Governor Jay Inslee signed a comprehensive bill yesterday that creates important new protections for low-income consumers, senior homeowners, and communities facing foreclosure.
Under the bill (HB 2057), counties and municipalities will be able to work with financial institutions to address abandoned properties in foreclosure while still protecting a homeowner’s right of possession before the foreclosure is complete. Surviving family members and others who inherit property will have protections during foreclosure similar to those of the original borrower.
The bill also establishes new protections around reverse mortgages. Reverse mortgages are mortgages that convert equity in a home into cash, a tool primarily used by seniors. Under the bill, lenders will now be required to notify owners in writing about their rights and resources for free assistance before filing a reverse mortgage foreclosure lawsuit.
“These changes will help create economic stability in communities hit hardest by the financial crisis, without eroding homeowner rights,” said Lili Sotelo, directing attorney with Columbia Legal Services.
The bill ensures that lenders can only enter properties in foreclosure when the property is a nuisance and abandoned; it creates strict procedures for determining abandonment, for repairing and maintaining those properties, and for returning possession of the home should the owner reappear.
The provisions of HB 2057 came after years of stakeholder negotiation under the leadership of Representative Tina Orwall (D-Des Moines). Stakeholders, including Columbia Legal Services, the Northwest Justice Project, financial institutions, state agencies and local government, identified several areas of focus. One was the growing number of reverse mortgage foreclosures and foreclosures due to the death of the borrower. With Governor Inslee’s signature on HB 2057, homeowners and their families will now have a better chance to preserve the family home.
The bill also bolsters the Foreclosure Fairness Act (FFA) of 2011 by increasing the fee financial institutions pay into the Foreclosure Fairness Fund and establishing a new way to track foreclosure filings. “The increased fee will allow Washington to preserve the housing counseling expertise it has built since the inception of the FFA and ensure the foreclosure mediation program can continue to help homeowners in need,” said Marc Coté, Director of Parkview Services, a nonprofit organization that creates and promotes inclusive housing solutions.