Amending the Law to Make it Harder to Stop Foreclosure Scams.

Here’s one that is sailing through the state legislature without discussion and under everyone’s radar.  Today the senate had a public hear to amend the deed of trust act so as to make it easier for trustees to conduct foreclosure sales when they are disputed.  Substitute Senate Bill 5378 removes a deed of trust trustee’s (the one who does the foreclosure) fiduciary duty to the owner and frees the trustee from having to field phone calls by saying requests for payoffs must be in writing.  Not only that but by law the trustee would not have to respond to a written request sooner than 10 days from receipt.  Not only that but the new law would make it clear that the trustee is under no obligation to discontinue a sale for any reason whatsoever.  Finally the owner, or anyone else, trying to stop the sale is required to put up security for damages, attorneys fees and costs.  This of course is a crippling requirement for someone going through a foreclosure.

That’s one way to stop a scandal: Deny access to the courts by prohibitive procedural and substantive legal requirements for getting a hearing.  This approach is reminiscent of the legislature’s answer to the condominium scandal, where developers were using materials that after a few years became defective and required replacement. The legislatures answer was to pass a law that said as to condominiums only if the problem does not show up within 4 years of the completion of the building, the owners have no recourse against anyone.

Substitute senate bill 5378  is skipping through the legislature without any debate.  In the area of real estate scandals the Washington legislature has developed a very clear pattern of resolving these things by curbing the rights of the victims.

This bill is sponsored by senators Weinstein, Kline and  Rockefeller.  What exactly is their connection with the banking industry?

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One Response to Amending the Law to Make it Harder to Stop Foreclosure Scams.

  1. That does sound terrible from the perspective of anyone who ever wants to own a home. Especially with the fallout from the subprime mess, a great number of these foreclosures could be disputed. Curbing access to the courts is definitely not the way to keep people in their homes.

    So far, the banks have gotten loads of money from the Federal Reserve and are working hard on preventing bankruptcy courts from having the power to lower mortgage balances. They also want to be able to keep homeowners out of court when the entire foreclosure process may be a scam? I think the lenders have already profited from government involvement enough.

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