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Committee hears technical fixes to foreclosure-prevention fee, aims to protect vulnerable buyers
Summary
SB 5938 would refine collection and exemptions for the $80 foreclosure-prevention origination fee, lower the reverse-mortgage exemption age to 60, prevent duplicate charges for some state‑affiliated financing, and direct a study on a possible homeowner assistance fund; foreclosure-prevention advocates and legal-aid groups supported the bill.
On Jan. 14 the Senate Housing Committee reviewed SB 5938, a technical cleanup to the foreclosure-prevention $80 origination fee enacted last year, and heard broad support from foreclosure-prevention counselors, legal-aid attorneys and equity advocates.
Committee staff explained that the bill narrows who pays the fee (limiting duplicate charges when a transaction uses multiple state-affiliated loans), lowers the reverse-mortgage exemption age from 62 to 60, exempts certain chattel loans and retail installment contracts, requires the fee be paid from loan proceeds rather than from borrower cash at closing, and clarifies Commerce's rule‑making authority. The bill also asks Commerce and the Housing Finance Commission to study feasibility of directing a portion of fee collections to a state homeowner assistance fund.
Elizabeth Perez, executive director of the Washington Homeownership Resource Center (which operates the state’s foreclosure-prevention hotline), testified the fee stabilized funding for counseling and mediation and supported SB 5938 as a reasonable technical cleanup. Multiple witnesses—HOA United, the Northwest Justice Project, and the Washington Build Back Black Alliance—testified in favor and urged the study and protections for first-time buyers and vulnerable homeowners. Advocates stressed prior federal programs (HAF) were effective and urged the state to consider a similar targeted assistance vehicle.
Senator Tina Orwell, the prime sponsor, said the foreclosure-mitigation framework established since the Great Recession has saved many homes and that the proposed clarifications will help ensure equitable fee application and transparency.
