In 2011, the Washington State Legislature enacted the Foreclosure Fairness Mediation Act.

This Act was passed in part to combat Bank’s reluctance to deal fairly and directly with homeowner’s who are seeking loan modification, deed in lieu of foreclosure, and other loss mitigation options.

One of the requirements of the Act is that prior to starting the foreclosure process, the beneficiary (meaning the lender or bank/financial institution that owns the promissory note and deed of trust) must attempt to contact the homeowner regarding potential work outs as an alternative to foreclosure.

This contact is usually in the form of a letter also known as a notice of pre-foreclosure options letter.  If you respond to the letter within thirty days, you can elect to meet directly with the beneficiary.  The meeting is also known as a “meet and confer.”  Often times, it is possible to obtain a loan modification or other work out.

If the “meet and confer” is not successful, it is also possible to go to “mediation.”  The Washington Department of Commerce oversees the mediation program.  To request mediation, you need to speak with an attorney or authorized housing counselor.

Mediation differs from the “meet and confer” in that a Mediator is assigned by the Department of Commerce to assist both the homeowner and the beneficiary.  Often this process can be successful where the “meet and confer” was not because it is more guided and controlled.  Further, if the beneficiary does not negotiate in good faith, it can be a defense to the foreclosure.

The Foreclosure Fairness Mediation Act has been a positive development for homeowners in getting an opportunity to sit down with the beneficiary and determine if a loan modification or some other work out is possible.