Foreclosure bill creates mediation process

Legislature: 3rd party might help avoid bank takeover

KATIE SCHMIDT; Staff writer | • Published February 18, 2011 

 

The Washington Legislature this week moved forward on two bills meant to reduce foreclosure rates in the state and offer more guidance to indebted homeowners.

After some changes, House and Senate proposals to set up a foreclosure mediation process passed out of committee, picking up support from bankers and anti-poverty advocates alike.

“We’re joining a handful of states that have done mediation and had a lot of success,” said Rep. Tina Orwall, a Normandy Park Democrat and the primary sponsor of House Bill 1362. “I think it will help a lot of homeowners who are frustrated with the process.”

Both Orwall and Sen. Adam Kline, sponsor of Senate Bill 5275, introduced substitute bills to the ones originally heard in committee. Orwall said the substitutes were the product of negotiations with banks, anti-poverty advocates and others over the bill’s third-party mediation provisions, one of its most controversial elements.

Under the substitute bills an attorney or housing counselor could refer a homeowner to mediation, which would mean that the lender and borrower would meet with a third party to try to work out an alternative to foreclosure.

The original bills would have allowed a homeowner to request mediation without a referral.  The substitute bills would also require banks to pay a $250 fee per property they foreclose on, which would fund additional housing counselors in the state.

Washington Bankers Association lobbyist Denny Eliason, who opposed the mediation provisions in the original bills, said he was satisfied with the substitutes and the negotiation process that the measures had gone through.