Foreclosure Process in Washington

By: Rebekah Near, ORCA Information, Inc.
www.orcainformation.com

This report is to provide you with the information on how the foreclosure process works in Washington State and how long it takes for a bank 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 statue is known as a nonjudicial 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’s 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 30 days, the property will be scheduled for sale at an auction by the trustee.

The Notice of Default must be mailed/served on the borrower at least 30 days before the Notice of Trustee’s Sale.

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 at least 90 days before the sale. The notice must be mailed first class 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 published twice in the newspaper (a month before and a week before the scheduled sale). 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 Skagit County, the sale must be held on a Friday at the court house.

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 11th day before the sale is the borrower’s last chance to reinstate the loan by 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.

STEP FOUR
Trustee’s Sale
The trustee’s sale is a public auction held at the court house, 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 possession of the property 20 days after the sale. If the borrower does not move out by then, the new owner can evict them using the same procedure a landlord would use to evict a tenant.