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Committee advances expansion of foreclosure mediation program and new fee; committee rejects some amendment changes
Summary
The House Housing Committee voted to report Engrossed Second Substitute Senate Bill 5686, which expands the state foreclosure mediation program and includes a contested $80 foreclosure prevention charge intended to fund counseling and program operations.
Engrossed Second Substitute Senate Bill 5686, which expands the foreclosure mediation program and proposes a new funding mechanism, was reported out of the House Housing Committee on March 26 after extended debate and multiple amendment attempts.
Staff summarized extensive changes in the committee packet, including a striking amendment and several amendments to that striker. The striking amendment revised the meet-and-confer process, clarified that an $80 foreclosure prevention fee would apply to each residential mortgage originated within or outside the state but related to property located in the state, revised notice-of-delinquency requirements and adjusted the timing for when associations may commence foreclosure for past-due assessments when a unit owner has been referred to mediation. It also revised reporting requirements tied to the foreclosure fairness account and focused Commerce’s online common interest communities resource center on foreclosure programs.
Committee members debated financing and allocations at length. Representative Jacobson introduced amendments to eliminate the $80 fee (H2034.1 and H2035.1), which were not adopted. Another amendment (H2038.1) would require notice of the fee at or before closing; that amendment was adopted. Representative Dufo moved to increase the share of collections directed to housing counseling activities from the bill’s proposed 50% back to 69% (and proposed 75% in committee discussion); that amendment failed. Members arguing for the fee said it creates a dedicated funding stream for foreclosure prevention programs; opponents described the $80 charge as a tax on borrowers and warned it would raise costs for homebuyers and shift costs among HOA members.
The committee adopted several amendments to the striker (including H2038.1 and H2035.1 was discussed but not adopted) and ultimately reported the engrossed second substitute bill out of committee. The clerk recorded 10 ayes, 7 nays. By that vote, Engrossed Second Substitute Senate Bill 5686 was reported out of committee with a due-pass recommendation.
