Revises foreclosure procedure. Requires that a mortgagee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure. (See also Companion HB 1942).   Official Text and Analysis.

Removes the provisions describing the financial preconditions for workout plan are removed. The duty of the trustee is clarified. The claims not waived by the borrower's failure to bring a lawsuit enjoining the foreclosure sale are clarified. These claims must be asserted within two years of the foreclosure sale.

To clarify that in addition to contacting a borrower in default, the beneficiary or its authorized agent shall also include the Loss Mitigation Form with the Notice of Default. Language that the foreclosure may be enjoined if a lender has not been responsive to a borrower's attempts to contact the lender is removed. Language stating that the trustee must act in the borrower's best interest is removed. Claims that are not waived with the foreclosure sale must be brought within 2 years instead of 1 year. Specifies that contact information for the Department of Financial Institutions, the Washington State Bar Association, and the Office of Civil Legal Aid be provided. Prior to the Notice of Sale being recorded, the Trustee is to have proof that the beneficiary is the actual holder of the promissory note or other obligation secured by the Deed of Trust. It is clarified that a new purchaser may offer a lease to a tenant of the foreclosed property, or may offer a cash payment in exchange for the tenant vacating the property prior to the 60 days otherwise provided for.

To remove the following provisions concerning what claims survive a foreclosure sale: Breach of contract; Failure of trustee to materially comply with provisions of this chapter; Allowing damages where the beneficiary still owns the property at the time the action is filed; Relief to the grantor, if in the same action, the grantor is alleging a violation of chapter 19.86 RCW based on the same fact, is limited to actual damages, treble damages, costs of suit, including reasonable attorneys' fees. The term in which a claim must be asserted is amended to one year from two. Language is also amended so that claims may not in any way affect the validity or finality of the foreclosure sale or a subsequent transfer of the property to a bona fide purchaser.

To require the beneficiary's initial contact to be by letter as well as by phone; provides that the contact requirement does not apply when the beneficiary is a homeowner or condominium association; removes the provision allowing the claim to be raised in an unlawful detainer action; removes breach of contract from the types of claims that are not waived. The amendment makes many other changes and removes various sections.

For deeds of trust made from January 1, 2003, to December 31, 2007, for owner-occupied, residential property, a 30-day extension is made to the current timeline for foreclosure. Thirty days must pass from the time the lender contacts the borrower or shows reasonable effort, before the notice of default can be filed. Outlines certain exemptions and details other obligations of the lender to the borrower in the notification process.