New Law Helps Homeowners Facing Foreclosure

Originally Published 06 May 2011 in “Whidbey Crosswind”

Many veterans and average Americans are struggling.  With the announcement that the Navy is going to reduce forces by another 3,000; even more are going to find themselves unemployed soon.  Another factor directly affecting veterans is the backlog of disability claims being processed by the V.A.  Because of the constant flow claims from vets coming home from Afghanistan and Iraq, claims for retirees are taking between 6 and 18 months.

This perfect storm means that many veterans are facing foreclosure on their homes.  Men and women who have dedicated their lives to serving their country are losing the American dream that they have worked so hard to defend, and enjoy.

There is help.  More importantly, there is help that wasn’t available before; however, very few know about it.  On April 14th, House Bill 1362 was signed into law.  The bill, which goes into effect in July, will give indebted homeowners more time, free counseling and free third-party mediation with their lenders.  The passage of the bill makes Washington the third non-judicial foreclosure state in the nation to pass a foreclosure mediation law.

Also known as the Foreclosure Fairness Act, the new law requires banks to sit down with homeowners and explore options outside of foreclosure.

            Homeowners facing foreclosure can now receive mediation between themselves and their mortgage lender.  Thanks to the Washington Legislature, Governor Gregoire and Sen. Adam Kline, who sponsored the Senate version of this bill (SB 5275), you now have access to people that will inform you and help you work with your lender, explain all of your options, and help put you on a path that may keep you in your home.

If you fall behind on your payments, you will have 30 days from the time that you receive an initial letter from your lender to respond and ask for a period of time called “meet and confer.” If you ask for this period, you’ll get 60 days to talk with your lender and counselors before the lender can issue a notice of default, followed by a notice of trustee sale.  If you do not ask for a “meet and confer” within 30 days of the initial default letter, you essentially wave your rights to working with a counselor.

Nevada and Maryland already have homeowner mediation laws.  According to lead program analyst, Michael Sommermeyer, in the first year in which this law was in effect in Nevada, 46 percent of people who participated in mediation were able to keep their homes.

As every veteran knows, education is the key to making good decisions.  That’s where a housing counselor comes in.  A housing counselor’s job is to educate the home owner about all available options, to the point that they can make a well-informed decision.

According to the Homeowner Institute, a non-profit organization, the sooner homeowner begins talking with a mediator, the better.  One of the benefits to talking with a mediator, before you get your first letter of default, is that they can advise you as to all of the paperwork you will need to gather.  Organization is key to keeping your interests protected.

If you are anticipating problems paying your mortgage, there are a few things you need to keep in mind.

1)  The initial default letter will be different from lender to lender.   Legislators are working to get the letters mandated into a uniform format, but that’s still in the works.  This means that if you have a second mortgage you will need to pay close attention to your mail and carefully read anything from your lenders.

2) You don’t have to wait for the law to take effect to utilize a housing counselor.  If, like many of America’s unemployed, you anticipate that you may have a hard time making your monthly mortgage payment, you can get help immediately.

3)  There are only two people that can start the mitigation between you and your lender- a lawyer or a housing counselor; the home owner can not initiate mitigation.  If you are currently in the foreclosure process, you can still seek out the education services of a housing counselor so you can clearly understand your options- at no cost to you.

4)  Contrary to popular opinion, banks do not want your home.  They make money from the interest from your loan, not having to deal with all of the issues of homeownership.  For this reason, many are surprised with the level of cooperation they find when they use a lawyer or a housing counselor.

If you think foreclosure may be in your future, but you don’t have the funds for a lawyer, you can get help.  To contact the Homeownership Institute, call (360) 679-7621 for free consultations.  Get informed, get educated and get back on the road to peace of mind.

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