OLYMPIA—Moved by the story of a woman in her district facing the loss of her family’s home, state Rep. Tina Orwall wrote a bill that will bring solutions to many of Washington’s struggling homeowners facing foreclosure.
“Charlotte Gilbert has lived in her home with her family for over a decade and is now on the verge of losing it,” said the Des Moines Democrat who has repeatedly pointed out that foreclosure is no longer something that happens to other people. “We’re looking at the new faces of foreclosure: our neighbors, co-workers, friends and family members. Not just people who took out subprime loans, but also to those with prime, regular loans as more families, like Ms. Gilbert’s, are impacted by this great recession.”
In response to this crisis, Orwall sponsored HB 1362, the Foreclosure Fairness Act of 2011 that requires banks and homeowners to work together and explore alternatives to foreclosure, which is on its way to the governor’s desk.
With more than 77,000 families losing their homes in just two years, advocates say that Washington has gone from 25th in foreclosures to 10th in the nation.
“Approximately 45,000 families will receive notices of foreclosure this year, but we are providing new hope for many of them with a fair process and resources to help them explore every option available and keep their homes whenever possible,” said Orwall.
In 2009 the legislature approved a “meet and confer” requirement between lenders and homeowners. Banks were to offer a meeting with homeowners prior to issuing a foreclosure notice. But some banks, especially the large ones, have not been offering this option.
“Not only are banks failing to meet the requirement we passed two years ago, they are also making it hard for many homeowners to find out if they are going to stay in their homes or not,” explained Orwall. “It’s upsetting and frustrating for people who are looking for finality and are instead given the run-around.”
That’s the case in Charlotte Gilbert’s experience; she has been trying to work something out with the banks for two years to no avail.
“It makes a difference to speak with politicians about an issue and see something is done about it,” said Gilbert. “Thanks to Rep. Orwall and HB 1362, the good people of this state now have hope that there will be some true negotiations and not just placating us with a useless paper chase.”
Orwall worked on a new system with stakeholders to help homeowners stay in their homes whenever possible, and help reach a resolution faster than they do now, which can take 12 to 16 months. The Washington Foreclosure Fairness Act passed today will:
- Strengthen the “meet and confer” requirement. If homeowners request to meet with the bank to discuss their options, the bank has to agree to this meeting.
- Fund more housing counselors. Homeowners who get help from trained housing counselors are less likely to end up in foreclosure. The banks have agreed to fund more housing counselors to help people understand their options and make informed decisions about the future of their homes.
- Create a foreclosure mediation requirement. If the bank and homeowner can’t reach an agreement during “meet and confer” they can go to foreclosure mediation. That’s when both sides make their cases with a neutral person in the room to see if there are alternatives to foreclosure. Mediations have drastically reduced the number of foreclosures in other states.
- Provide a consumer protection act remedy for institutions that don’t comply with this foreclosure process.
“One of the keys to restore Washington’s economy is to stabilize the housing market through a proactive and effective strategy that helps families keep their homes,” said the lawmaker. “Mediation is an important new tool to ensure that all options have been explored before moving to foreclosure.”
“This bill gives people a good chance at avoiding foreclosure all together,” said Sen. Adam Kline, D-Seattle, the sponsor of the Senate companion bill to Orwall’s measure. “This means keeping people in their homes, keeping kids in their schools, keeping neighborhoods together, keeping other house prices up and keeping our society together.”
“We’re one Washington—we don’t turn our backs when our neighbors are in need,” said Orwall. “This new law will make a difference to many families in need of a real break.”