Foreclosure Process in Washington State
The foreclosure process is tough in any state, but it can be especially harsh in the state of Washington. If you fall far enough behind on your mortgage payments and the mortgage holder decides to foreclose, the home is liable to be sold on the courthouse steps to satisfy the outstanding mortgage arrears. Making matters worse is that if the property doesn't bring enough money to satisfy the mortgage, state law allows you to be sued for the difference between what the property brings at a foreclosure sale and what you still owe the mortgage holder. Ouch. One positive note is that if you can come up with the money to purchase the house back, the state allows it--but not always.
Other People Are Reading
-
Mortgages vs. Deeds of Trust
-
States permit homeowners to borrow money in several ways. One is by taking out a mortgage. The other is that the lender holds the deed in trust. Some states allow one, some states allow the other and some states allow both. Washington allows both. The main thing to know is that when a lender holds a mortgage, the process to foreclose on a property requires judicial intervention, is more costly and takes longer. When a lender holds the deed in trust, no judicial intervention is necessary, it's easier for the lender to foreclose and the process occurs much more quickly. So the first thing you want to know if you purchased property in Washington is whether the lender holds the mortgage or holds the deed in trust.
Power of Sale
-
In both mortgages and deeds in trust, the contract may contain a provision that specifies procedures that must be followed in the event of foreclosure. If so, then those are the rules that must be followed. If there is no power of sale clause, foreclosure proceeds in one of two ways. If the deed is a mortgage, the lender must petition the court to obtain an order to foreclose, which is usually granted. The foreclosure proceeds and the property is auctioned to the highest bidder. A month of notices must be published in a newspaper of general circulation for a month, but you still have 11 days before the foreclosure sale to fully satisfy the outstanding loan amount plus pay court costs and fees to stop the foreclosure.
-
Non-Judicial Foreclosure
-
The preponderance of foreclosures in Washington are non-judicial and usually take about four months. The process has very specific notice requirements and the legal documents of sale must contain the power of sale. Essentially, the power of sale surrenders the right to the lender to foreclose on the property should payments become delinquent. In addition to public notice, there must be notice to the homeowner through regular and certified mail. If there is no power of sale language in the sale documents, the foreclosure then reverts to a judicial sale.
Bad to Worse
-
Not all states allow mortgage companies and other lenders to sue former homeowners after the foreclosure process, but Washington does allow it. So if the mortgage holder's debt is not completely satisfied through foreclosure, the lender can come after you for the rest. Many mortgage companies realize that if you can't meet the terms of your mortgage, it may not be worth the effort and cost to seek a further judgment against you, depending on the circumstances. For example, you may own numerous properties and may have made a business decision to allow one property to be sold at foreclosure, but that doesn't necessarily mean you don't have other assets that the lender could seek to liquidate to satisfy the full terms of the loan. It happens.
A Silver Lining
-
While the laws may appear harsh in some ways to property owners, Washington does have a law called a Right of Redemption, but it is not an absolute right. It allows the former owner of a foreclosed property one year from the time of foreclosure to reclaim the property by repaying all defaulted amounts plus any costs and fees associated with the foreclosure. The court, however, doesn't automatically grant rights of redemption. If, for example, the financial conditions of the former owner are dismal or haven't improved, or if there is the possibility of going through yet another foreclosure process, the court could very well deny your request.
-
References
- Photo Credit house 3 image by michael langley from Fotolia.com
