Washington Amends and Adds Provisions Regarding Defaulted, Abandoned, or Foreclosed Residential Real Property

The State of Washington adopted House Bill 2057 related to the services and processes that are available to and required of mortgage servicers and trustees in the context of properties in default as well as abandoned properties, a reverse mortgage lender’s responsibilities regarding notices of intent to foreclose, and various other deed of trust issues.

The Bill addresses the mandatory procedures and timelines that must be adhered to in the case where a property goes into default and the servicer or trustee knows that a borrower or grantor of the property is deceased.  When this circumstance arises, mortgage servicers and trustees must fulfill their responsibilities under the new provisions for using “reasonable diligence” to find the contact information for the deceased borrower’s or grantor’s child, spouse, or parent in order to provide them, among others, with written notices of default and beneficiary declarations before a notice of sale may be filed.  If none of these persons can be located, the trustee must file, with the notice of sale, a declaration that no child, spouse, or parent could be located.

Additionally, if via written notice a person claims to be a successor in interest to the identified property (who is not otherwise a party to the obligation secured by the deed of trust), then the trustee may not record a notice of sale until the servicer or trustee takes certain steps, such as requesting and receiving documentation of both the death of the borrower and the claimant’s ownership interest in the property, and if the documentation is received, providing the claimant with information regarding the mortgage loan on the real property and the steps that the claimant must take in order to assume or modify the loan.

House Bill 2057 further provides that, when no successor in interest has been established, and no child, spouse, or parent of the borrower or grantor has been identified, in addition to mailing notice to the property addressed to the unknown heirs and devisees of the grantor, publication of a notice of sale in a newspaper of general circulation in the county or city where the property is located once per week for three consecutive weeks will be sufficient to deem all unknown heirs as served with the notice of sale.  The revised provisions also indicate how a servicer or trustee must respond if they receive notice from a claimed successor in interest to the borrower or grantor after the notice of sale has been recorded.

The updated provisions also amend various existing provisions regarding trustee sales and related issues and increase the amount that must be paid by the beneficiary on whose behalf a notice of trustee’s sale is filed for each notice of trustee’s sale recorded on residential real property from $250 to $325 per notice.

Various other new provisions were added via the Bill, including, but not limited to:

• Provisions about when and how a trustee may file a declaration of nonmonetary status;
• Provisions about when and how a mortgagee has to provide a reverse mortgage mortgagor (i.e., resident mortgagor or, if the last surviving mortgagor has died, any known surviving spouse or “unknown heirs” of the residential mortgagor) with a notice of an intent to foreclose, and provisions regarding the content and format of that notice; and
• A new chapter, which discusses, among other things, under what circumstances residential real property (i.e., a single-family residence, a residential condominium unit, or a residential cooperative unit) may be considered abandoned; how a county, city, or town may provide notice to a mortgage servicer that a property has been determined to be abandoned, in mid-foreclosure, and a nuisance; what steps the mortgage servicer may take to remedy the nuisance, preserve property, prevent waste, and secure the property after such a notice; and the consequences for not taking such steps.

The updated and new provisions take effect on June 7, 2018.