There are several options to stop a foreclosure sale or eviction in Washington State. Due to Covid-19 many homeowners as well as renters are falling behind on their mortgage and rent payments due to unemployment. While there are various federal and local government assistance and intervention programs available, many of the options may just provide temporary relief and are not long-term solutions. Attorney Richard Symmes discussed these options below on how to stop a foreclosure or eviction in Washington state on 1150am KKNW and you can listen to the show here:
The options to help get you back on track with your mortgage payments or with your rent payment are below.
(1) Talk to your Mortgage Lender or Landlord about a Forbearance
In Washington State and the city of Seattle there is a moratorium on evictions through the end of the year. Furthermore, landlords are required to work with tenants with regards to reasonable repayment plans to make up the rent that they are behind. This does not mean that the back rent owed that consumers owe will disappear when the eviction moratorium is lifted. If consumers are unable to pay at that time or enter into a reasonable repayment plan with their landlord, they could face eviction and a lawsuit for back rent owed. Additionally, the federal government has imposed a Federal stay on foreclosures related to primary residences with government backed mortgages.
If a consumer has the ability to pay something, then in my opinion that is your best option as your failure to pay will only cause you to make up any arrears and possibly face a foreclosure or eviction at a later date. With that said, if you have no other option to keep a roof over your head, then you will want to have the forbearance conversation with your landlord or mortgage lender to get on the same page and see what kind of work out options you will have at a later date.
(2) Get a Loan Modification on your mortgage
If you have fallen behind and are now back to work and have the ability to make your mortgage payment moving forward you should contact your lender to see if your mortgage lender will allow you to put your arrears (the amount you fell behind) on the back end of your loan and possibly reduce your mortgage interest rate.
Typically, a servicer will have an application you need to complete, you will need to provide your last filed tax return, last month of paystubs, bank statements and provide a hardship letter explaining why you fell behind. The bank is not obligated to give you a loan modification and they will make a business decision as to whether it makes sense for them to modify your loan and keep you in the home or if they will benefit more by completing a foreclosure sale if you are unable to make payments.
In Washington State you can apply for a loan modification through the foreclosure fairness mediation program which will stop a foreclosure sale from continuing while you wait to get your loan modified. The FFA mediation is only available once you have received a notice of default on your loan, are trying to modify your loan for a primary residence, and you have a loan from a bank who is not on the states exempt list for being a small bank. FFA mediation may only be requested by an attorney or a housing counselor and is recommended for the added benefit of having a stay on your foreclosure sale while you are trying to get your loan modified.
(3) File Chapter 13 Bankruptcy
If you have been denied a loan modification or your foreclosure sale or eviction is outside the window of applying for FFA mediation or there is not enough time to take any other options, chapter 13 bankruptcy might make the most sense to make up the amounts you are behind over a 3-5 year period.
The filing of the chapter 13 bankruptcy (if you have had no other case filings in the last year) will impose an automatic stay in which creditors are stayed from collecting on a debt, including mortgage servicers trying to foreclose on a property. This will allow consumers to implement other options such as applying for a loan modification or completing a sale of a property or provide the opportunity for homeowners to make up payments they have fell behind over a five-year period if there are funds available to make up these payments.
(4) File a lawsuit against your Mortgage Lender or Landlord
If you have been denied a loan modification and you simply do not want to file a bankruptcy case, you could sue your mortgage lender or your landlord if you think they are in violation of laws designed to protect consumers and homeowners.
Filing a lawsuit can be expensive, take a long time to go through the process, and does not guarantee any results. With that said it may buy you the time you need to make up your arrears or get a loan modification. In many cases this is not the solution I would recommend as it would involve planning ahead of any eviction or foreclosure sale as it would be hard to get a stay at the last minute to stop a sale and if not successful you may be out of options.
(5) Think about putting your home on the market
Despite what may be portrayed in the national media, real estate prices in Western Washington continue to rise to record highs. This is largely due to a lack of inventory as well as the strong high earning job market in the region.
If a homeowner comes to the conclusion that they simply will not be able to retain their home, now would be the optimal time to put a home on the market to get maximum value. This also requires planning as it can take at least 30 days minimum to sell a home on the MLS including the typical time it takes to close on a transaction.
As a managing broker at EXP Realty, attorney Richard Symmes can provide you with options. For instance, If your home is in need of repairs prior to listing it on the MLS, my brokerage has an option in which a company can provide a small rehab loan to be paid at closing so you can get top dollar for your property. Additionally, if you would like to take a cash offer, EXP Realty offers a program called Express Offers to get you cash quickly. With that said, you will likely get the most value for your property by listing on the MLS, however it will take more time, expense and effort to get the top price for the property.
if your home does foreclose and is auctioned off for more than you owed on the property, it is important to be aware that you may be able to recover surplus funds on your own or with the assistance of a Seattle surplus funds attorney to apply to get your money out from the Superior Court where your property was located.