Seattle Foreclosure Specialist

02/04/2021

An update on the Seattle Metro market, insights on the foreclosure market, housing inventory, distressed properties, and what to expect in the coming year. W...

01/26/2021

Tough times are here and growing. Also reported that major banks are seeing 50% of mortgage holders fall behind in payments.

As of the January rent bill, more than 10 million Americans will be behind on their rent, meaning 18% of all renters are in danger of being evicted.

04/12/2020

This is what the foreclosure timeline looks like.

04/01/2020

Judicial vs. Non-Judicial Foreclosure

Essentially, there are two types of foreclosure procedures; judicial foreclosure and non-judicial foreclosure. In California, for example, non-judicial foreclosures are more common than judicial foreclosures (lawsuits in court). A non-judicial foreclosure begins with the recording of a “Notice of Default” and ends with a “Trustee’s Sale,” where a third party, known as the trustee, sells the property at a public auction to the highest bidder. The Trustee’s Sale is held like a public auction. The property goes to the highest bidder. If no one bids at the public auction, the property reverts to the foreclosing beneficiary (lender). Foreclosed properties are referred to as REOs (Real Estate Owned by the lender that foreclosed).
Judicial Process

Generally, states that use mortgages conduct judicial foreclosures, using the court system to execute the foreclosure; states that use deeds of trust conduct non-judicial foreclosures, using an out-of-court procedure defined by state law.

In judicial foreclosure states like Florida, borrowers sign two separate instruments: the note (or bond), which is evidence of the borrower’s promise to pay the debt; and the mortgage, which is the legal instrument that creates the lien on the property as security for the debt. If the borrower cannot pay the mortgage, the lender hires an attorney, who begins legal action to protect the lender’s interest. The attorney files several documents: a summons directing the borrower (defendant) to appear in court, a complaint describing the lenders (plaintiffs) allegations of entitlement to relief and the relief sought, and a lis pendens (lawsuit pending notice), the legal document that gives notice to the world that there is a legal action pending on the property. Lis pendens is a Latin word meaning “lawsuit pending.” The documents are filed with the clerk of the court in the county where the property is located.

If the borrower fails to respond to the notices within the statutory time limit, the attorney submits a report to the court requesting that the court appoint a referee. The referee reviews the facts and circumstances in the foreclosure action and renders a report to the court. Then a judge issues a Judgment of Foreclosure and Sale in favor of the foreclosing lender. The judicial auction is advertised and the property is sold at the auction to the highest bidder.
Non-Judicial Process

Non-judicial foreclosures are based on deeds of trust that contain a power-of-sale clause. The clause enables the trustee to initiate a foreclosure sale of the collateral (home), without having to file a lawsuit or go to court. The trustee is typically required to issue a notice of default and notify the trustor (borrower) accordingly about the defaulted loan status. If the trustor does not respond, the trustee then initiates the steps for conducting the foreclosure sale of the collateral (home).

03/31/2020

Washington Foreclosure Laws
Foreclosure Process Overview

Washington foreclosures are conducted both in court and out of court, although out-of-court foreclosures are more common. The out-of-court foreclosure process typically takes about five months.
Judicial Non Judicial Comment Process Period Publish Sale Redemption Period Sale/NTS
• • Trustee Sale mostly 135 days 90 days None Trustee
Pre-foreclosure Period

For in-court foreclosure proceedings, once a lender files suit against a borrower, the minimum time to a court ruling is 30 days. This time is extended to 60 days for out-of-state borrowers, in order to provide ample time to respond. If the court rules in favor of the lender, the property is sold to recover the amount owed to the lender. A sheriff’s sale occurs usually 6-8 weeks following court’s ruling.

Before starting a foreclosure out of court, the lender mails a notice of default to the borrower and either posts the notice at the property or delivers the notice to the borrower in person. The borrower has 30 days to respond before the property is scheduled for public sale.

Up until 11 days before the sale, the borrower can stop the foreclosure by paying the past due payments, plus applicable expenses.
Notice of Sale / Auction Legislative and Legal Updates

If the borrower does not stop the foreclosure within 30 days after receiving the notice of default, the lender records a notice of sale with the county recorder. The notice of sale is recorded at least 90 days before the sale date and is mailed to the borrower and any other affected parties.

The notice of sale is also published twice in a local newspaper. The lender publishes the notice of sale once between the 32nd and 28th days prior to the sale, and once between the 11th and 7th days before the sale.

Foreclosure sales are by public auction with the property going to the highest bidder, who must pay in cash. For out-of-court foreclosures, the trustee transfers ownership to the winning bidder, who can take possession of the property 20 days after the foreclosure sale. The borrower has no right to redeem the property after an out-of-court foreclosure sale.

For court foreclosures, the borrower has redemption rights for one year from the date of sale. To redeem the property, the borrower has to pay the full amount due and applicable costs. During the redemption period, the borrower can remain in possession of the property if it is used as their primary residence.
Legislative and Legal Updates

A new state Supreme Court ruling could put hundreds of home foreclosures in question in Washington, where the foreclosures were initiated by an organization known as MERS, or the Mortgage Electronic Registration System. MERS is a central tracking system that essentially represents the person or investor that holds the note on a loan when a mortgage is sold.

Lenders have been using MERS to initiate foreclosures, even though MERS doesn’t actually hold the loans. MERS and lenders maintain that under their system MERS is a legal beneficiary of the promissory note.

But in a 9-0 decision, the justices ruled that’s not what Washington state law intended. On August 16, 2012, the nine justices ruled that under Washington state law, the beneficiary must hold the promissory note. The court ruled that based on Washington state law, MERS is not a legal beneficiary unless it actually held the promissory note secured by the deed of trust when a foreclosure is initiated.

Huelsman says the implications are huge- with the potential to affect hundreds, perhaps thousands of foreclosures initiated by MERS in Washington in the past 10 years.

The ruling could open the door for legal action by homeowners who’ve been foreclosed by MERS — instead of an actual loan holder whose name is on the promissory note. It also has the potential to affect foreclosures currently being challenged because of MERS.

Washington state is one of several states where the legality of MERS initiated foreclosures is being challenged in court.

03/29/2020

If you need some advice on how to talk to your lender about late mortgage payments, I am here to help.

03/28/2020

In the state of Washington, it takes a minimum of 120 days to receive a Notice of Date of Sale, if a bank sends one at all. I had one clients, stay in their house 9 years without making a payment before their bank finally foreclosed.

03/28/2020

Since 2006 I’ve been sitting at kitchen tables advising great people in navigating difficult times.

03/27/2020

Nothing like hindsight to tell you what you should have done.