Foreclosure laws in Washington State
You can save your house from foreclosure if a bankruptcy is filed prior to the actual trustee sale date and time! What happens after that depends on the type of bankruptcy and your goals! Below is to guide you but laws change. You should rely on an attorney’s advice on your rights. How long you have lived in Washington State over the last several years may also affect your rights!
Step 1 : Foreclosure Fairness Act
The State of Washington passed the Foreclosure Fairness Act which provides an additional relief to the many homeowners who are having trouble reaching the bank for loss mitigation options.
The Act requires banks to issue a letter to the homeowner, prior to issuing the “Notice of Default”, that explains the homeowner’s new rights under the new law. These new rights include the right to a meeting with the bank’s agent, and the right request formal mediation through an attorney or HUD Counselor. There is an extremely short time-line.
Homeowners are advised to speak to a foreclosure attorney at the earliest moment possible to avoid missing deadlines. Homeowners in default have only days to act! You need to check and see what that deadline is ! But once that timeline date has expired, that does NOT stop you from saving your home!
Many clients skip the above step and do not participate in it. Participating may allow you to stay in a home longer even if you are not attempting to keep it or to allow you longer time to possibly make an informed decision.
Step 2 . Foreclosure/ Modification
A. Time line Procedure Deadlines
Time line: Notice of Default: After the above step, the creditor will mail to you a Notice of Default which provides you with a statement of how much in arrears you owe that must be paid within 30 days to avoid the next foreclosure step.
Time line: Notice of Trustee’s Sale: After expiration of the above Notice of Default 30 day period, the creditor will mail and post a Notice of Trustee’s Sale and a Notice of Foreclosure; such notices will establish a foreclosure date which must be at least 90 days after the date of such notices as well as at least 270 days from the date of default. So long as you file a bankruptcy before that sale date your foreclosure will not take place on that date as a result of the automatic stay in effect.
Time line: Deadline to vacate property. If you are not keeping your house or real estate, the Notice of Trustee Sale will also indicate you do NOT have to vacate the property until 20 days after the sale date! Of course filing bankruptcy before the actual sale will stop it, but after, your rights then are limited as you no longer own the property if sold at the trustee’s sale!
B. Should you keep the house?
Foreclosure can cause long-lasting damage to your life or it may provide relief in being free of your mortgage payments. The issue is whether you can afford to keep and whether you want to keep your home.
Your choice to keep or let go of your house may dictate which type of bankruptcy you file . Foreclosure is one of the most common reasons for someone to file Chapter 13 bankruptcy to save a home.
Attorney Richard D. Granvold will help you keep your home if possible and go through your options with you. The bankruptcy system can protect your rights and enable you to start over.
C. Can you keep house and wipe off the 2 Mortgage?
Are you able to Discharge 2 Mortgage and Only Keep 1 Mortgage?
In Chapter 13, if the fair market value of your home is less than the amount owed on your first mortgage balance, the second mortgage may possibly be eliminated by treating as unsecured debt like other unsecured claims depending on what type of Chapter 13 you are filing. You will need to know the value of your home and may want to obtain 2 or 3 free “market analysis” by calling a real estate agent to obtain those so you can be advised on your options concerning the second mortgage. Although a market analysis is not valid as proof in a court, most persons do not obtain and pay for a formal appraisal as such fee is normally avoided by using a market analysis.
Possible Chapter 7 Options to Reduce 2 Mortgage?
I have also several times obtained a reduction of the 2nd mortgage in a chapter 7 but that is by an agreement with the creditor; in such cases some 2nd mortgage creditors recognize they will receive no monies if the 1st mortgage creditor forecloses.; as a result, such 2nd mortgage creditor may agree to new terms of the balance owing, the interest rate, the monthly payment, and when the next payment is due. That must be accomplished during your Chapter 7 case within certain deadlines and you must notify your attorney you want to explore that option in case you are able to keep the home with such smaller payments!
D. How do you stop the foreclosure?
There are several ways to stop or delay an impending foreclosure:
A loan modification may stop the foreclosure by the creditor agreeing with you to new terms. With a loan modification, you or someone you designate negotiates a reduction in the interest rate, the amount of the loan, the monthly payment, or some of those terms. Unfortunately, the process of seeking a loan modification takes time and there is no guarantee of success. In the meantime, your financial situation may get worse.
Legally challenge the validity of the foreclosure : As with a loan modification the process consumes time plus there is no guarantee that you can win your suit. A lawsuit would be based on an assertion that the mortgage is somehow invalid due to improperly drawn loan documents, foreclosure documents or other technical shortcomings. You may have to employ an attorney who works in that area of law and one can be recommended to you. However, if the foreclosure date nears, you may proceed to file bankruptcy to stop it.
File bankruptcy to stop the foreclosure. A Chapter 13 bankruptcy filing 100% can stop a foreclosure (for repeated filers of Chapter 13 your rights may be dependant on facts in prior bankruptcy filings). Filing Chapter 13 even ONE MINUTE before the sale stops it! And then you can be assured that you can stop a foreclosure and keep your home if you can afford to keep it . Bankruptcy Attorney Richard D. Granvold can protect your home and your rights, provide an objective review of your options and take action to protect your rights.
The law requires a class to be taken before you ever file any bankruptcy and thus do not wait for advice. No matter where you live in Western Washington, your case must be filed in either Seattle or Tacoma . Call Bankruptcy Attorney Richard D. Granvold to discuss before the last minute -it is free to discuss and explore your options!