Foreclosure process in Washington

Judicial or non-judicial?

Both exist, but the deed of trust route is the standard one. A deed of trust conveys the property to a trustee as security. If it contains a power of sale, and the lender meets the conditions of RCW 61.24.030, the trustee can sell the home at public auction without going to court. One condition: the deed of trust must state that the land is not used mainly for agricultural purposes. If that statement is false, the deed of trust must be foreclosed in court (RCW 61.24.030(2)). A deed of trust on agricultural land “may be foreclosed as a mortgage” (RCW 61.24.020), meaning through a lawsuit.

Timeline step by step

Put together, the statute’s own notice of default tells the borrower that the sale may be no less than 120 days after the notice, or 150 days if the contact letter was required (RCW 61.24.030(8)(g)). The trustee may postpone the sale for up to 120 days in total (RCW 61.24.040(10)). A court order or bankruptcy stay can push the date out further.

How a homeowner can stop the sale

• Reinstate. Until the 11th day before the sale, the borrower can end the process by paying the arrears plus the trustee’s costs and fees. The loan then continues as if it had not been accelerated (RCW 61.24.090).
• Restrain the sale in court. A court can restrain a sale on any proper legal or equitable ground, but only if the applicant pays the clerk the sums that would be due under the loan, and gives the trustee five days’ notice (RCW 61.24.130).
• Loss mitigation. After a complete application is filed more than 37 days before a sale, federal rules bar the servicer from moving for a foreclosure judgment or order of sale or holding the sale until the application is resolved (12 CFR 1024.41(g)).

Right of redemption

After a trustee’s sale in Washington, “no person shall have any right, by statute or otherwise, to redeem the property” (RCW 61.24.050). After a trustee’s sale the purchase is final once the trustee accepts the bid and the deed is recorded within 15 days. Only the trustee or beneficiary may void a sale, and only up to the 11th day after it, for listed reasons such as a sale-process error or a loss mitigation agreement.

A redemption right does exist after a judicial foreclosure. The debtor may redeem within eight months of the sale if the mortgage says the property is not used mainly for farming and the lender waived any deficiency; otherwise the period is one year (RCW 6.23.020).

Deficiency judgments

After a trustee’s sale on a deed of trust, no deficiency judgment may be obtained against the borrower, grantor or guarantor, except in limited cases tied to commercial loans (RCW 61.24.100). A lender may still sue on the debt before a notice of trustee’s sale is given or after a sale is discontinued (RCW 61.24.100(2)).

If the home sells for more than the debt and costs, the trustee deposits the surplus with the clerk of the superior court in the county of the sale, and parties with claims can move for disbursement (RCW 61.24.080).

Help for homeowners in default

Foreclosure mediation. Under RCW 61.24.163, a borrower with a deed of trust on residential property of up to four units can be referred to mediation by a housing counselor or an attorney. Homeowners cannot refer themselves (Washington Department of Commerce).

• Deadline. A referral may be made once a notice of default has issued and no later than 90 days before the sale date in the notice of trustee’s sale. If an amended notice of sale is recorded after a stay, the deadline is 25 days before the new date.
• Process. Commerce selects a mediator within 10 days of the referral. The borrower sends documents within 23 days, the lender within 20 days after that, and the session must be held within 70 days.
• Cost. A mediator’s fee may not exceed $400 for a session of one to three hours, unless waived or the department authorizes more. The borrower and lender split it equally.
• Effect. If a referral comes before the notice of sale, the trustee may not record it until the mediator certifies completion. If it comes after, the sale may not occur until the certification arrives.
• Good faith. A mediator’s finding that the lender failed to mediate in good faith is a defense to the foreclosure it covers. A lender can proceed after mediation fails without a bad-faith finding.
• Exceptions. Commercial loans, entity-owned property and seller-financed sales are excluded (RCW 61.24.165), as are certain small federally insured lenders (RCW 61.24.166).

Free counseling. The statewide housing counselor line is 1-877-894-HOME (4663) (Washington Department of Commerce). The notice of default must also list HUD and the statewide civil legal aid hotline. The notice of default also warns borrowers to be careful of people who prey on those in distress.