The Foreclosure Process In Washington State

This article provides information on how the foreclosure process works in Washington State and how long it takes for a bank or mortgage company to foreclose on your property under Washington's deed of trust act (RCW Chapter 61.24).

The foreclosure process set out in the legal statute is known as a non-judicial foreclosure, meaning it is a foreclosure conducted without having to go to court and have a judge order a sheriff's sale of your property. Instead of a judge, the foreclosure is handled by a trustee who is appointed by the lender.

The entire process is basically a series of notices given by a trustee to the borrower and anyone else who has an interest in the property, followed by a public auction (also known as a trustee's sale). The highest bidder at the trustee's sale is entitled to a trustee's deed to the property and to possession of the property 20 days after the sale.

The first step in the process is usually to name a new trustee, since most of the deed of trust forms name a title insurance company as trustee and the title companies in this state do not do the foreclosures. The trustee named can be an attorney or a corporation, but cannot be the same person or company as the beneficiary under the deed of trust (the beneficiary is the lender). The trustee must follow exactly the procedures set out in the deed of trust act. The basic steps are listed below. There are specific requirements in the law covering what must be included in each notice sent to the property owner.

STEP ONE
Notice of Default
The Notice of Default must be mailed by first class and certified mail to the borrower and must also be personally served on the borrower or posted at the property. The Notice of Default must tell the borrower what the default is (usually failure to make payments), how much is owed for the delinquent payments, trustee/attorney fees and other costs that would have to be paid to bring the loan current. It must also advise the borrower that if the default is not cured in property will be scheduled for sale at an auction by the trustee. The Notice of Default must be mailed/served on the borrower of Trustee's Sale 30 days, theat least 30 days before the Notice.

STEP TWO
Notice of Trustee's Sale
If the default is not cured, the trustee schedules the property for a sale at a public auction. The Notice must be given and certified and served on the borrower, the occupant of the property and on anyone else who holds a recorded interest in the property. The trustee must order a title report (Trustee's Sale Guarantee) from a title insurance company to find out who holds a recorded interest so the trustee can give notice to all parties entitled to receive a Notice. The Notice must also be issued at least 90 days before the sale. The Notice must be mailed first class published twice in the newspaper. The Notice advises the borrower and anyone else that the loan is in default and if the default is not cured the property will be sold to the highest bidder at the time and place set out in the Notice. In Kitsap County, the sale must be held on a Friday at the courthouse in Port Orchard.

STEP THREE
Notice of Foreclosure
This step occurs simultaneously with Step Two since the Notice of Foreclosure is sent to the borrower along with the Notice of Trustee's Sale. This Notice gives the borrower the amount necessary to reinstate the loan and also an estimate of how much will be owed 11 days before the sale. The 11 making up back payments and any additional costs. After that date, the lender does not have to accept anything less than full payment of the entire loan balance, plus costs. The day before the sale is the borrower's last chance to reinstate the loan by remitting full payment of the reinstatement amount.

STEP FOUR
Trustee's Sale
The trustee's sale is a public auction held at the courthouse, with the sale to the highest bidder. Only cash, cashier's check or a combination of cash and cashier's check are accepted. Usually the sale is to the lender for the amount owed to the lender at the time of the sale.

STEP FIVE
Trustee's Deed and Possession
Following the sale, the trustee issues a trustee's deed to the highest bidder. The new owner is entitled to take possession of the property and can evict the current occupants using the same procedure a landlord would use to evict a tenant. Possession of the property 20 days after the sale.

QUESTIONS

How Much Time Does All This Take?
The absolute minimum time period to conduct foreclosure is 120 days (30 days between Notice of Default and Notice of Trustee's Sale and 90 days between Notice of Trustee's Sale and the actual sale). Because of typical delays in mailing, getting personal service on necessary parties, and the requirement that certain steps take place on certain days (such as the requirement that the sale be on a Friday), it is difficult for the process to actually occur in 120 days.

There is also an additional restriction in the law that the sale cannot be sooner than after the first default the more realistic minimum time period is probably in the neighborhood of 7 months or so from the time of default. 190 days. Since the borrower can remain in possession up to 20 days after the sale,

How Much Money Can Foreclosure Cost the Lender?
The main costs in foreclosure are: attorney's fees, trustee's fees, title report, and costs of postage, serving notices and publications. These costs will all vary somewhat depending on the particular circumstances, such as how many parties are involved and how much time the attorney/trustee spends dealing with the lender, the debtor and other lienholders. Generally, lenders do not want to foreclose on properties and would rather work out a sale prior to foreclosure since their cost of foreclosing and reselling the property usually outweighs the discount they take prior to the auction.

If you would like to be contacted to sell your home please email us at or call us at 360.850.1123. We are happy to to discuss your situation in depth and help you resolve your mortgage issues.