If a lender or servicer wishes to conduct a non-judicial foreclosure in Washington State, certain notices to the borrower are required. The two primary notices required under Washington law include: (1) Notice of Default and (2) Notice of Sale. Unfortunately, there is no set timeline for the lender/servicer to initiate or complete a non-judicial foreclosure. In most cases, a non-judicial foreclosure may occur between 9-12 months following the first missed payment. However, I have seen many situations where a lender/servicer takes years to foreclose.
The non-judicial foreclosure process in Washington state formally begins with the Notice of Default. The NOD is issued to a borrower pursuant to RCW 61.24.031. Due to the confusion created by the numerous collection documents delivered to borrowers from mortgage servicers after a default has occurred, I have attached a Notice of Default issued in connection with an actual foreclosure case. Once a borrower receives the Notice of Default, the borrower may apply for a mediation pursuant to the Foreclosure Fairness Act if the loan/home is eligible.
Not sooner than 30 days from the issuance of the Notice of Default, a lender may record a Notice of Sale. The Notice of Sale sets forth the date and time of the public sale. The Notice of Sale may not be issued if a mediation is scheduled pursuant to the Foreclosure Fairness Act.
Assuming the loan/home is eligible, a homeowner has 20 days from the recording of the Notice of Sale to request a mediation pursuant to the Foreclosure Fairness Act. If the homeowner does not wish to attempt to modify the loan or undertake a short sale or deed in lieu of foreclosure, the foreclosure trustee may conduct a public sale of the property not sooner than 90 days from the issuance of the Notice of Sale. For your review, I have attached a Notice of Sale issued in connection with an actual foreclosure case.
In order to stop the foreclosure, a Washington borrower has a couple of options. First, a qualifying borrower may be referred for a mediation under the Washington Foreclosure Fairness Act. The foreclosure is stayed pending the outcome of the mediation. Second, a qualifying borrower may file a Chapter 7 or Chapter 13 bankruptcy case. Upon filing, an automatic stay goes into effect in most cases. However, if you have filed multiple Chapter 13 cases, the stay may not be automatic. Third, a borrower may file for injunctive relief in the superior court where the property is located. This option can pose several problems as evidenced in RCW 61.24.130(2), which states as follows:
No court may grant a restraining order or injunction to restrain a trustee's sale unless the person seeking the restraint gives five days notice to the trustee of the time when, place where, and the judge before whom the application for the restraining order or injunction is to be made. This notice shall include copies of all pleadings and related documents to be given to the judge. No judge may act upon such application unless it is accompanied by proof, evidenced by return of a sheriff, the sheriff's deputy, or by any person eighteen years of age or over who is competent to be a witness, that the notice has been served on the trustee. (3) If the restraining order or injunction is dissolved after the date of the trustee's sale set forth in the notice as provided in RCW 61.24.040(1)(f), the court granting such restraining order or injunction, or before whom the order or injunction is returnable, shall, at the request of the trustee, set a new sale date which shall be not less than forty-five days from the date of the order dissolving the restraining order. The trustee shall: (a) Comply with the requirements of RCW 61.24.040(1) (a) through (f) at least thirty days before the new sale date; and (b) Cause a copy of the notice of trustee's sale as provided in RCW 61.24.040(1)(f) to be published in a legal newspaper in each county in which the property or any part thereof is situated once between the thirty-fifth and twenty-eighth day before the sale and once between the fourteenth and seventh day before the sale.
As you can see, the Foreclosure Fairness Act mediation can be an attractive option when a homeowner is facing a foreclosure on her/his primary residence. However, it is important to consult with an attorney experienced in foreclosure, bankruptcy and real estate law before making any decision regarding a residential or commercial foreclosure. For more information on the foreclosure timeline or the Foreclosure Fairness Act, please feel free to schedule a free consultation with our firm.