Ever since the Washington Supreme Court’s decision in the Jordan v. NationStar case, loan servicers have been on edge about securing abandoned property. House Bill 2057 seeks to address this, and several other pressing issues.
Most of the bill's sections will become effective 90 days after the end of the legislative session, or on June 6, 2018. However, the new requirements applicable to Notices of Default (NOD) will apply to NODs issued after June 30, 2018. The bill covers several subjects related to real estate loans, including residential and commercial loans, and amends the Revised Code of Washington.
The bill addresses statutory rights for lenders and servicers to take action over vacant and abandoned properties prior to foreclosure, clarifying the Washington Supreme Court’s ruling in Jordan v. NationStar Mortgage, LLC. It provides clarification of the owner/holder/actual holder language consistent with the Brown v. Washington State Department of Commerce decision.
For notices issues after June 30, 2018, the bill adds required information on the first page of the Notice of Default and Notice of Trustee’s Sale for commercial and residential loans. It adds statutory due diligence and notice requirements for nonjudicial foreclosure in the event a borrower is deceased. Specifically, the trustee must provide notice of the foreclosure to all known heirs and, if unknown, perform due diligence to locate the heirs.
The bill adds statutory requirements for interaction of lenders, servicers, and trustees with successors in interest to a deceased borrower. Similar to California’s 2017 Widows and Orphans’ bill and the new CFPB rules (effective April 2018), a servicer cannot proceed with a Notice of Default or Notice of Trustee’s Sale, as prescribed in each statute, until it confirms whether the person qualifies as a successor-in-interest under the new statute.
A new pre-foreclosure notice in English and Spanish is required for judicial foreclosures of reverse residential mortgages.
One new option for non-judicial foreclosure trustees is to file a declaration of nonmonetary interest in response to civil litigation in which no wrongful conduct is alleged against the trustee (similar to California’s Civil Code section 2924l). The bill also includes requirements that the beneficiary note declaration now be in the trustee’s possession at the time the NOD is issued and provided to the borrower with the NOD. Finally, the bill includes an increase from $250.00 to $325.00 in the amount a beneficiary must deposit into the foreclosure fairness fund for each notice of trustee’s sale on residential real property.
(Click here [1] to read more of DS News' coverage of Washington House Bill 2057.)