Tenant Tip: Know your foreclosure rights in 2015!

Foreclosure sign

Landlord/tenant laws related to foreclosures in Washington state changed as of January 1st of this year because the Protecting Tenants at Foreclosure Act of 2009 (PTFA) officially expired at the end of 2014. State law continues to provide protections to tenants in residences facing foreclosure. Some of these protections differ significantly from the Federal protections that expired. We’ve outlined some of the basics of the law below. (Note: If you rent a property that is facing foreclosure, Solid Ground’s Tenant Services recommends that you speak with an attorney to understand the full breadth of protections available to you. See our online Legal Assistance Guide for some free legal resources.)

Tenants residing in properties of four units or less at the time of sale in foreclosure must be given written notice to vacate within 60 days, regardless of whether the rental agreement is a fixed-term or month-to-month lease. If the new owner of the property wishes to rent with the existing tenants, they can ask the tenants to sign a new rental agreement. The law does not specifically state whether rent must be paid during the 60-day period, so it is advisable to set the funds aside in case they are demanded later. It is the former owner’s responsibility to return any remaining deposit as well.

If tenants choose to overstay the allotted 60-day period, they could risk an eviction being filed. The only other reasons tenants can face eviction are for waste or nuisance, especially involving illegal activities or paraphernalia.

If landlords neglect to pay for the utilities, tenants have the option to request that the utility company put the utilities in their name. Tenants should be very cautious if taking this step, and ensure that their new account will not be associated with any prior unpaid fees. This Sample Letter to Public Utility can help tenants contact their provider company and legally restore their electric and/or water services. When exiting the property, the tenant should arrange with the utility company to shut off services and close the account.

Foreclosure is a challenging and confusing process, but it is important for tenants to know what their rights are and how to assert them. Visit our Tenant Services Foreclosure webpage for more information about tenants’ rights related to foreclosures, as well as access to other helpful resources.

The tenant information contained in this article or linked to the Solid Ground Tenant Services website is for informational purposes only. Solid Ground makes no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to its website. Solid Ground cannot act as your attorney. Solid Ground makes no representations, expressed or implied, that the information contained in or linked to its website can or will be used or interpreted in any particular way by any governmental agency or court. As legal advice must be tailored to the specific circumstances of each case, and laws are constantly changing, nothing provided here should be used as a substitute for the advice of competent counsel. Solid Ground Tenant Counselors offer these tenant tips as generalized information for renters. People with specific questions should call our Tenant Services hotline at 206.694.6767, Mondays and Wednesdays between 10:30am and 2:30pm.

Late mortgage payments & your credit

Foreclosure signHow does being late on your mortgage affect your credit? The short answer: It depends.

When you hear about credit scores, what people are most often referring to is a FICO® score. Your FICO score is a way to summarize your credit risk at any given moment in time. The score takes into account your payment history, outstanding debt and length of credit history, among other things. Any potential lender will look at this score to determine how much of a risk you are and what interest rate you will be charged as a result of your risk level.

So, what happens to your credit score when you fall behind on your mortgage payment? That depends where you started. People with higher credit scores actually take more of a hit when they fall behind on their mortgage and when they go through foreclosure. For example, according to FICO:

Homeowner A

  • Starting credit score: 680
  • 90 days late: 610 (70 point drop)
  • Foreclosure sale: 585 (95 point drop)

Homeowner B

  • Starting credit score: 780
  • 90 days late: 660 (120 point drop)
  • Foreclosure sale: 630 (150 point drop)

While Homeowner B still comes out with a higher score after foreclosure, their drop in overall points is significantly greater than that of Homeowner A. This is likely because Homeowner A has some non-mortgage delinquencies or credit issues that have already lowered their score, so the effect of the mortgage delinquency isn’t as great. It also takes longer for a homeowner with a high credit score to recover their previous credit status after a delinquency or foreclosure.

When dealing with a mortgage delinquency, the options that allow you to keep your home typically have the least impact on your credit. Most loan modifications, including those offered through the federal government like Making Home Affordable, will not affect your credit score. Any negative credit impact comes from late payments that happened prior to the modification. A forbearance agreement or repayment plan can additionally tag on a negative impact to your credit score if your lender reports you as paying under a partial payment agreement.

Non-retention options such as short sale and foreclosure sale will have the biggest hit on your credit because of the level of delinquency and failure to pay on the loan as agreed. A common assumption is that a short sale is better for your credit than foreclosure. This may not actually be true.

Both will impact homeowners’ credit scores in a similar way because they typically involve significant delinquencies. Beyond that, it is difficult to say for certain how a short sale will impact your credit because there is no specific reporting code for short sales. This means that some of how your credit is affected is up to your lender’s discretion.

If you are behind on your mortgage and want to know more about your options, please call 206.694.6766 or email housingcounseling@solid-ground.org. There is no charge for Solid Ground services.

For more general information on this and related topics, attend our next free Mortgage Information & Enrollment Workshop on Wednesday, May 28th from 6-8pm at Solid Ground (1501 N 45th St, Seattle, WA 98103).

A message of thanks to our supporters

During the past year, you have helped Solid Ground expand efforts to end poverty for local families and individuals and move them toward stability. You helped us:

Brettler Family Place

Open Brettler Family Place…
providing 51 formerly homeless families with permanent housing and supportive services. Brettler Family Place is now a vibrant community of over 120 children and their parents. It is a place of stability, security and hope. We break ground to build an additional 54 homes in 2013!

A work party at Seattle Community Farm, June 2011

Seattle Community Farm, June 2011

Raise our first crops…
at the Seattle Community Farm, bringing fresh organic produce to people in the Rainier Valley who did not have access to affordable, healthy produce. The Farm is pioneering a work-trade volunteer model that values the talents and contributions of the community members who receive this nutritious food.

Launch the groundbreaking Pathway to Career AmeriCorps team…
which melds our national community service model with intensive work readiness training to help disadvantaged youth overcome barriers to success.

Break down barriers to homeless prevention services…
for immigrant and other marginalized communities by building intentional partnerships with community-based organizations that enable people to access services in a direct, culturally-sensitive and efficient manner.

Lead the statewide advocacy effort to pass the Foreclosure Fairness Bill…
giving consumers a mediation tool that results in fewer repossessed houses and more people staying in their homes.

These efforts and other improvements in our programs mean that Solid Ground will help more people than ever before in 2011.

But we need to do even more to heal the traumas caused by homelessness and hunger, and stabilize our community. To that end, we are looking ahead to implementing more comprehensive wrap-around services, giving the people who come to us even more tools and resources to be successful.

We are proud of our history of taking innovative action in response to community needs. Right now, we are focusing our passion for progressive social change on strategies that will increase our impact with the people we serve, so that we can meet them wherever they are and support them until they thrive.

Solid Ground's Continuum of Care

Solid Ground envisions a more comprehensive continuum of care, connecting our program participants to resources inside our doors as well as those outside. We look forward to sharing details with you in the coming year.

Since our early days as an emergency services provider in a little northend neighborhood, we have relied on the passion, creativity and financial support of caring people to counter poverty in our community. For over 38 years, donors and volunteers like you have helped our community weather the economic storms, build upon our strengths, and bring hundreds of thousands of our neighbors and friends to solid ground.

Most importantly, you joined with us to help build a strong community by giving over 64,000 vulnerable people support and opportunities to thrive.

On behalf of everyone at Solid Ground, thank you!

You can continue to support Solid Ground through our online donation portal.

Foreclosure Fairness Act: Foreclosure mediation is now the law

The Foreclosure Fairness Act (HB 1362) was signed into law by Governor Christine Gregoire on April 14, 2011, creating a foreclosure mediation program in Washington State. Mediation will give struggling homeowners the opportunity to meet with their lender to discuss options before losing their home and most valuable asset. This law will truly make a difference for thousands of homeowners in our state. Foreclosure mediation programs have been shown to be extremely effective in allowing families to save their homes. The bill was sponsored by Rep. Tina Orwall (D-Normandy Park) and had overwhelming support in the legislature.

Governor Christine Gregoire signs the Foreclosure Fairness Act

Governor Christine Gregoire signs the Foreclosure Fairness Act

Throughout the housing crisis, homeowners and housing counselors have repeatedly reported that banks and loan servicers do not answer the phone, lose homeowners’ information about loan modifications, and have different staff people from different offices talking to a homeowner. This new law will eliminate the problem of struggling homeowners being unable to get in touch with their lenders as they fight to stay in their homes.

“Approximately 45,000 families will receive notices of foreclosure this year, but we are providing new hope for many of them with a fair process and resources to help them explore every option available and keep their homes whenever possible,” said Rep. Tina Orwall.

Are you facing foreclosure? Unable to get your lender to respond? Want to know your options? Read on…

Washington State has a new law to prevent foreclosures.
As of July 22, 2011 you can now ask for a face-to-face meeting with your lender by requesting foreclosure mediation. To request a meeting with your lender, contact a housing counselor or attorney by calling 1.877.894.HOME (4663).

What is foreclosure mediation?
Foreclosure mediation is a process where a neutral, third-party mediator assists the homeowner and the lender to reach a fair, negotiated agreement.

Why request mediation?
If you have not been able to get in touch with your lender, you can now request a face-to-face meeting to discuss alternatives to foreclosure. During mediation, the lender is required to negotiate with you in good faith.

Who is eligible?
• Homeowners who are in default on their mortgage and have not yet received
   the Notice of Trustee’s Sale are eligible
• Homeowners who live in owner-occupied properties

How can I request mediation?
Foreclosure mediation must be requested by a housing counselor or an attorney on behalf of a homeowner. To find a housing counselor, call 1.877.894.HOME (4663).

How much does it cost?
The homeowner and the lender each pay a $200 fee for the mediation. The fee must be paid prior to the mediation.

Share your Story!
The foreclosure mediation law was passed because struggling homeowners shared their stories with lawmakers. Poverty Action is collecting stories from community members like YOU! Are you facing foreclosure? Having trouble with payday lenders? In danger of losing benefits like TANF or Disability Lifeline? Share your story and help lawmakers understand the issues Washingtonians are facing. For more information contact Poverty Action at 1.866.789.7726 or visit the Statewide Poverty Action Network website.

More information

Tenant Tip: Renting a home in foreclosure

In King County, 1,429 homes received a foreclosure notice in February, 2011 alone. According to RealtyTrac.com, Washington homes that received a notice of default, foreclosure filing, auction or a bank repossession notice reached 4,385 in February. For tenants who are renting a home that receives any of these notices, it can be a difficult surprise to navigate through. More often than not, tenants have no idea that their landlord may not be paying their mortgage until they see a note posted on the front door.

Foreclosure is a complex problem and it can have many variables depending on what stage of foreclosure the owner is in, the financial obligations, bank procedures and market trends. During this difficult process, tenants who rent homes in foreclosure may find themselves confused about whom to pay rent to and how quickly they may need to move out. While this tip may provide some basic information and resources for renters in foreclosed homes, tenants who are in this situation may want to consult with an attorney — especially since each foreclosure case can vary depending not only on the owner and the bank, but also on the type of rental agreement a tenant has with their landlord, and their obligations under that agreement.

In response to the ongoing housing crisis, Congress passed the Protecting Tenants at Foreclosure Act in 2009. Under this federal law, the new owner who purchases a home at a foreclosure sale is required to provide tenants renting the foreclosed home with a 90-day notice to move out if the new owner intends to move in to the home. If a tenant is on a lease, the new owner can choose to honor the lease or provide the 90-day notice if they want to move in themselves. If a tenant is on a month-to-month rental agreement, they are still entitled to the 90-day notice.

In addition there is a Washington State law that requires the foreclosing party, such as the bank or trustee that is foreclosing on the home, to send a notice to tenants notifying them that the home they are renting may be sold within 90 days. This notice will also include a reference to another section of the state law that says the new owner has to provide renters a 60-day notice after the sale has been made. To repeat, under the state law, a tenant would receive a 90-day notice before the sale and a 60-day notice after the date of the sale. Under the federal law, the new owner would be required to also provide a 90-day notice after the sale in addition to state law requirements.

If the home you are renting is in foreclosure, you may want to contact the county auditor for the county in which you live. King County residents can search their property on the King County tax assessor webpage to find out information about who owns the property. Tenants may want to recheck this information frequently to make sure that they are paying rent to the right person, especially in situations where a tenant may not have received proper notification about the foreclosure or proper move out notices. Tenants can ask the new owner for a copy of the Trustee’s Deed. To verify the legitimacy of the deed, tenants can access their local county auditor. Information for auditors by county in WA may be found at the Washington Land Records and Deeds Directory.

If you are concerned that your current landlord may be being foreclosed upon, and you have questions about rent payment, one thing to keep in mind is that until your current landlord is no longer the owner of the property, you continue to pay rent to them. While it may seem frustrating that you pay rent to someone who may not be paying their mortgage, that sense of unfairness does not mean that your obligations as a tenant change, and it does not change your duty as a tenant to pay rent.

Tenants who are renting a home in foreclosure should contact an attorney for legal advice and to address questions regarding rent payment as well as any concerns they may have about how the laws apply in their case and how to proceed. For a list of free legal referrals, you can access the Legal Assistance Guide on our Tenant Services website.

This Columbia Legal Services Washington LawHelp webpage is a useful resource for tenants who are renting a foreclosed property and have questions about rent payment, how their deposit is transferred, how to address repairs and how these laws may apply to their particular situation. Tenants who have questions about their rights and need information and referrals may call the tenant services hotline at 206.694.6767 M, W and Th from 10:30am-4:30pm to speak with a tenant counselor.

The information contained in this tip or linked to the Solid Ground Tenant Services website is for informational purposes only. Solid Ground makes no claims, promises or guarantees about the accuracy, completeness or adequacy of the information contained in or linked to its website. Solid Ground cannot act as your attorney. Solid Ground makes no representations, expressed or implied, that the information contained in or linked to its website can or will be used or interpreted in any particular way by any governmental agency or court. As legal advice must be tailored to the specific circumstances of each case, and laws are constantly changing, nothing provided herein should be used as a substitute for the advice of competent counsel.

Get Up, Stand Up!

While the budget crisis has gotten most of the press from the 2011 legislative session in Olympia, there are also some important bills that need your support to give homeowners facing foreclosure a fair chance at staying in their homes, and to bolster protections against predatory lending that were passed last year.

Foreclosure Fairness Act
Our housing counselors report that one of the biggest barriers faced by homeowners threatened with foreclosure is the extreme difficulty of getting whoever owns the loan to discuss modification options. What used to take a few phone calls and a few hours to work out can now stretch out over months of calls, and many forms of delay. This brief video on the Foreclosure Fairness Act dramatizes how consumers are being stonewalled. Please check it out and post the link on Facebook and other social networks to attract attention to the issue!

The Foreclosure Fairness Act (SB 5275 and HB1362) would mandate that banks, or whoever holds the loan, must offer face-to-face mediation with homeowners. In the 23 states and municipalities that have mandatory mediation, 60% of homeowners in foreclosure are able to stay in their homes! The banking industry is trying to strip the mandatory mediation out of the bill, which will take away its most important tool. Please contact your state Senator and Representatives and urge them to support the Foreclosure Fairness Act and to keep mandatory mediation in the bill!

You can use this web form to email your legislators in support of the Foreclosure Fairness Act.

Keep Protections against Predatory Lending
Last year the Legislature enacted law to protect Washington State residents from predatory lending. This year the banking industry is fighting back with two bills that would strip away crucial consumer protections. Please contact your lawmakers and urge them to oppose these bills: HB 1678 and SB 5547.

You can use this web form to email your legislators to oppose gutting protections against predatory lending.

To find out who your Senator and Representatives are, go to Statewide Poverty Action Network and look for the zip code tool on the top of the page.

I’m in!

Seahawks tap the "I'm In" sign on their way to the field

I'm in! Seattle Seahawks players tap this sign on the way from locker room to practice field as a reminder of the commitment it takes to succeed.

At Solid Ground we talk a lot about the importance of advocacy. We work to get you involved in the political process. We lobby for funding and initiatives that strengthen our community by providing equal opportunities to people living on low incomes.

We’ve cajoled you online and in our newsletters. We phone bank you and blast emails to get you to sign petitions, send cards to the legislature and phone the Governor. And our Statewide Poverty Action Network has supported folks with low incomes around the state in claiming their political voice and building their power in Olympia.

As Solid Ground’s Communications Manager, I’ve personally reached out to thousands of you to engage you in the political system. And while I’ve made my share of phone calls to elected officials and written and signed many petitions, I need to own up to something here. I’ve never made the trip to Olympia to meet one-on-one with the people who represent me in the Washington State Legislature.

But this year, I’m in! And you need to be in, too.

We’ve all heard about the crisis in the state budget. You can bet that corporate interests will be well represented in the state capitol, protecting their slice of the pie.

Like the much maligned Seattle Seahawks, folks who care about the fate of working class people in our communities are huge underdogs. We really need to fully commit to the cause this year. We need to commit our hearts and souls, our phone calls, letters and visits, if we are to to protect the very fabric of our community— the ability to protect and provide for the most vulnerable among us. To keep our Hawks metaphor alive: We need to Always Compete and put it all out on the field, if we are to have any chance to succeed.

Poverty Action members rally on the steps of the Capitol

People power!

So, Monday, January 17, I am celebrating Martin Luther King Day by tapping the “I’m In” touchstone and joining hundreds of other people in Olympia to lobby the Washington State Legislature to strengthen our communities by:

  • Protecting people from foreclosure by implementing a foreclosure mediation process in the state. Foreclosure mediation would give homeowners an opportunity to sit down with their lender to discuss alternatives before losing their home and most valuable asset. Twenty-three other jurisdictions — state and municipalities — have some sort of mediation process to seek foreclosure alternatives. These programs have found that 60% of people participating in mediation avoid losing their homes.
  • Supporting programs that will help people with low incomes build up their assets and create opportunities to prosper.
  • Ensuring access to TANF, Disability Lifeline and other programs that help people maintain their dignity.

Join Poverty Action on the Capitol for MLK Day to advocate for the issues important to you and your community.

For more information or to reserve your spot, please contact Kate.

Transportation, breakfast & lunch, & interpretation are available. Children are welcome to join.

I’m in! Are you?

Hundreds flock to Mortgage Help Day

Volunteers gather consumer stories at Mortgage Help Day

More than 200 homeowners met this past Saturday with representatives of banks and HUD-certified housing counselors to try and find solutions to their mortgage problems. Housing Counselors and bank reps tried to create work out plans to keep folks from foreclosure. At the same time, advocates provided information about other options available to homeowners facing default and highlighted the need for changes in public policy that will protect Washington homeowners from foreclosure. The meeting, dubbed “Mortgage Help Day,” was organized by Solid Ground’s Statewide Poverty Action Network and a large group of governmental entities and nonprofits. The event was held at South Seattle Community College.

Throughout the day a recurring theme was that the Federal Government’s Home Affordable plan was not working to help homeowners the way it was envisioned.

KOMO News’ coverage showcases some of the challenges homeowners are facing.

The Statewide Poverty Action Network also collected stories from frustrated homeowners to take to the Washington State legislature this coming session in an effort to get legal help for struggling homeowners. Specifically, they are promoting legislation that would create a mandatory mediation process in Washington State. This would give homeowners every opportunity to avoid foreclosure and maximize the ability for loan modifications. In 23 other states and municipalities around the country, this mediation process has helped 60 percent of participants avoid losing their homes.

Mortgage counselor on KUOW

Solid Ground’s mortgage default counselor, Erin Rearden, appeared on KUOW’s The Conversation yesterday, discussing federal efforts to help folks who are facing foreclosure and talking to homeowners about their specific situations. Lots of good info and perspective. You can listen in here.

Solid Ground’s Statewide Poverty Action Network is co-producing Mortgage Help Day, this Sat. Oct 2 at South Seattle Community College, to give folks an opportunity to meet 1-on-1 with Erin and other counselors as well as representatives of area lenders. Details here.

4 banks participating in Mortgage Help Day, Oct 2

Representatives of four banks are expected to join a dozen nonprofit, HUD-certified housing counselors at Mortgage Help Day this coming Saturday, October 2, to help homeowners facing foreclosure to understand their options and make good decisions.

PosterIf you are worried about making your next house payment, please come.

If you are currently delinquent on your mortgage, please come.

If you have received a foreclosure notice, please come.

We are expecting representatives from Chase, Bank of America, Wells Fargo and PNC. If your mortgage is with one of those lenders and you are facing a rate adjustment or other factors that are making it difficult to make your payments, please bring your loan documents and other important papers to ensure that you can make the most of this opportunity. Counselors from Solid Ground and other HUD-certified housing counseling organizations will also be available to help.

Organizers from the Statewide Poverty Action Network and other partner agencies suggest that you bring along:

  • Photo ID
  • Social Security Card
  • Last 2 years’ W-2 and tax returns
  • Last 2 months’ pay stubs
  • Last 2 months’ bank statements
  • All mortgage documents, including closing documents and statements
  • AND if you have them: layoff notice from employer and/or medical letter from doctor.

Mortgage Help Day is from 10am – 4pm on October 2 at South Seattle Community College’s Brockey Conference Center (6000 16th Ave SW). You can get there on Metro bus lines 125 & 128. Free childcare and translation services can be provided, but please call to arrange them in advance: 206.694.6794.

For more information go to www.povertyaction.org.

What’s up with the legislators supporting banks instead of homeowners?

Several weeks ago the bill SB 6648 was turned down by the Washington State House. This bill would have given homeowners a second chance to avoid foreclosure. Lenders would have been required to participate in a mediation to evaluate if there is an affordable and sustainable means to keeping the home, as opposed to selling the home at an auction sale. Reasonable criteria would have been established and lenders would have been required to implement modifications under the current FDIC programs. Moreover, banks would have been mandated to create a fair and open process that would have benefited both, the lenders and homeowners.

Bank balancing on the rotunda of the Capitol in OlympiaIn other words, homeowners currently in foreclosure and heading into foreclosure sale would have been given a second chance to keep their homes. The lenders, on the other hand, would have been able to get an expedited process to help mitigate their losses in addition to mitigating expenses related to foreclosure which can amount up to $70,000 in fees per foreclosure sale. Banks end up buying these properties and selling them at a discounted price, which translates into more losses for the investor and a trickle down effect on the value of properties around neighborhoods. Continue reading

Short Sale & Deficiency Judgments in Washington State

Short sale is a good option to avoid foreclosure, however if you don’t know what you are getting into, you may end up owing a deficiency judgment unless it is otherwise stipulated in the short sale agreement.

What is short sale: A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the “deficiency.”

HousesWhat is a deficiency judgment: A deficiency judgment is simply the difference between what the lender is owed and what they are paid back. When a lender is not paid back in full via a short sale, they can go to court and get a court order directing the borrower to pay them back the difference. The lender can then take that judgment and attach it to the borrower’s other properties, if they have any, or garnish the wages of the borrower.

In the State of Washington deficiency judgments are not permitted on non-judicial foreclosure processes, however, if there is no “power of sale” clause present in the original loan documents, the lender can pursue judicial foreclosure. The lender would have to sue the borrower to start a judicial foreclosure and a deficiency judgment can be awarded to the lender if the property is found by the court to have been abandoned for at least six months before the decree of foreclosure. If the “power of sale” clause is present in the original loan documents, the lender can pursue non-judicial foreclosure. This clause authorizes the lender to sell the property in the event the borrower goes into default on the loan.

The non-judicial foreclosure process in Washington State does not allow for the lender to sue the borrower to obtain a deficiency judgment. In real life it’s rare for the lender to foreclose judicially because Washington is a redemption state. Also, if the homeowner doesn’t have equity in the property, and they do not have other assets the lender can go after, they usually don’t attempt to obtain a deficiency judgment. It’s not to say they won’t try, but it is usually to their advantage to just get the house sold with a short sale and write the loss off and move on.

Continue reading

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