on the twentieth day following the sale, as against the borrower and grantor under the deed of trust and anyone having an interest junior to the deed of trust, including occupants who are not tenants, who were given all of the notices to which they were entitled under this chapter. The purchaser shall also have a right to the summary proceedings to obtain possession of real property provided in chapter 59.12 RCW.

61.24.060. Rights and remedies of trustee’s sale purchaser–Written notice to occupants or tenants, WA ST 61.24.060

After the 20 days have run, the party attempting to gain possession of the property must then follow the procedures contained in RCW 59.12. This statute covers the rules and procedures to evict someone from a property. If you include the statutory time it takes to execute the actual eviction, a property owner might expect to stay in the property for another several days. A smart strategy would be to negotiate a payment from the new owner of the property. Under the right circumstances, they may be willing to pay a modest relocation payment so as to avoid the hassle of having to try and push through the eviction procedures.

Housing market in recovery? Yes, but signs show there will be a slow down in 2013

Writing for Housing Wire, Megan Hopkins reports that the housing prices are likely to top out at modest increase in value:

Despite beginning the year with market lows, most home prices gained momentum toward the end up 2012, finishing the year at 4.9% year-over-year price gains. Some markets, though they are few, may also suffer a backslide in values.

According to the latest Clear Capital home data report, national home prices are expected to increase by only 2.1% this year. The 2013 yearly gains are expected to be smaller partly because homes are starting on a higher price base, but the entire explanation is more complex than that, Clear Capital notes.

While many western localities are seeing the firming up of housing prices, there are still several areas that could potentially see a shift down in pricing:

Only eight markets are projected to see prices fall in 2013, including Denver; Louisville, Ky.; Charlotte, N.C.; Philadelphia; Atlanta; Baltimore; Chicago and St. Louis. For those eight markets, average declines should come in at just 0.9%.

Thankfully, the Seattle area housing market continues to lead the charge in the beleaguered housing recovery:

Seattle, a market with a strong recovery already in the works, is expected to see the highest gains of the top 50 major metro markets at 13.5%.

A word on the HAMP program

Since the beginning of the recession in 2008, loan modification programs have been available primarily through the Home Affordable Mortgage Program (HAMP). If a homeowner was unable to quality, the individual mortgage company could offer its own programs.

Normally, the goal of a modification is a lower monthly payment through reduced interest rates, elongating the term of the loan, principal balance reduction, or a combination of all. Our firm has helped clients since the downturn’s beginning with modifications. We have seen a tremendous amount succeed through the lowered interest rates and/or lengthening the loan. Seldom, however, did lenders reduce principal balances. But now they are. Over several months, we have seen an uptick in this remedy, sometimes several thousand dollars or even tens of thousands in reduced balance. We have seen eliminations of entire second mortgage balances.

You may have heard of the settlement five banks reached with the federal government, called the New National Mortgage Settlement. In February 2012, the federal government and 49 states (Oklahoma did not participate) entered into a settlement with the country’s five largest loan lenders: Ally, Bank of America, Citi Bank, JPMorgan Chase, and Wells Fargo. In the settlement, $25 billion is set aside for mortgage relief to underwater homeowners, $17 billion of which for loan modifications and principal reductions.

As we watch the effect of this settlement unfold, we can only assume it will further benefit the homeowners who qualify though they must be borrowers of the settling banks or servicers. In a later Blog entry, focus on eligibility will be discussed.

–Contributed by Michael P. Dickson

Podcast: Foreclosure Fairness Act – What is it, and how to take advantage of the mediation option

 In this podcast, Rob Dickson describes how the new Foreclosure Fairness Act has impacted foreclosures in Washington. (Photo Credit: jscreationzs)


Podcast: Washington State is a “non-recourse” loan state (kind of)

In this podcast, Rob Dickson discusses the difference between non-recourse and recourse loans and how they effect foreclosures in Washington State.

IMF pushing for US banks to reduce principal amounts on home loans

HouseDebtAccording to a recent Washington Post article by Howard Schneider, the International Monetary Fund is pushing for lenders in the United States to agree to principal reductions on their existing loans.

As a general rule, banks are very (VERY) reluctant to reduce principal reductions.  It will be interesting to see if these types of pressures, from international organizations to be exact, will actually have an effect on the loan modification strategies that US lending institutions currently follow.

Here’s a quote from the article:


“International Monetary Fund chief Christine Lagarde called on the U.S. government to reduce the mortgage debt owed by homeowners as a way help to revive the nation’s economy and stimulate growth in the wider industrialized world.

Speaking Thursday at the Brookings Institution, Lagarde urged that this relief be extended to loans held by mortgage giants Fannie Mae and Freddie Mac. The issue of whether to reduce mortgages held by Fannie Mae and Freddie Mac, representing more than half of U.S. home loans, has become contentious in Washington in recent months.

Ahead of the IMF’s spring meetings next week, agency analysts have been warning that household debt — in particular, mortgages that are in default or that exceed the value of the borrower’s home — is dragging down growth in developed countries at a time when the global economy is struggling to revive.”

Photo: renjith krishnan

What is a deed-in-lieu?

dsadsadasDebtors who have defaulted on their obligations under a real estate security agreement typically face foreclosure, either judicial or non-judicial.  A deed in lieu of foreclosure is another type of procedure to deal with a distressed property.  A deed in lieu is a transfer to a lender of title to real estate that fully or partially satisfies the debt that the property secures. These transactions may have significant benefits for both parties. First, a deed in lieu saves much of the time and cost of a foreclosure and gives the lender more direct and immediate control of the property. A deed in lieu may also be beneficial to the debtor if he or she just wants to convey the property and essentially be done with it.


While deeds in lieu have these advantages there are some potential pitfalls to this procedure.  First, if there are junior mortgages or liens on the property the deed in lieu does not serve to extinguish those liens.  In the event that there are junior liens, chances are good that unless the senior and junior lienholders negotiate an agreement the junior liens will be advanced against the title in the senior lienholder’s hands.  Second, a deed in lieu may be considered to be an equitable mortgage and not a complete conveyance. Only one Washington case has held found a deed in lieu to be an equitable mortgage, but depending on the nature of the transaction it remains a possibility.  Finally, a deed in lieu may be set aside on the grounds of fraud or overreaching. Washington courts have failed to do so thus far but other jurisdictions have done so, particularly when the value of the land exceeds the indebtedness or when the lender is desperate or suffers a disability.

With these advantages and possible pitfalls in mind, but before a deed in lieu is actually conveyed, the mortgagor and the lender should enter into an agreement that covers these details.

Photo Credit: Renjith Krishnan/

Foreclosing on an agricultural property – what you need to know

dsaWhen a party forecloses on residential or commercial property they may have options on how to do so. However, when the property being foreclosed on is being used for agricultural purposes Washington law only permits judicial foreclosure. RCW 61.24.030(1). Real property is considered “used for agricultural purposes” if it is used in a manner that produces crops, livestock or aquatic goods. RCW 61.24.030(2). Despite these fairly strict protections for agricultural land, lenders may have alternatives if they draft a deed of trust.

In a recent but unpublished decision a state appellate court upheld a party waiving the right to a judicial foreclosure based solely on the fact that the land was being used for agricultural purposes. Schroeder v. Haberthur, unpublished 2011 WL 4599661 (Oct. 6, 2011). Additionally the parties to real estate transaction may stipulate in a deed of trust that the land is not and will not be used for agricultural purposes. The grantee of the deed of trust may require the grantor to warrant in the deed of trust that the land will not be used for agricultural purposes without the consent of the grantee. Id. Absent such agreements however, deeds of trust and power of sale foreclosure are unavailable for agricultural land and foreclosure must occur judicially.

Photo Credit: federico stevanin

California courts upholding MERS foreclosure methods, inspite of note/deed of trust issues

Housing Wire‘s website had an interesting little article about some decisions that are coming out of California regarding MERS and its ability to foreclose on properties without having property assignment of the deeds of trust.

I speak with a lot of individuals who approach foreclosure from the standpoint that if the foreclosing entity does not have both the note and deed of trust assigned to them, they therefore cannot foreclose.  MERS (Mortgage Electronic Registration System) presented a problem because it dealt with many of these types of arrangements.  We are now starting to see that the court is not buying that argument, and that at a minimum, MERS may act as an agent on behalf of banks to execute their rights under deeds of trust.

I’m sure there will be more battles forthcoming regarding this issue, but California seems to be laying out at least an initial trend.

The most telling quote from the short article is the following:

“MERS’ legal standing as mortgagee, or agent of the note holder, gives MERS the authority under California law to take action on behalf of the owner of the note,” said Janis Smith, MERS vice president of corporate communications.

(Granted, it’s from MERS, so take that into consideration.)