SB 5686 expands Washington’s foreclosure mediation framework and creates a new foreclosure fairness funding structure. The bill requires housing counselors to help delinquent borrowers and, in a parallel set of provisions, unit owners in common-interest communities and condominium/HOA contexts, prepare for meetings with lenders or associations, identify needed documents, and determine whether mediation is appropriate. It also requires the Department of Commerce to administer and report on the program, provide public information and multilingual resources, and coordinate with housing counseling and legal aid providers.
The bill also adds detailed procedural protections and timelines for foreclosure-related mediation. For deed-of-trust foreclosures, and separately for association foreclosures, it sets out notice, document-exchange, good-faith participation, mediator certification, and timing requirements that can delay foreclosure steps until mediation is completed or the certification deadline passes. It specifies what documents each side must provide, how mediation sessions are conducted, what constitutes good-faith participation, and what happens if a party refuses to participate. The bill further creates a foreclosure prevention fee on residential mortgage loans, deposits that revenue into a foreclosure fairness account, and directs the money to counseling, legal aid, outreach, hotline support, and program administration.
The bill’s impact on state law is broad. It amends multiple sections of Washington’s foreclosure, condominium, and homeowners’ association statutes to add mandatory pre-foreclosure notice language, mediation referral procedures, record-retention rules, and disclosure obligations. It also creates new statutory sections establishing the foreclosure prevention fee, the foreclosure fairness account, annual legislative reporting, and public-facing consumer information requirements. In practical terms, lenders, trustees, servicers, HOAs, condominium associations, housing counselors, mediators, and homeowners/unit owners would all be affected by the new notice, documentation, and timing rules.
The general sentiment reflected in the vote history is supportive but divided. The bill advanced through the Senate and House with majority support at each stage, including committee approvals and final passage in both chambers, but several votes were close, especially on the House floor and in the Senate’s final passage after House amendments. That pattern suggests broad agreement with the bill’s consumer-protection and foreclosure-prevention goals, alongside meaningful concern about its costs, administrative burden, and the added obligations imposed on lenders and associations.
The main points of contention appear to be the scope and mechanics of the new requirements. Supporters likely favored expanded access to counseling, mediation, multilingual notices, and funding for homeowner assistance, while opponents likely objected to the new fee on mortgage loans, the added compliance duties, and the delays and procedural hurdles before foreclosure can proceed. The bill also places significant responsibilities on associations in HOA and condominium foreclosures, including notice content, waiting periods, and mediation participation, which may have been another source of concern for property managers and association stakeholders.
SB 5686 amends Washington’s foreclosure and common-interest-community statutes to add mandatory counseling, mediation referral, notice, document-production, and good-faith participation requirements before certain deed-of-trust and association foreclosures may proceed. It also creates a foreclosure prevention fee on residential mortgage loans, establishes the foreclosure fairness account, and directs those funds to counseling, legal aid, outreach, hotline services, and administration of the program. Lenders, trustees, servicers, housing counselors, mediators, condominium associations, homeowners’ associations, and unit owners are all directly affected by the new procedures and funding structure.
The bill appears to have received generally favorable treatment, as reflected by repeated do-pass votes in committee and final passage in both chambers. At the same time, the relatively close floor votes indicate that support was not unanimous and that the bill drew substantial reservations. Overall, the sentiment suggests agreement with the goal of preventing avoidable foreclosures and expanding homeowner assistance, tempered by concern over cost, complexity, and added obligations on foreclosure actors.
The most notable contention centers on whether the bill goes too far in regulating foreclosure timing and imposing new fees and administrative duties. Supporters likely emphasized the need for counseling, mediation, multilingual notice, and dedicated funding to help borrowers and unit owners avoid losing their homes. Opponents likely focused on the foreclosure prevention fee, the expanded role of the Department of Commerce, the added burdens on lenders and associations, and the possibility that mandatory procedures could slow or complicate foreclosure enforcement. HOA and condominium stakeholders may also have been concerned about the new pre-foreclosure notice and mediation requirements specific to association liens.