OLYMPIA – Hope came to life this morning for thousands of Washington families facing the loss of their homes, thanks to Gov. Chris Gregoire signing the Foreclosure Fairness Act of 2011 into law.
The new law gives homeowners facing foreclosure access to housing counselors to assist them in the process. This helping hand can include meetings with the bank and an independent mediator to review every available option for struggling families to keep their homes.
“Adding housing counselors and third-party mediation to the foreclosure process will level the playing field between homeowners and mortgage lenders,” said state Rep. Tina Orwall (D-Des Moines), prime sponsor of HB 1362. Orwall is a long-time affordable housing advocate who, alongside state Sen. Adam Kline (D-Seattle), worked for two years on negotiations with stakeholders to develop a plan that benefits both homeowners and financial institutions.
“Having the opportunity to sit down face-to-face with the bank will give struggling homeowners a real chance to work out the best possible outcome for their specific situation,” Orwall added.
“This bill will truly make a difference for thousands of homeowners in our state,” said Marcy Bowers, Interim Director for the Statewide Poverty Action Network. “Foreclosure mediation programs have been shown to be extremely effective in allowing families to save their homes.”
Seventy-seven thousand families lost their homes to foreclosure over a period of two years, and with 4,385 new foreclosures in February of 2011, Washington currently holds the 11th highest foreclosure rate in the nation.
“The impact of this foreclosure crisis is affecting every one of us, not just people who are losing their homes,” said Orwall, who is working to wipe out the foreclosure stigma by putting an all-too-familiar face on the crisis. “We’re talking about our neighbors, co-workers, close friends and family members; foreclosure is no longer something that happens to other people.”
It was, in fact, the story of a woman in her district who fought tirelessly to keep the house she had lived in for more than a decade, and lost – what triggered Orwall to search for solutions.
“I kept hearing the same story from exasperated homeowners attempting to navigate the complicated banking system, being bounced from one department to another, and when they finally reached an actual service representative, they often got contradictory information,” said Orwall about the hurdles homeowners have to jump over just to communicate with the lenders. “How can you reach a solution to your mortgage problem if the bank is basically ignoring you?”
Her measure will make it possible for homeowners to salvage their homes whenever feasible and help reach a resolution faster than they do now, which can take up to a year and a half.
Under the new law, banks will pay $250 into a fund every time they issue a new Notice of Default. The money will be used to train housing counselors and also to pay mediators. Homeowners will be notified that housing advisers are available to help them, and that they can request a meeting with the lender and a mediator to explore all options and reach an agreement regarding the future of their homes.
“The passage of this landmark legislation makes our state a leader in the 27 non-judicial foreclosure states as Washington will become only the third non-judicial state to require third party mediation of foreclosures,” said Bruce Neas with Columbia Legal Services, who has spent 31 years as a legal services lawyer representing consumers, tenants, and homeowners. “The unique approach of the Foreclosure Fairness Act, combining meaningful pre-foreclosure rights with a post-foreclosure right to third party mediation, will help thousands of Washington homeowners save their homes.”
The Foreclosure Fairness Act of 2011 goes into effect July 13.