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Relief for strapped borrowers: "Foreclosure Fairness" is now law
Emergency measures in a new law go into effect immediately, creating the infrastructure needed to get more housing counselors working with banks and preventing people from losing their homes.
The aim is to require lenders to meet with borrowers in person and try to work out a deal before they take back their properties. Among the remedies included in the law known as the " Foreclosure Fairness Act":
- encourages homeowners to use the skills and professional judgment of housing counselors as early as possible in the foreclosure process
- creates a framework for homeowners and beneficiaries to communicate with each other to reach a resolution and avoid foreclosure whenever possible
- provides a process for foreclosure mediation when a housing counselor or attorney determines mediation is appropriate
- immediately creates the foreclosure fairness account, into which a $250 fee will be paid by banks for each default notice they issue.
Governor Chris Gregoire signed the bill into law surrounded by dozens of advocates for low-income borrowers and supporters, including the prime sponsor of the law, state House, Rep. Tina Orwall (D-Des Moins.)
"Washington ranks tenth now in the nation in the number of foreclosures. This year more than 30,000 of our families are at risk of losing their homes in our state. In a time like this, we desparately need this bill," Gregoire said as she thanked the advocates for years of work on the new regulations.
She says it will help us get through this recession "and we can come out strong on the other end."
The legislation is crafted to ensure the banks foot the bill for the costs of the new communication and mediation requirements; funds will be collected in the newly-created "foreclosure fairness account," which immediately kicked in with the signing of the measure. The legislature's bill analysis gives the banks credit for doing their part to make this happen.
"Financial institutions have stepped up to offer to pay for the housing counselors and other requirements of the bill...it is estimated there will be a minimum of $7.5 million for counseling and other efforts," it says, noting that there will be no immediate cost to the state to administer the new programs.
The full law takes effect in mid-July and is expected to at least double the number of housing counselors in the state.
Right now there are only about 40 certified professionals helping the tens of thousands of borrowers who are on the verge of losing their homes.