07 Jun Idaho, Iowa and Washington Legislative Update
The Idaho legislature recently amended its laws relating to trust deeds, and disposing of non-titled personal property after a trustee’s sale. The Iowa legislature recently amended its laws related to foreclosure. The Washington legislature previously enacted a law establishing the foreclosure fairness account, which is held in the custody of the state treasurer. That law has now been amended to specify the state’s allocation of those funds to various organizations or programs (no action required on the part of lenders or servicers). All the legislation discussed in this memorandum is effective July 1, 2016.
IDAHO HOUSE BILL 503
The definition of “trustee” (in a trust deed) has been amended as follows: a person to whom title to real property is conveyed by trust deed, or his successor in interest, for the limited purpose of the power of sale upon the occurrence of certain contingencies set forth in such trust deed, and the obligation to reconvey the deed of trust under Idaho law. All other incidents of ownership of the real property remain with the grantor. Under the law specifying the manner of foreclosure of a trust deed, a trustee is not a party requiring notice of sale.
IDAHO SENATE BILL 1315
The Idaho legislature recently amended its laws to provide that the purchaser at a trustee’s sale is entitled to dispose of any non-titled personal property remaining on the property on the 10th day following the sale without further notice and without liability to any party claiming any interest in such personal property. Titled personal property must be disposed of pursuant to applicable law.
IOWA HOUSE FILE 2359
Neither the borrower nor a junior lienholder has a right of redemption after a foreclosure sale. The mortgagee (lender) or a junior lienholder may purchase the property at a foreclosure sale and, if so, acquire the same title as would any other purchaser other than the borrower. If the borrower at the sale bids an amount equal to the judgment, the property will be sold to the borrower even though other persons may bid an amount which is more than the judgment. If the borrower purchases at the sale, the liens of junior lienholders will not be extinguished. If a person other than the borrower purchases at the sale, the liens of junior lienholders are extinguished.
WASHINGTON HOUSE BILL 2876
Previously, the foreclosure fairness act required that every beneficiary issuing notices of default report to the Washington Department of Commerce (the “Department”) as to the number of notices and to remit $250 per property. This requirement has been repealed and a new section has been added, wherein the reporting and remittance continue to be required; however, the triggering event for these actions has changed. The new section provides as follows:
Beginning July 1, 2016, and every quarter thereafter, every beneficiary on whose behalf a notice of trustee’s sale has been recorded on residential real property (defined as 1-4 family dwelling units whether or not the property or any part thereof is owner-occupied) under a deed of trust must:
- Report to the Department the number of notices of trustee’s sale recorded for each residential property during the previous quarter;
- Remit the amount required (as described below); and
- Report and update the beneficiary contact information for the person and work group responsible for the beneficiary’s compliance with the requirements of the foreclosure fairness act.
For each notice of trustee’s sale recorded on residential real property, the beneficiary shall remit $250 to the Department to be deposited into the foreclosure fairness account. This requirement does not apply to the recording of an amended notice of trustee’s sale (for the same property). If the beneficiary previously made a payment, as it existed prior to July 1, 2016, for a notice of default supporting the recorded notice of trustee’s sale, no additional payment is required for recording of the notice of trustee’s sale. The beneficiary must remit the total amount required in a lump sum each quarter. Reporting and remittance are due within 45 days after the end of each quarter.
The reporting, remittance and updating requirements above do not apply to:
- Any beneficiary or loan servicer that is a federally insured depository institution, as defined under federal law, and that certifies under penalty of perjury that fewer than 50 notices of trustee’s sale were recorded on its behalf in the preceding year; or
- Any association beneficiary (including, homeowners’ associations, condominium associations, or any horizontal property regime association).
The law also amends the definition of an unfair or deceptive act or practice under the Washington consumer protection act to include the failure to comply with the above requirements as they exist after the effective date or as they existed prior to the effective date.