August 1, 2016
by Susana Chambers
RCO Legal, P.S.
USFN Member (Alaska, Oregon, Washington)
This article appeared in the USFN e-Update (June 2016 ed.) and is reprinted here for those readers who missed it.
There are two recent changes to the Washington Foreclosure Fairness Act: one affects how the foreclosure tax is obtained from beneficiaries, reducing overall exemptions from the foreclosure tax; and the second increases the required fee to participate in mediation.
Changes to the Foreclosure Fairness Account —Legislation enacted in 2011 created the Foreclosure Fairness Account (Account) and imposed a “foreclosure tax” that required payment by any beneficiary issuing a notice of default on owner-occupied real property in Washington. For each owner-occupied residential real property for which a notice of default was issued, the beneficiary is required to remit $250 to the Department of Commerce (Commerce). Certain exceptions applied to the foreclosure tax and excluded any beneficiary or loan servicer that is FDIC-insured, and certifies under penalty of perjury that it has issued less than 250 notices of default in the preceding year.
Funds from the account are allocated among various agencies including Commerce, housing counselor agencies, the attorney general’s Consumer Protection Division, Office of Civil Legal Aid, and the Department of Financial Institutions.
RCW 61.24.172 was amended to change the allocation of the funds in the Foreclosure Fairness Account, redistributing the funds amongst the agencies mentioned above, increasing the portion for some agencies and decreasing the distribution to others.
The statute was further amended to change the foreclosure tax to a tax on the notice of trustee’s sale, rather than the notice of default. Since July 1, 2016 every beneficiary on whose behalf a notice of trustee’s sale for residential real property has been recorded in the county records must:
1. Report to Commerce the number of notices of trustee’s sale recorded for each residential property during the previous quarter. Commerce has confirmed that the report and payment for the 2016 second quarter (April-June) is due by August 14, 2016 and is based on the number of notices of trustee’s sale, rather than notices of default.
2. Remit $250 for every notice of trustee’s sale recorded for each residential property during the previous quarter to Commerce to be deposited into the Foreclosure Fairness Account. The total amount due must be remitted in a lump sum each quarter.
3. Report and update beneficiary contact information for the person and work-group responsible for the beneficiary’s compliance with these requirements.
There are still several exceptions to the foreclosure tax, including:
1. The $250 payment does not apply to the recording of an amended notice of trustee’s sale.
2. If the beneficiary previously made a payment under RCW 61.24.174 as it existed prior to the effective date of the amendment for a notice of default supporting the recorded notice of trustee’s sale, no additional payment is required.
3. The foreclosure tax does not apply to any beneficiary or loan servicer that is FDIC-insured and certifies under penalty of perjury that fewer than 50 notices of trustee’s sale were recorded on its behalf in the preceding year. Commerce has confirmed that beneficiaries will need to recertify their status to be exempt from paying the fees for the remainder of 2016. New exemption forms are available on Commerce’s website: http://www.commerce.wa.gov/.
Failure to comply with the statute is considered an unfair or deceptive act in trade or commerce and an unfair method of competition in violation of the Consumer Protection Act, Chapter 19.86 RCW.
Increase of Mediator Fees — Since 2011, mediation fees charged by the mediator have been capped at $400 (split evenly between the borrower and beneficiary) for up to three hours of mediation. The statute also included a vague reference to “reasonable” fees that mediators were permitted to charge for rescheduling mediation sessions, or for mediations lasting longer than three hours.
Effective May 1, 2016 Commerce has used its statutory authority to increase mediation fees, as published in the Foreclosure Fairness Program Guidelines, available at: http://classic.commerce.wa.gov/Documents/FFP%20Guidelines%201-20-2015.pdf. The new mediation fee is $600 (split evenly between the borrower and beneficiary), and up to $300 for a rescheduling fee.
Copyright © 2016 USFN. All rights reserved.
Summer USFN Report
Note for consideration of the USFN Award of Excellence: This article is a "Feature."