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Washington Amends Provisions Regarding Beneficiary Payments Under Foreclosure Fairness Act

Wright, Finlay & Zak, LLP ("WFZ") is a full-service litigation and transactional law firm with offices in Orange County, San Francisco Bay Area, Las Vegas, Phoenix Area and Seattle. In addition, they have attorneys licensed in Oregon, New Mexico, Utah and Hawaii that can handle your legal needs in those states. WFZ provides its legal services at reasonable hourly rates, with particular attention to the overall cost of any matter. "Our goal is simple — to provide quality representation and excellent service at a reasonable cost to the client."

The state of Washington amended its statutes addressing the mandatory fees related to foreclosure of deeds of trust, repealing the Revised Code of Washington section 61.24.174 that required certain beneficiaries to remit based on the number of notices of default issued, and including a new section that requires certain beneficiaries to remit based on the number of recorded notices of trustee’s sale. These provisions were effective on July 1, 2016, and the first quarterly report following this effective date was due on or before August 14, 2016.

A copy of HB 2876 regarding the reporting and payment of fees by certain deed of trust beneficiaries is available at http://lawfilesext.leg.wa.gov/biennium/2015-16/Pdf/Bills/House%20Passed%20Legislature/2876-S.PL.pdf. As of July 1, 2016, reporting will be made based on Notices of Sale issued. Wright Finlay & Zak obtained further clarification from the Department of Commerce regarding the nature of the reporting that will be due in August of 2016 for Quarter 2 of 2016, as it will be the first report due after the effective date of the statute but it will cover foreclosure activity that occurred prior to the effective date. The report due in August 2016 for the previous quarter will actually be based on Notices of Sale issued under the new statute, NOT Notices of Default. A copy of the Department of Commerce’s Summary and Q&A regarding the Bill is available at http://www.commerce.wa.gov/Documents/SHB2876-Summary-5-23-2016.pdf.There are some exceptions in subsections (2) and (4) of the new code section governing the reporting and deposits:

No duplicative payment after compliance with previous payment regarding Notice of Default or for Amended Notice of Sale
Subsection (2) provides: ”The two hundred fifty dollar payment is required for every recorded notice of trustee's sale, but does not apply to the recording of an amended notice of trustee's sale. If the beneficiary previously made a payment under RCW 61.24.174, as it existed prior to the effective date of this section, for a notice of default supporting the recorded notice of trustee's sale, no payment is required under this section. The beneficiary shall remit the total amount required in a lump sum each quarter.” In light of the ambiguity in the statute and the Reporting Form and Instructions, Wright Finlay has confirmed with the Department of Commerce that beneficiaries must still report the total number of Notices of Trustee Sale recorded, but if an exemption to fee payment is used, the beneficiary should include with its Reporting Form an itemization of the Notices for which fees that will not be paid, including the reason for the exemption.

New Lower Exemption Threshold
Subsection (4) provides: “This section does not apply to any beneficiary or loan servicer that is a federally insured depository institution, as defined in 12 U.S.C. Sec. 461(b)(1)(A), and that certifies under penalty of perjury that fewer than fifty notices of trustee's sale were recorded on its behalf in the preceding year.” This is a reduction from the previous threshold of 250 Notices of Default per year under repealed R.C.W. 61.24.174. A copy of the new Fee Exemption Template issued by the Washington Department of Commerce is available in the Financial Institutions section of its website at http://www.commerce.wa.gov/Programs/housing/Foreclosure/Pages/default.aspx. Beneficiaries and servicers must recertify exemption status under the new statute.

If you have any questions regarding this Bill, or to be added to the firm’s Western Regional email list for future updates, please do not hesitate to contact Michelle Mierzwa [email protected]