Stafne Trumbull LLC.dkt 30 Judical Notice of Legislative History.mickelson Case

No. 13-35008

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

TRAVIS MICKELSON, et. ux.

Plaintiffs-Appellants,

v.

CHASE HOME FINANCE LLC, et. al.

Defendants-Appellees.

Appeal from the United States District Court for the

Western District of Washington NO. 2:11-CV-01445 MJP

JUDICIAL NOTICE OF LEGISLATIVE HISTORY

STAFNE TRUMBULL, LLC

Scott E. Stafne, WSBA 6964

Attorney for Appellants

239 N. Olympic Ave

Arlington, WA 98155

[email protected]

Case: 13-35008 08/23/2013 ID: 8754672 DktEntry: 30-1 Page: 1 of 5 (1 of 98)

I. GROUNDS FOR MOTION AND RELIEF SOUGHT

Plaintiffs-Appellees (Mickelsons) hereby move pursuant to Fed. R. App. P.

and 9th Cir. R. 27-1 and request that the Court take judicial notice of legislative

history of Washingtons Deed of Trust Act (DTA), Ch. 61.24 Rev. Code Wash.,

copies of which are submitted as Appendices with this motion as follows:

Appendix A- 1975, 1st Ex. Sess., ch. 129;

Appendix B- Senate Bill Report on Substitute Senate Bill 5378;

Appendix C- Senate Bill 5810 (as originally proposed on February 3, 2009);

Appendix D- Striker Amendment to Senate Bill 5810 (adopted March 12,

2009);

Appendix E- Engrossed Senate Bill 5810 (adopted April 9, 2009);

Appendix F- Senate Bill Report, Engrossed Senate Bill 5810; and,

Mickelsons intend to rely on the above mentioned legislative history of DTA in

their brief, which must be filed no later than August 23, 2013.

II. LEGAL ARGUMENT

On appeal, Mickelsons argue that the district court erred its application and

interpretation of various provisions of the DTA. Mickelsons intend to rely, in part,

on Washington legislative history to make these arguments.

Appellate courts may take judicial notice of state legislative history when

interpreting state law. See e.g., Territory of Alaska v. American Can Co., 358 U.S.


224, 226-27 (1959) (Court took judicial notice of state legislative history); see also

Bass v. County of Butte, 458 F.3d 978, 981-82 (9th Cir,. 2006) (relying upon state

legislative history to interpret state statute); Federal Trade Commission v. MTK

Marketing, Inc., 149 F.3d 1036, 1040-41 (9th Cir., 1998) (same); Hebert v. J.F.

Fliegel, 813 F.2d 999, 1002 (9th Cir., 1987) (same).

It is appropriate for courts to take judicial notice of legislative history

materials because they are matters of public record that are not subject to

reasonable dispute. Daghlian v. DeVry University, Inc., 461 F. Supp. 2d 1121,

1145 (C.D. Cal., 2006); see also, Korematsu v. U.S., 584 F.Supp. 1406, 1414 (C.D.

Cal., 1984) (courts frequently take judicial notice of legislative history, including

committee reports, particularly when interpreting statutes).

This Court has ruled that a new argument involving the legal analysis or

interpretation of a statute may be raised for the first time on appeal as long as the

claim itself was preserved, as it was here. California Pro-Life Council, Inc. v.

Randolph, 507 F.3d 1172, 1185 & n.18 (9th Cir. 2007) (holding that a new

argument regarding the proper legal analysis and interpretation of a statute could

be raised "for the first time on appeal" because the claim itself had been preserved,

explaining that the Court "review[s] any element of legal analysis and statutory

interpretation . . . de novo" and it is "claims, not arguments in support of claims,

[that] are waived") (citing, Siegel v. The Federal Home Loan Mortgage Corp., 143


F.3d 525, 528 (9th Cir. 1998)). Accordingly, if this Court finds that the language of

DTA is ambiguous, the Court can and should review the statutes legislative

history to discern the intent of the legislature and meaning of the statute. Id.

In Seattle Times Co. v. Benton County, the Washington Supreme Court

recognized that correspondence, reports and other materials submitted to

legislative committees or subcommittees may be judicially noticed and may have

value in the search for legislative intent. Seattle Times Co. v. Benton County, 99

Wash.2d 251, 264 & fn.1, 661 P.2d 964 (1983). Therein states:

The legislative purpose of this provision [referring to RCW 13.50.010(8)]

has been ascertained, in part, from letters and memoranda from members of

the state judicial council and the Senate Judiciary Committee. E.g., Senate

Comm. on the Judiciary, 46th Legislature, Overview of SSB 2768 (March

19, 1979); Washington Judicial Council memorandum to Senate Judiciary

Committee regarding SB 2924 (Feb. 13, 1979). Such documents are not

authoritative, but if drafted prior to, or contemporaneously with, the passage

of an act, they may have value in the search for legislative intent. We take judicial notice of these documents for lack of a more substantial record of

the legislative history of this provision.

Id.; see also, e.g., Cosmopolitan Engineering Group, 159 Wash.2d 292, 149 P.3d

666, 673 & n.4 (giving weight to testimony submitted to legislative committee by

interested parties as indicative of legislative intent); State v. Turner, 658 P.2d 658,

661-62 (1983) (same).

///

///

///


III. CONCLUSION

Accordingly, Mickelsons respectfully request that the Court take judicial

notice of the legislative history of DTA, submitted with this motion, for the

purpose of interpreting the statute and determining Mickelsons rights thereunder.

DATED: this 23rd day of August, 2013.

Respectfully submitted by:

STAFNE TRUMBULL, LLC

/s Scott E. Stafne _

Scott E. Stafne

WSBA 6964

239 N. Olympic Ave

Arlington, WA 98155

[email protected]


Case: 13-35008 08/23/2013 ID: 8754672 DktEntry: 30-2 Page: 1 of 10(6 of 98)

SENATE BILL REPORTSSB 5378

As Amended by House, March 6, 2008

Title: An act relating to deeds of trust.

Brief Description: Modifying deeds of trust provisions.

Sponsors: Senate Committee on Judiciary (originally sponsored by Senators Weinstein, Klineand Rockefeller).

Brief History:Committee Activity: Judiciary: 1/16/07, 2/09/07 [DPS].Passed Senate: 2/14/08, 48-0.

SENATE COMMITTEE ON JUDICIARY

Majority Report: That Substitute Senate Bill No. 5378 be substituted therefor, and thesubstitute bill do pass.

Signed by Senators Kline, Chair; Tom, Vice Chair; Carrell, Hargrove, Murray andWeinstein.

Staff: Dawn Noel (786-7472)

Background: A deed of trust is a document in which a borrower incurs a debt obligation inexchange for real estate. The deed of trust transfers title to the borrower, yet the trustee has alien against the property until the borrower pays off the obligation in full. If the borrowerdefaults on the obligation, for example by failing to make a payment under the deed of trust,the trustee may foreclose on the property by conducting a public sale. The Deeds of Trust Act(Act) currently does not specify what fiduciary duties, or duties of care, the trustee owes to thelender versus the borrower of a deed of trust.

One seeking to stop a foreclosure sale must apply for a preliminary injunction from a courtand post a certain amount of security with the court. The challenger or borrower must depositwith the court either the "principal, interest, and reserves" required monthly under the deed, ifthe borrower is in default of such payment, or the amount of monthly interest required, if theobligation is then payable in full. In stating such security requirements, the Act does notdifferentiate between commercial and residential foreclosures.

Trustees must disclose to the borrower the amount required to reinstate the promissory noteand deed of trust. However, trustees currently have no obligation to timely disclose theamount necessary to satisfy the full amount required. Trustees also have no obligation toprovide written notice concerning postponement of a foreclosure sale; currently they may

This analysis was prepared by non-partisan legislative staff for the use of legislative membersin their deliberations. This analysis is not a part of the legislation nor does it constitute astatement of legislative intent.

Senate Bill Report - 1 - SSB 5378


continue the sale by oral proclamation. The Act permits agents of title companies to betrustees, so long as one officer of the title company is a Washington resident, and the trusteehas a Washington street address.

Summary of Substitute Bill: A trustee has no fiduciary obligation to any persons having aninterest in the property subject to the deed of trust. However, the trustee or successor trusteeunder a deed of trust has a duty of fairness and impartiality to the grantor, beneficiary, andother persons having an interest in the property subject to the deed of trust. The trustee maydecline to complete a foreclosure sale or deliver the trustee's deed and refund the purchaseprice, if it appears that the bidding has been collusive or defective, or that the sale might havebeen void.

In considering an application for a preliminary injunction to stop a residential foreclosuresale, a court may require whatever security it deems proper as a condition to granting theinjunction. In determining the amount of security, the court shall consider the potential costs,fees, and damages suffered by the opposing party if the court later determines that thechallenger wrongfully sought the injunction. A court may restrain a residential or commercialforeclosure sale on any proper "legal or equitable" ground, and issue a temporary restrainingorder, when warranted.

Trustees must disclose the amount necessary to satisfy the obligation in full, and to providesuch disclosure within 10 days of receiving a written request for such. As to notice ofpostponement, a trustee must submit written notice no less than four days before the new dateand time of sale, when the new sale occurs within seven days of the postponement. When thesale is postponed to a date beyond seven days into the future, the trustee must submit writtennotice within three days of postponement. A trustee must also maintain a Washingtonaddress, where the trustee maintains physical presence and telephone service at that address.

Appropriation: None.

Fiscal Note: Not requested.

Committee/Commission/Task Force Created: No.

Effective Date: Ninety days after adjournment of session in which bill is passed.

Staff Summary of Public Testimony on Original Bill: PRO: Confusion exists regardingwhat duties a trustee owes to the debtor versus the lender, resulting in many lawsuits. Theexistence of duties to both the lender and the debtor creates a conflict of interest for thetrustee. This bill strikes a fair compromise in eliminating the existence of trustee duties toeither party, while giving a judge discretion in determining how much security to require fromthe debtor in a debtor's action to restrain a foreclosure sale. This way, a debtor is protectedfrom potentially unfair practices by the trustee. Many attorneys for both debtors and creditorswere consulted on the bill, which has wide support.

Persons Testifying: PRO: John Gose, Aleana Harris, Real Property, Probate and TrustSection, Washington State Bar Association.

House Amendment(s): Removes the language requiring the trustee to have a duty of fairness andimpartiality to the grantor, beneficiary, and other persons having an interest in the real property



subject to the deed of trust. Adds in its place language requiring the trustee to act impartiallybetween the borrower, grantor, and beneficiary.

Limits the people to whom a trustee must provide written notice of an oral postponement of aforeclosure sale, those people being the borrower, grantor, and junior lien holders. Also statesthat such notice is necessary only if the sale is postponed beyond the originally scheduleddate.

Removes the provision requiring judges to require debtors to pay security when a debtorattempts to enjoin a foreclosure sale of residential property.

Removes distinctions in how the law applies to sales of residential versus nonresidentialproperty.



Z-0568.2 _____________________________________________SENATE BILL 5810

_____________________________________________State of Washington 61st Legislature 2009 Regular SessionBy Senators Kauffman, Berkey, Shin, Franklin, Keiser, Tom, and Kohl-Welles; by request of Governor GregoireRead first time 02/03/09. Referred to Committee on FinancialInstitutions, Housing & Insurance.

1 AN ACT Relating to foreclosures on deeds of trust; amending RCW 2 61.24.130, 61.24.010, 61.24.040, and 61.24.060; adding new sections to 3 chapter 61.24 RCW; creating new sections; and providing an expiration 4 date.

5 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

6 NEW SECTION. Sec. 1. A new section is added to chapter 61.24 RCW 7 to read as follows: 8 (1)(a) A mortgagee, trustee, beneficiary, or authorized agent may 9 not file a notice of default under RCW 61.24.030(7) until thirty days10 after contact is made as required under (b) of this subsection or11 thirty days after satisfying the due diligence requirements as12 described in subsection (5) of this section.13 (b) A mortgagee, beneficiary, or authorized agent shall contact the14 borrower in person or by telephone in order to assess the borrower's15 financial situation and explore options for the borrower to avoid16 foreclosure. During the initial contact, the mortgagee, beneficiary,17 or authorized agent shall advise the borrower that he or she has the18 right to request a subsequent meeting and, if requested, the mortgagee,19 beneficiary, or authorized agent shall schedule the meeting to occur

p. 1 SB 5810


1 within fourteen days. The assessment of the borrower's financial 2 situation and a discussion of options may occur during the first 3 contact or at the subsequent meeting scheduled for that purpose. In 4 either case, the borrower must be provided the toll-free telephone 5 number made available by the department to find a department-certified 6 housing counseling agency. Any meeting may occur telephonically. 7 (2) A notice of default filed under RCW 61.24.030(7) must include 8 a declaration from the mortgagee, beneficiary, or authorized agent that 9 it has contacted the borrower, it has tried with due diligence to10 contact the borrower as required under this section, or the borrower11 has surrendered the property to the mortgagee, trustee, beneficiary, or12 authorized agent.13 (3) A mortgagee's, beneficiary's, or authorized agent's loss14 mitigation personnel may participate by telephone during any contact15 required under this section.16 (4) A borrower may designate a department-certified housing17 counseling agency, attorney, or other advisor to discuss with the18 mortgagee, beneficiary, or authorized agent, on the borrower's behalf,19 options for the borrower to avoid foreclosure. The contact made at the20 direction of the borrower must satisfy the contact requirements of21 subsection (1)(b) of this section. Any deed of trust modification or22 workout plan offered at the meeting by the mortgagee, beneficiary, or23 authorized agent is subject to approval by the borrower.24 (5) A notice of default may be filed under RCW 61.24.030(7) if a25 mortgagee, beneficiary, or authorized agent has not contacted a26 borrower as required under subsection (1)(b) of this section and the27 failure to contact the borrower occurred despite the due diligence of28 the mortgagee, beneficiary, or authorized agent. Due diligence29 requires the following:30 (a) A mortgagee, beneficiary, or authorized agent shall first31 attempt to contact a borrower by sending a first-class letter that32 includes the toll-free telephone number made available by the33 department to find a department-certified housing counseling agency.34 (b)(i) After the letter has been sent, the mortgagee, beneficiary,35 or authorized agent shall attempt to contact the borrower by telephone36 at least three times at different hours and on different days.37 Telephone calls must be made to the primary telephone number on file.

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1 (ii) A mortgagee, beneficiary, or authorized agent may attempt to 2 contact a borrower using an automated system to dial borrowers if the 3 telephone call, when answered, is connected to a live representative of 4 the mortgagee, beneficiary, or authorized agent. 5 (iii) A mortgagee, beneficiary, or authorized agent satisfies the 6 telephone contact requirements of this subsection (5)(b) if the 7 mortgagee, beneficiary, or authorized agent determines, after 8 attempting contact under this subsection (5)(b), that the borrower's 9 primary telephone number and secondary telephone number or numbers on10 file, if any, have been disconnected.11 (c) If the borrower does not respond within two weeks after the12 telephone call requirements of (b) of this subsection have been13 satisfied, the mortgagee, beneficiary, or authorized agent shall send14 a certified letter, with return receipt requested.15 (d) The mortgagee, beneficiary, or authorized agent shall provide16 a means for the borrower to contact the mortgagee, beneficiary, or17 authorized agent in a timely manner, including a toll-free telephone18 number that will provide access to a live representative during19 business hours.20 (e) The mortgagee, beneficiary, or authorized agent shall post a21 prominent link on the home page of the mortgagee's, beneficiary's, or22 authorized agent's internet web site, if any, to the following23 information:24 (i) Options that may be available to borrowers who are unable to25 afford their mortgage payments and who wish to avoid foreclosure, and26 instructions to borrowers advising them on steps to take to explore27 those options;28 (ii) A list of financial documents borrowers should collect and be29 prepared to present to the mortgagee, beneficiary, or authorized agent30 when discussing options for avoiding foreclosure;31 (iii) A toll-free telephone number for borrowers who wish to32 discuss options for avoiding foreclosure with their mortgagee,33 beneficiary, or authorized agent; and34 (iv) The toll-free telephone number made available by the35 department to find a department-certified housing counseling agency.36 (6) Subsections (1) and (5) of this section do not apply if any of37 the following occurs:

p. 3 SB 5810


1 (a) The borrower has surrendered the property as evidenced by 2 either a letter confirming the surrender or delivery of the keys to the 3 property to the mortgagee, trustee, beneficiary, or authorized agent; 4 (b) The borrower has contracted with an organization, person, or 5 entity whose primary business is advising people who have decided to 6 leave their homes on how to extend the foreclosure process and avoid 7 their contractual obligations to mortgagees or beneficiaries; or 8 (c) The borrower has filed for bankruptcy, and the proceedings have 9 not been finalized.10 (7) This section applies only to deeds of trust made from January11 1, 2003, to December 31, 2007, inclusive, that are secured by12 residential real property and are for owner-occupied residences. For13 purposes of this subsection, "owner-occupied" means that the residence14 is the principal residence of the borrower.15 (8) As used in this section:16 (a) "Borrower" includes a mortgagor or trustor.17 (b) "Department" means the United States department of housing and18 urban development.

19 NEW SECTION. Sec. 2. A new section is added to chapter 61.24 RCW20 to read as follows:21 (1) The legislature finds and declares that any duty that servicers22 may have to maximize net present value under their pooling and23 servicing agreements is owed to all parties in a deed of trust pool,24 not to any particular parties, and that a servicer acts in the best25 interests of all parties if it agrees to or implements a deed of trust26 modification or workout plan for which both of the following apply:27 (a) The deed of trust is in payment default, or payment default is28 reasonably foreseeable; and29 (b) Anticipated recovery under the deed of trust modification or30 workout plan exceeds the anticipated recovery through foreclosure on a31 net present value basis.32 (2) The mortgagee, beneficiary, or authorized agent shall offer the33 borrower a deed of trust modification or workout plan if the34 modification or plan is consistent with its contractual or other35 authority.

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1 NEW SECTION. Sec. 3. A new section is added to chapter 61.24 RCW 2 to read as follows: 3 (1) Upon posting a notice of sale under RCW 61.24.040, a trustee 4 or authorized agent shall also post the following notice, in the manner 5 required for posting the notice of sale on the property to be sold, and 6 a mortgagee, trustee, beneficiary, or authorized agent shall mail at 7 the same time in an envelope addressed to the "Resident of property 8 subject to foreclosure sale" the following notice: 9 "The foreclosure process has begun on this property, which may10 affect your right to continue to live in this property. Twenty days or11 more after the date of this notice, this property may be sold at12 foreclosure. If you are renting this property, the new property owner13 may either give you a new lease or rental agreement or provide you with14 a sixty-day eviction notice. However, other laws may prohibit an15 eviction in this circumstance or provide you with a longer notice16 before eviction. You may wish to contact a lawyer or your local legal17 aid or housing counseling agency to discuss any rights that you may18 have."19 (2) This section applies only to deeds of trust secured by20 residential real property, and if the billing address for the mortgage21 note is different than the property address.

22 NEW SECTION. Sec. 4. A new section is added to chapter 61.24 RCW23 to read as follows:24 (1) A tenant or subtenant in possession of a rental housing unit at25 the time the property is sold in foreclosure must be given sixty days'26 written notice before the tenant or subtenant may be removed from the27 property as prescribed in chapter 59.12 RCW. The rent of the tenant or28 subtenant must be prorated if the tenant or subtenant has paid all rent29 amounts due and the tenant or subtenant vacates before the expiration30 of any month.31 (2) This section does not apply if a party to the note remains on32 the property as a tenant, subtenant, or occupant.

33 NEW SECTION. Sec. 5. Sections 3 and 4 of this act do not affect34 any local just cause eviction ordinance or affect the authority of a35 public entity that otherwise exists to regulate or monitor the basis36 for eviction.

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1 NEW SECTION. Sec. 6. Sections 3 and 4 of this act apply only to 2 the foreclosure of a nonowner-occupied one-to-four family residence, 3 condominium unit, residential cooperative unit, residential unit in any 4 other type of planned unit development, or manufactured home in which 5 title has been eliminated under RCW 65.20.040.

6 Sec. 7. RCW 61.24.130 and 2008 c 153 s 5 are each amended to read 7 as follows: 8 (1) Nothing contained in this chapter shall prejudice the right of 9 the borrower, grantor, any guarantor, or any person who has an interest10 in, lien, or claim of lien against the property or some part thereof,11 to restrain, on any proper legal or equitable ground, a trustee's sale.12 The court shall require as a condition of granting the restraining13 order or injunction that the applicant pay to the clerk of the court14 the sums that would be due on the obligation secured by the deed of15 trust if the deed of trust was not being foreclosed:16 (a) In the case of default in making the periodic payment of17 principal, interest, and reserves, such sums shall be the periodic18 payment of principal, interest, and reserves paid to the clerk of the19 court every thirty days.20 (b) In the case of default in making payment of an obligation then21 fully payable by its terms, such sums shall be the amount of interest22 accruing monthly on said obligation at the nondefault rate, paid to the23 clerk of the court every thirty days.24 In the case of default in performance of any nonmonetary obligation25 secured by the deed of trust, the court shall impose such conditions as26 it deems just.27 In addition, the court may condition granting the restraining order28 or injunction upon the giving of security by the applicant, in such29 form and amount as the court deems proper, for the payment of such30 costs and damages, including attorneys' fees, as may be later found by31 the court to have been incurred or suffered by any party by reason of32 the restraining order or injunction. The court may consider, upon33 proper showing, the grantor's equity in the property in determining the34 amount of said security.35 (2) No court may grant a restraining order or injunction to36 restrain a trustee's sale unless the person seeking the restraint gives37 five days notice to the trustee of the time when, place where, and the

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1 judge before whom the application for the restraining order or 2 injunction is to be made. This notice shall include copies of all 3 pleadings and related documents to be given to the judge. No judge may 4 act upon such application unless it is accompanied by proof, evidenced 5 by return of a sheriff, the sheriff's deputy, or by any person eighteen 6 years of age or over who is competent to be a witness, that the notice 7 has been served on the trustee. 8 (3) If the restraining order or injunction is dissolved after the 9 date of the trustee's sale set forth in the notice as provided in RCW10 61.24.040(1)(f), the court granting such restraining order or11 injunction, or before whom the order or injunction is returnable,12 shall, at the request of the trustee, set a new sale date which shall13 be not less than forty-five days from the date of the order dissolving14 the restraining order. The trustee shall:15 (a) Comply with the requirements of RCW 61.24.040(1) (a) through16 (f) at least thirty days before the new sale date; and17 (b) Cause a copy of the notice of trustee's sale as provided in RCW18 61.24.040(1)(f) to be published in a legal newspaper in each county in19 which the property or any part thereof is situated once between the20 thirty-fifth and twenty-eighth day before the sale and once between the21 fourteenth and seventh day before the sale.22 (4) If a trustee's sale has been stayed as a result of the filing23 of a petition in federal bankruptcy court and an order is entered in24 federal bankruptcy court granting relief from the stay or closing or25 dismissing the case, or discharging the debtor with the effect of26 removing the stay, the trustee may set a new sale date which shall not27 be less than forty-five days after the date of the bankruptcy court's28 order. The trustee shall:29 (a) Comply with the requirements of RCW 61.24.040(1) (a) through30 (f) at least thirty days before the new sale date; and31 (b) Cause a copy of the notice of trustee's sale as provided in RCW32 61.24.040(1)(f) to be published in a legal newspaper in each county in33 which the property or any part thereof is situated, once between the34 thirty-fifth and twenty-eighth day before the sale and once between the35 fourteenth and seventh day before the sale.36 (5) Subsections (3) and (4) of this section are permissive only and37 do not prohibit the trustee from proceeding with a trustee's sale

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1 following termination of any injunction or stay on any date to which 2 such sale has been properly continued in accordance with RCW 3 61.24.040(6). 4 (6) The issuance of a restraining order or injunction shall not 5 prohibit the trustee from continuing the sale as provided in RCW 6 61.24.040(6). 7 (7) Upon good cause shown to the court, a foreclosure sale may be 8 enjoined if the lender has not been responsive to a borrower's 9 documented, reasonable, and material requests. This subsection only10 applies to a foreclosure sale of an owner-occupied one-to-four family11 residence, condominium unit, residential cooperative unit, residential12 unit in any other type of planned unit development, or manufactured13 home in which title has been eliminated under RCW 65.20.040, which is14 the principal residence of the borrower.

15 Sec. 8. RCW 61.24.010 and 2008 c 153 s 1 are each amended to read16 as follows:17 (1) The trustee of a deed of trust under this chapter shall be:18 (a) Any domestic corporation incorporated under Title 23B, 30, 31,19 32, or 33 RCW of which at least one officer is a Washington resident;20 or21 (b) Any title insurance company authorized to insure title to real22 property under the laws of this state, or its agents; or23 (c) Any attorney who is an active member of the Washington state24 bar association at the time the attorney is named trustee; or25 (d) Any professional corporation incorporated under chapter 18.10026 RCW, any professional limited liability company formed under chapter27 25.15 RCW, any general partnership, including limited liability28 partnerships, formed under chapter 25.04 RCW, all of whose29 shareholders, members, or partners, respectively, are either licensed30 attorneys or entities, provided all of the owners of those entities are31 licensed attorneys, or any domestic corporation wholly owned by any of32 the entities under this subsection (1)(d); or33 (e) Any agency or instrumentality of the United States government;34 or35 (f) Any national bank, savings bank, or savings and loan36 association chartered under the laws of the United States.

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1 (2) The trustee may resign at its own election or be replaced by 2 the beneficiary. The trustee shall give prompt written notice of its 3 resignation to the beneficiary. The resignation of the trustee shall 4 become effective upon the recording of the notice of resignation in 5 each county in which the deed of trust is recorded. If a trustee is 6 not appointed in the deed of trust, or upon the resignation, 7 incapacity, disability, absence, or death of the trustee, or the 8 election of the beneficiary to replace the trustee, the beneficiary 9 shall appoint a trustee or a successor trustee. Upon recording the10 appointment of a successor trustee in each county in which the deed of11 trust is recorded, the successor trustee shall be vested with all12 powers of an original trustee.13 (3) The trustee or successor trustee shall have no fiduciary duty14 or fiduciary obligation to the grantor or other persons having an15 interest in the property subject to the deed of trust.16 (4) The trustee or successor trustee shall act impartially between17 the borrower, grantor, and beneficiary.18 (5) The trustee or successor trustee must:19 (a) Act in the borrower's best interest and in the utmost good20 faith toward the borrower, and shall disclose any and all interests to21 the borrower including, but not limited to, interests that may lie with22 the lender that are used to facilitate a borrower's request. A trustee23 shall not accept, provide, or charge any undisclosed compensation or24 realize any undisclosed remuneration that inures to the benefit of the25 trustee on an expenditure made for the borrower;26 (b) Carry out all lawful instructions provided by the borrower;27 (c) Disclose to the borrower all material facts of which the28 trustee has knowledge that might reasonably affect the borrower's29 rights, interests, or ability to receive the borrower's intended30 benefit from the residential mortgage loan;31 (d) Use reasonable care in performing duties; and32 (e) Provide an accounting to the borrower for all money and33 property received from the borrower.34

35 NEW SECTION. Sec. 9. A new section is added to chapter 61.24 RCW36 to read as follows:

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1 (1) The claims listed under this subsection may not be waived by 2 the failure of the borrower to bring a lawsuit to enjoin a foreclosure 3 sale under this chapter. Nonwaived claims include: 4 (a) Common law fraud and misrepresentation; 5 (b) A violation of RCW 19.144.080; 6 (c) Damages against the lender that may be grounds for contractual 7 rescission, if asserted in a timely manner before the foreclosure sale; 8 (d) Breach of duty of impartiality by a trustee under RCW 9 61.24.010(4);10 (e) Breach of duty by a trustee under RCW 61.24.010(5); or11 (f) Breach of duty by a lender under RCW 61.24.130(7).12 (2) The nonwaived claims listed under subsection (1) of this13 section may be (a) asserted in an unlawful detainer action brought by14 the lender against the borrower as a holdover tenant or (b)15 independently brought against a lender or trustee if a third party is16 the successful bidder at the foreclosure sale.17 (3) The nonwaived claims listed under subsection (1) of this18 section must be asserted or brought within one year from the date of19 the foreclosure sale.20 (4) This section applies only to foreclosures of an owner-occupied21 one-to-four family residence, condominium unit, residential cooperative22 unit, residential unit in any other type of planned unit development,23 or manufactured home in which title has been eliminated under RCW24 65.20.040, which is the principal place of the borrower.

25 Sec. 10. RCW 61.24.040 and 2008 c 153 s 3 are each amended to read26 as follows:27 A deed of trust foreclosed under this chapter shall be foreclosed28 as follows:29 (1) At least ninety days before the sale, the trustee shall:30 (a) Record a notice in the form described in ((RCW31 61.24.040(1)))(f) of this subsection in the office of the auditor in32 each county in which the deed of trust is recorded;33 (b) To the extent the trustee elects to foreclose its lien or34 interest, or the beneficiary elects to preserve its right to seek a35 deficiency judgment against a borrower or grantor under RCW36 61.24.100(3)(a), and if their addresses are stated in a recorded37 instrument evidencing their interest, lien, or claim of lien, or an

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1 amendment thereto, or are otherwise known to the trustee, cause a copy 2 of the notice of sale described in ((RCW 61.24.040(1)))(f) of this 3 subsection to be transmitted by both first-class and either certified 4 or registered mail, return receipt requested, to the following persons 5 or their legal representatives, if any, at such address: 6 (i) The borrower and grantor; 7 (ii) The beneficiary of any deed of trust or mortgagee of any 8 mortgage, or any person who has a lien or claim of lien against the 9 property, that was recorded subsequent to the recordation of the deed10 of trust being foreclosed and before the recordation of the notice of11 sale;12 (iii) The vendee in any real estate contract, the lessee in any13 lease, or the holder of any conveyances of any interest or estate in14 any portion or all of the property described in such notice, if that15 contract, lease, or conveyance of such interest or estate, or a16 memorandum or other notice thereof, was recorded after the recordation17 of the deed of trust being foreclosed and before the recordation of the18 notice of sale;19 (iv) The last holder of record of any other lien against or20 interest in the property that is subject to a subordination to the deed21 of trust being foreclosed that was recorded before the recordation of22 the notice of sale;23 (v) The last holder of record of the lien of any judgment24 subordinate to the deed of trust being foreclosed; and25 (vi) The occupants of property consisting solely of a single-family26 residence, or a condominium, cooperative, or other dwelling unit in a27 multiplex or other building containing fewer than five residential28 units, whether or not the occupant's rental agreement is recorded,29 which notice may be a single notice addressed to "occupants" for each30 unit known to the trustee or beneficiary;31 (c) Cause a copy of the notice of sale described in ((RCW32 61.24.040(1)))(f) of this subsection to be transmitted by both first-33 class and either certified or registered mail, return receipt34 requested, to the plaintiff or the plaintiff's attorney of record, in35 any court action to foreclose a lien or other encumbrance on all or any36 part of the property, provided a court action is pending and a lis37 pendens in connection therewith is recorded in the office of the

p. 11 SB 5810


1 auditor of any county in which all or part of the property is located 2 on the date the notice is recorded; 3 (d) Cause a copy of the notice of sale described in ((RCW 4 61.24.040(1))) (f) of this subsection to be transmitted by both first- 5 class and either certified or registered mail, return receipt 6 requested, to any person who has recorded a request for notice in 7 accordance with RCW 61.24.045, at the address specified in such 8 person's most recently recorded request for notice; 9 (e) Cause a copy of the notice of sale described in ((RCW10 61.24.040(1))) (f) of this subsection to be posted in a conspicuous11 place on the property, or in lieu of posting, cause a copy of said12 notice to be served upon any occupant of the property;13 (f) The notice shall be in substantially the following form:14 NOTICE OF TRUSTEE'S SALE15 I.16 NOTICE IS HEREBY GIVEN that the undersigned Trustee will on the . . . .17 day of . . . . . ., . . ., at the hour of . . . . o'clock . . . . M. at18 . . . . . . . . . . . . . . . . . . . . . . . . . . . . [street19 address and location if inside a building] in the City of . . . . . .,20 State of Washington, sell at public auction to the highest and best21 bidder, payable at the time of sale, the following described real22 property, situated in the County(ies) of . . . . . ., State of23 Washington, to-wit:24 [If any personal property is to be included in the trustee's25 sale, include a description that reasonably identifies such26 personal property]27 which is subject to that certain Deed of Trust dated . . . . . .,28 . . ., recorded . . . . . ., . . ., under Auditor's File No. . . . .,29 records of . . . . . . County, Washington, from . . . . . . . . ., as30 Grantor, to . . . . . . . . ., as Trustee, to secure an obligation in31 favor of . . . . . . . . ., as Beneficiary, the beneficial interest in32 which was assigned by . . . . . . . . ., under an Assignment recorded33 under Auditor's File No. . . . . [Include recording information for34 all counties if the Deed of Trust is recorded in more than one county.]35 II.36 No action commenced by the Beneficiary of the Deed of Trust is now

SB 5810 p. 12


1 pending to seek satisfaction of the obligation in any Court by reason 2 of the Borrower's or Grantor's default on the obligation secured by the 3 Deed of Trust. 4 [If there is another action pending to foreclose other security 5 for all or part of the same debt, qualify the statement and 6 identify the action.] 7 III. 8 The default(s) for which this foreclosure is made is/are as follows: 9 [If default is for other than payment of money, set forth the10 particulars]11 Failure to pay when due the following amounts which are now in arrears:12 IV.13 The sum owing on the obligation secured by the Deed of Trust is:14 Principal $ . . . . . ., together with interest as provided in the note15 or other instrument secured from the . . . . day of . . . . . ., . . .,16 and such other costs and fees as are due under the note or other17 instrument secured, and as are provided by statute.18 V.19 The above-described real property will be sold to satisfy the expense20 of sale and the obligation secured by the Deed of Trust as provided by21 statute. The sale will be made without warranty, express or implied,22 regarding title, possession, or encumbrances on the . . . . day of23 . . . . . ., . . . The default(s) referred to in paragraph III must be24 cured by the . . . . day of . . . . . ., . . . (11 days before the sale25 date), to cause a discontinuance of the sale. The sale will be26 discontinued and terminated if at any time on or before the . . . . day27 of . . . . . ., . . ., (11 days before the sale date), the default(s)28 as set forth in paragraph III is/are cured and the Trustee's fees and29 costs are paid. The sale may be terminated any time after the . . . .30 day of . . . . . ., . . . (11 days before the sale date), and before31 the sale by the Borrower, Grantor, any Guarantor, or the holder of any32 recorded junior lien or encumbrance paying the entire principal and33 interest secured by the Deed of Trust, plus costs, fees, and advances,34 if any, made pursuant to the terms of the obligation and/or Deed of35 Trust, and curing all other defaults.

p. 13 SB 5810


1 VI. 2 A written notice of default was transmitted by the Beneficiary or 3 Trustee to the Borrower and Grantor at the following addresses:

4 ......................... 5 ......................... 6 ......................... 7 by both first-class and certified mail on the . . . . day of 8 . . . . . ., . . ., proof of which is in the possession of the Trustee; 9 and the Borrower and Grantor were personally served on the . . . . day10 of . . . . . ., . . ., with said written notice of default or the11 written notice of default was posted in a conspicuous place on the real12 property described in paragraph I above, and the Trustee has possession13 of proof of such service or posting.14 VII.15 The Trustee whose name and address are set forth below will provide in16 writing to anyone requesting it, a statement of all costs and fees due17 at any time prior to the sale.18 VIII.19 The effect of the sale will be to deprive the Grantor and all those who20 hold by, through or under the Grantor of all their interest in the21 above-described property.22 IX.23 Anyone having any objection to the sale on any grounds whatsoever will24 be afforded an opportunity to be heard as to those objections if they25 bring a lawsuit to restrain the sale pursuant to RCW 61.24.130.26 Failure to bring such a lawsuit may result in a waiver of any proper27 grounds for invalidating the Trustee's sale.28 [Add Part X to this notice if applicable under RCW 61.24.040(9)]2930 .......................................31 ............ , Trustee

32 ........

SB 5810 p. 14


1 ........ Address

2 ........ 3 ........ } Phone 4 [Acknowledgment] 5 (2) In addition to providing the borrower and grantor the notice of 6 sale described in ((RCW 61.24.040)) subsection (1)(f) of this section, 7 the trustee shall include with the copy of the notice which is mailed 8 to the grantor, a statement to the grantor in substantially the 9 following form:10 NOTICE OF FORECLOSURE

11 Pursuant to the Revised Code of Washington,

12 Chapter 61.24 RCW13 The attached Notice of Trustee's Sale is a consequence of14 default(s) in the obligation to . . . . . ., the Beneficiary of your15 Deed of Trust and owner of the obligation secured thereby. Unless the16 default(s) is/are cured, your property will be sold at auction on the17 . . . . day of . . . . . ., . . .18 To cure the default(s), you must bring the payments current, cure19 any other defaults, and pay accrued late charges and other costs,20 advances, and attorneys' fees as set forth below by the . . . . day of21 . . . . . ., . . . [11 days before the sale date]. To date, these22 arrears and costs are as follows:

23 Estimated amount24 Currently due that will be due25 to reinstate to reinstate26 on . . . . . on . . . . .27 . . . . . . . . . . . .28 (11 days before29 the date set

p. 15 SB 5810


1 for sale)

2 Delinquent payments 3 from . . . . . ., 4 . . ., in the 5 amount of 6 $ . . . ./mo.: $ . . . . $ . . . .

7 Late charges in 8 the total 9 amount of: $ . . . . $ . . . .10 Estimated11 Amounts12 Attorneys' fees: $ . . . . $ . . . .

13 Trustee's fee: $ . . . . $ . . . .

14 Trustee's expenses: 15 (Itemization)

16 Title report $ . . . . $ . . . .17 Recording fees $ . . . . $ . . . .1819

Service/Posting

of Notices $ . . . . $ . . . .

2021

Postage/Copying

expense $ . . . . $ . . . .

22 Publication $ . . . . $ . . . .2324

Telephone

charges $ . . . .

$ . . . .

25 Inspection fees $ . . . . $ . . . .26 . . . . . . $ . . . . $ . . . .27 . . . . . . $ . . . . $ . . . .28 TOTALS $ . . . . $ . . . .29 To pay off the entire obligation secured by your Deed of Trust as30 of the . . . . . day of . . . . . . you must pay a total of $. . . . .31 in principal, $. . . . . in interest, plus other costs and advances32 estimated to date in the amount of $. . . . . . From and after the33 date of this notice you must submit a written request to the Trustee to34 obtain the total amount to pay off the entire obligation secured by35 your Deed of Trust as of the payoff date.

SB 5810 p. 16


1 As to the defaults which do not involve payment of money to the 2 Beneficiary of your Deed of Trust, you must cure each such default. 3 Listed below are the defaults which do not involve payment of money to 4 the Beneficiary of your Deed of Trust. Opposite each such listed 5 default is a brief description of the action necessary to cure the 6 default and a description of the documentation necessary to show that 7 the default has been cured.

8 Default Description of Action Required to Cure and 9 Documentation Necessary to Show Cure10 ........ .....................................11 .....................................12 .....................................13 ........ .....................................14 .....................................15 .....................................16 You may reinstate your Deed of Trust and the obligation secured17 thereby at any time up to and including the . . . . day of . . . . . .,18 . . . [11 days before the sale date], by paying the amount set forth or19 estimated above and by curing any other defaults described above. Of20 course, as time passes other payments may become due, and any further21 payments coming due and any additional late charges must be added to22 your reinstating payment. Any new defaults not involving payment of23 money that occur after the date of this notice must also be cured in24 order to effect reinstatement. In addition, because some of the25 charges can only be estimated at this time, and because the amount26 necessary to reinstate or to pay off the entire indebtedness may27 include presently unknown expenditures required to preserve the28 property or to comply with state or local law, it will be necessary for29 you to contact the Trustee before the time you tender reinstatement or30 the payoff amount so that you may be advised of the exact amount you31 will be required to pay. Tender of payment or performance must be made32 to: . . . . . ., whose address is . . . . . ., telephone ( )33 . . . . . . AFTER THE . . . . DAY OF . . . . . ., . . ., YOU MAY NOT34 REINSTATE YOUR DEED OF TRUST BY PAYING THE BACK PAYMENTS AND COSTS AND35 FEES AND CURING THE OTHER DEFAULTS AS OUTLINED ABOVE. The Trustee will36 respond to any written request for current payoff or reinstatement37 amounts within ten days of receipt of your written request. In such a

p. 17 SB 5810


1 case, you will only be able to stop the sale by paying, before the 2 sale, the total principal balance ($ . . . . . .) plus accrued 3 interest, costs and advances, if any, made pursuant to the terms of the 4 documents and by curing the other defaults as outlined above. 5 You may contest this default by initiating court action in the 6 Superior Court of the county in which the sale is to be held. In such 7 action, you may raise any legitimate defenses you have to this default. 8 A copy of your Deed of Trust and documents evidencing the obligation 9 secured thereby are enclosed. You may wish to consult a lawyer. Legal10 action on your part may prevent or restrain the sale, but only if you11 persuade the court of the merits of your defense.12 The court may grant a restraining order or injunction to restrain13 a trustee's sale pursuant to RCW 61.24.130 upon five days notice to the14 trustee of the time when, place where, and the judge before whom the15 application for the restraining order or injunction is to be made.16 This notice shall include copies of all pleadings and related documents17 to be given to the judge. Notice and other process may be served on18 the trustee at:

19 NAME: ......................................20 ADDRESS: ..............................21 ..............................22 TELEPHONE NUMBER: ....................23 If you do not reinstate the secured obligation and your Deed of24 Trust in the manner set forth above, or if you do not succeed in25 restraining the sale by court action, your property will be sold. The26 effect of such sale will be to deprive you and all those who hold by,27 through or under you of all interest in the property;28 (3) In addition, the trustee shall cause a copy of the notice of29 sale described in ((RCW 61.24.040)) subsection (1)(f) of this section30 (excluding the acknowledgment) to be published in a legal newspaper in31 each county in which the property or any part thereof is situated, once32 on or between the thirty-fifth and twenty-eighth day before the date of33 sale, and once on or between the fourteenth and seventh day before the34 date of sale;35 (4) On the date and at the time designated in the notice of sale,36 the trustee or its authorized agent shall sell the property at public

SB 5810 p. 18


1 auction to the highest bidder. The trustee may sell the property in 2 gross or in parcels as the trustee shall deem most advantageous; 3 (5) The place of sale shall be at any designated public place 4 within the county where the property is located and if the property is 5 in more than one county, the sale may be in any of the counties where 6 the property is located. The sale shall be on Friday, or if Friday is 7 a legal holiday on the following Monday, and during the hours set by 8 statute for the conduct of sales of real estate at execution; 9 (6) The trustee has no obligation to, but may, for any cause the10 trustee deems advantageous, continue the sale for a period or periods11 not exceeding a total of one hundred twenty days by (a) a public12 proclamation at the time and place fixed for sale in the notice of sale13 and if the continuance is beyond the date of sale, by giving notice of14 the new time and place of the sale by both first class and either15 certified or registered mail, return receipt requested, to the persons16 specified in ((RCW 61.24.040)) subsection (1)(b)(i) and (ii) of this17 section to be deposited in the mail (i) not less than four days before18 the new date fixed for the sale if the sale is continued for up to19 seven days; or (ii) not more than three days after the date of the20 continuance by oral proclamation if the sale is continued for more than21 seven days, or, alternatively, (b) by giving notice of the time and22 place of the postponed sale in the manner and to the persons specified23 in ((RCW 61.24.040)) subsection (1)(b), (c), (d), and (e) of this24 section and publishing a copy of such notice once in the newspaper(s)25 described in ((RCW 61.24.040)) subsection (3) of this section, more26 than seven days before the date fixed for sale in the notice of sale.27 No other notice of the postponed sale need be given;28 (7) The purchaser shall forthwith pay the price bid and on payment29 the trustee shall execute to the purchaser its deed; the deed shall30 recite the facts showing that the sale was conducted in compliance with31 all of the requirements of this chapter and of the deed of trust, which32 recital shall be prima facie evidence of such compliance and conclusive33 evidence thereof in favor of bona fide purchasers and encumbrancers for34 value, except that these recitals shall not affect the lien or interest35 of any person entitled to notice under ((RCW 61.24.040)) subsection (1)36 of this section, if the trustee fails to give the required notice to37 such person. In such case, the lien or interest of such omitted person38 shall not be affected by the sale and such omitted person shall be

p. 19 SB 5810


1 treated as if such person was the holder of the same lien or interest 2 and was omitted as a party defendant in a judicial foreclosure 3 proceeding; 4 (8) The sale as authorized under this chapter shall not take place 5 less than one hundred ninety days from the date of default in any of 6 the obligations secured; 7 (9) If the trustee elects to foreclose the interest of any occupant 8 or tenant of property comprised solely of a single-family residence, or 9 a condominium, cooperative, or other dwelling unit in a multiplex or10 other building containing fewer than five residential units, the11 following notice shall be included as Part X of the Notice of Trustee's12 Sale:13 X.

14 NOTICE TO OCCUPANTS OR TENANTS15 The purchaser at the trustee's sale is entitled to possession of the16 property on the 20th day following the sale, as against the grantor17 under the deed of trust (the owner) and anyone having an interest18 junior to the deed of trust, including occupants ((and)) who are not19 tenants. After the 20th day following the sale the purchaser has the20 right to evict occupants ((and)) who are not tenants by summary21 proceedings under ((the unlawful detainer act,)) chapter 59.12 RCW.22 For tenant-occupied property, the purchaser shall provide a tenant with23 sixty days' written notice in accordance with section 4 of this act;24 (10) Only one copy of all notices required by this chapter need be25 given to a person who is both the borrower and the grantor. All26 notices required by this chapter that are given to a general27 partnership are deemed given to each of its general partners, unless28 otherwise agreed by the parties.

29 Sec. 11. RCW 61.24.060 and 1998 c 295 s 8 are each amended to read30 as follows:31 The purchaser at the trustee's sale shall be entitled to possession32 of the property on the twentieth day following the sale, as against the33 grantor under the deed of trust and anyone having an interest junior to34 the deed of trust, including occupants ((and)) who are not tenants, who35 were given all of the notices to which they were entitled under this36 chapter. For tenant-occupied property, the purchaser shall provide a

SB 5810 p. 20


1 tenant with sixty days' written notice in accordance with section 4 of 2 this act. The purchaser shall also have a right to the summary 3 proceedings to obtain possession of real property provided in chapter 4 59.12 RCW.

5 NEW SECTION. Sec. 12. If any provision of this act or its 6 application to any person or circumstance is held invalid, the 7 remainder of the act or the application of the provision to other 8 persons or circumstances is not affected.

9 NEW SECTION. Sec. 13. Sections 1 through 6 of this act expires10 January 1, 2013.

--- END ---

p. 21 SB 5810


5810 AMS KAUF S2359.1

SB 5810 - S AMD 141By Senators Kauffman, Berkey

ADOPTED 03/12/2009

1 Strike everything after the enacting clause and insert the 2 following:

3 "NEW SECTION. Sec. 1. A new section is added to chapter 61.24 RCW 4 to read as follows: 5 (1)(a) A trustee, beneficiary, or authorized agent may not issue a 6 notice of default under RCW 61.24.030(7) until thirty days after 7 initial contact is made as required under (b) of this subsection or 8 thirty days after satisfying the due diligence requirements as 9 described in subsection (5) of this section.10 (b) A beneficiary or authorized agent shall contact the borrower in11 person or by telephone in order to assess the borrower's financial12 ability to pay the debt secured by the deed of trust and explore13 options for the borrower to avoid foreclosure. During the initial14 contact, the beneficiary or authorized agent shall advise the borrower15 that he or she has the right to request a subsequent meeting and, if16 requested, the beneficiary or authorized agent shall schedule the17 meeting to occur within fourteen days. The assessment of the18 borrower's financial ability to repay the debt and a discussion of19 options may occur during the initial contact or at the subsequent20 meeting scheduled for that purpose. At the initial contact, the21 borrower must be provided the toll-free telephone number made available22 by the department to find a department-certified housing counseling23 agency. Any meeting may occur telephonically.24 (2) A notice of default issued under RCW 61.24.030(7) must include25 a declaration, as provided in subsection (9) of this section, from the26 beneficiary or authorized agent that it has contacted the borrower as27 provided in subsection (1)(b) of this section, it has tried with due28 diligence to contact the borrower under subsection (5) of this section,29 or the borrower has surrendered the property to the trustee,30 beneficiary, or authorized agent. The trustee is entitled to rely on

Official Print - 1 5810 AMS KAUF S2359.1


1 the declaration as conclusive evidence that the requirements of this 2 section have been satisfied, and the trustee is not liable for the 3 beneficiary's or its authorized agent's failure to comply with the 4 requirements of this section. 5 (3) A beneficiary's or authorized agent's loss mitigation personnel 6 may participate by telephone during any contact required under this 7 section. 8 (4) Within fourteen days after the initial contact under subsection 9 (1) of this section, if a borrower has designated a department-10 certified housing counseling agency, attorney, or other advisor to11 discuss with the beneficiary or authorized agent, on the borrower's12 behalf, options for the borrower to avoid foreclosure, the borrower13 shall inform the beneficiary or authorized agent and provide the14 contact information. The beneficiary or authorized agent shall contact15 the designated representative for the borrower for the discussion16 within fourteen days after the representative is designated by the17 borrower. Any deed of trust modification or workout plan offered at18 the meeting with the borrower's designated representative by the19 beneficiary or authorized agent is subject to approval by the borrower.20 (5) A notice of default may be issued under RCW 61.24.030(7) if a21 beneficiary or authorized agent has not contacted a borrower as22 required under subsection (1)(b) of this section and the failure to23 contact the borrower occurred despite the due diligence of the24 beneficiary or authorized agent. Due diligence requires the following:25 (a) A beneficiary or authorized agent shall first attempt to26 contact a borrower by sending a first-class letter to the address of27 the property encumbered by the deed of trust that includes the toll-28 free telephone number made available by the department to find a29 department-certified housing counseling agency, and the following30 information:31 "You may contact the Department of Financial Institutions, the32 Washington State Bar Association, or the Office of Civil Legal Aid for33 possible assistance or referrals."34 (b)(i) After the letter has been sent, the beneficiary or35 authorized agent shall attempt to contact the borrower by telephone at36 least three times at different hours and on different days. Telephone37 calls must be made to the primary telephone number on file with the38 beneficiary or authorized agent.



1 (ii) A beneficiary or authorized agent may attempt to contact a 2 borrower using an automated system to dial borrowers if the telephone 3 call, when answered, is connected to a live representative of the 4 beneficiary or authorized agent. 5 (iii) A beneficiary or authorized agent satisfies the telephone 6 contact requirements of this subsection (5)(b) if the beneficiary or 7 authorized agent determines, after attempting contact under this 8 subsection (5)(b), that the borrower's primary telephone number and 9 secondary telephone number or numbers on file, if any, have been10 disconnected or are not good contact numbers for the borrower.11 (c) If the borrower does not respond within fourteen days after the12 telephone call requirements of (b) of this subsection have been13 satisfied, the beneficiary or authorized agent shall send a certified14 letter, with return receipt requested, to the borrower at the address15 of the property encumbered by the deed of trust.16 (d) The beneficiary or authorized agent shall provide a means for17 the borrower to contact the beneficiary or authorized agent in a timely18 manner, including a toll-free telephone number or charge-free19 equivalent that will provide access to a live representative during20 business hours.21 (e) The beneficiary or authorized agent shall post a link on the22 home page of the beneficiary's or authorized agent's internet web site,23 if any, to the following information:24 (i) Options that may be available to borrowers who are unable to25 afford their mortgage payments and who wish to avoid foreclosure, and26 instructions to borrowers advising them on steps to take to explore27 those options;28 (ii) A list of financial documents borrowers should collect and be29 prepared to present to the beneficiary or authorized agent when30 discussing options for avoiding foreclosure;31 (iii) A toll-free telephone number or charge-free equivalent for32 borrowers who wish to discuss options for avoiding foreclosure with33 their beneficiary or authorized agent; and34 (iv) The toll-free telephone number or charge-free equivalent made35 available by the department to find a department-certified housing36 counseling agency.37 (6) Subsections (1) and (5) of this section do not apply if any of38 the following occurs:



1 (a) The borrower has surrendered the property as evidenced by 2 either a letter confirming the surrender or delivery of the keys to the 3 property to the trustee, beneficiary, or authorized agent; 4 (b) The borrower has contracted with a distressed home consultant 5 as defined in RCW 61.34.020; or 6 (c) The borrower has filed for bankruptcy, and the bankruptcy stay 7 remains in place. 8 (7) This section applies only to deeds of trust made from January 9 1, 2003, to December 31, 2007, inclusive, that are recorded against10 owner-occupied residential real property. This section does not apply11 to deeds of trust: (a) Securing a debt incurred primarily for12 business, investment, or commercial purposes; (b) securing a13 guarantor's obligations under a guaranty; or (c) securing a purchaser's14 obligations under a seller-financed sale. For purposes of this15 subsection, "owner-occupied" means that the residence is the principal16 residence of the borrower.17 (8) As used in this section:18 (a) "Borrower" means a grantor of a deed of trust who executed a19 promissory note secured by the deed of trust.20 (b) "Department" means the United States department of housing and21 urban development.22 (c) "Residential real property" means a one-to-four, single-family23 residence, condominium unit, residential cooperative unit, residential24 unit in any other type of planned unit development, or manufactured25 home in which title has been eliminated under RCW 65.20.040.26 (d) "Seller-financed sale" means a real property transaction where27 the seller finances all or part of the purchase price, and that28 financed amount is secured by a deed of trust against the subject real29 property.30 (9) The form of declaration to be provided by the beneficiary or31 authorized agent as required under subsection (2) of this section must32 be in substantially the following form:33 "FORECLOSURE LOSS MITIGATION FORM34 Please select applicable option(s) below.35 The undersigned beneficiary or authorized agent for the beneficiary36 hereby represents and declares under the penalty of perjury that [check



1 the applicable box and fill in any blanks so that the trustee can 2 insert, on the beneficiary's behalf, the applicable declaration in the 3 notice of default required under chapter 61.24 RCW]: 4 (1) [ ] The beneficiary or beneficiary's authorized agent has 5 contacted the borrower under, and has complied with, section 1 of this 6 act (contact provision to "assess the borrower's financial ability to 7 pay the debt secured by the deed of trust and explore options for the 8 borrower to avoid foreclosure"). 9 (2) [ ] The beneficiary or beneficiary's authorized agent has10 exercised due diligence to contact the borrower as required in section11 1(5) of this act and, after waiting fourteen days after the12 requirements in section 1 of this act were satisfied, the beneficiary13 or the beneficiary's authorized agent sent to the borrower(s), by14 certified mail, return receipt requested, the letter required under15 section 1 of this act.16 (3) [ ] The borrower has surrendered the secured property as17 evidenced by either a letter confirming the surrender or by delivery of18 the keys to the secured property to the beneficiary, the beneficiary's19 authorized agent or to the trustee.20 (4) [ ] Under section 1 of this act, the beneficiary or21 beneficiary's authorized agent has evidence in its file, and reasonably22 believes, that the borrower has contracted with a distressed home23 consultant as defined in RCW 61.34.020.24 (5) [ ] Under section 1 of this act, the beneficiary or the25 beneficiary's authorized agent has verified information that, on or26 before the date of this declaration, the borrower(s) has filed for27 bankruptcy, and the bankruptcy stay remains in place."

28 NEW SECTION. Sec. 2. A new section is added to chapter 61.24 RCW29 to read as follows:30 (1) Upon posting a notice of sale under RCW 61.24.040, a trustee or31 authorized agent shall also post the following notice, in the manner32 required for posting the notice of sale on the property to be sold, and33 a trustee, beneficiary, or authorized agent shall mail at the same time34 in an envelope addressed to the "Resident of property subject to35 foreclosure sale" the following notice:36 "The foreclosure process has begun on this property, which may37 affect your right to continue to live in this property. Ninety days or



1 more after the date of this notice, this property may be sold at 2 foreclosure. If you are renting this property, the new property owner 3 may either give you a new lease or rental agreement or provide you with 4 a sixty-day eviction notice. You may wish to contact a lawyer or your 5 local legal aid or housing counseling agency to discuss any rights that 6 you may have." 7 (2) This section applies only to deeds of trust secured by 8 residential real property, as defined in section 1 of this act, and if 9 the billing address for the promissory note is different than the10 property address.

11 NEW SECTION. Sec. 3. A new section is added to chapter 61.24 RCW12 to read as follows:13 (1)(a) A tenant or subtenant in possession of a residential real14 property at the time the property is sold in foreclosure must be given15 sixty days' written notice before the tenant or subtenant may be16 removed from the property as prescribed in chapter 59.12 RCW.17 (b) A tenant may be evicted for waste or nuisance and subject to18 unlawful detainer under chapter 59.12 RCW.19 (2) This section does not prohibit the new owner of a property20 purchased pursuant to a foreclosure sale or trustee's sale from:21 (a) Negotiating a new purchase, lease, or rental agreement with a22 tenant or subtenant; or23 (b) Offering a payment to a tenant or subtenant in exchange for24 vacating the premises on a date earlier than the expiration of the25 notice period described in subsection (1) of this section. However,26 the tenant or subtenant is not required to accept any payment offered.27 (3) This section does not apply if a party to the promissory note28 secured by the deed of trust remains on the property as a tenant,29 subtenant, or occupant.

30 NEW SECTION. Sec. 4. Sections 2 and 3 of this act apply only to31 the foreclosure of a nonowner-occupied residential real property as32 defined in section 1 of this act.

33 NEW SECTION. Sec. 5. A new section is added to chapter 61.24 RCW34 to read as follows:



1 (1) The failure of the grantor to bring a civil action to enjoin a 2 foreclosure sale under this chapter may not be deemed a waiver of a 3 claim for damages asserting: 4 (a) Common law fraud, misrepresentation, and breach of contract; 5 (b) A violation of RCW 19.144.080; or 6 (c) Failure of the trustee to materially comply with the provisions 7 of this chapter. 8 (2) The nonwaived claims listed under subsection (1) of this 9 section may be (a) asserted in an unlawful detainer action brought by10 the lender against the grantor as a holdover tenant or (b)11 independently brought against a lender or trustee if a third party is12 the successful bidder at the foreclosure sale.13 (3) The nonwaived claims listed under subsection (1) of this14 section are subject to the following limitations:15 (a) The claim must be asserted or brought within two years from the16 date of the foreclosure sale;17 (b) The claim may not seek any remedy at law or in equity other18 than direct monetary damages, unless the property is owned by the19 beneficiary at the time the action is filed;20 (c) The claim may not otherwise affect the validity or finality of21 the foreclosure sale or a subsequent transfer of the property to a bona22 fide purchaser;23 (d) A grantor who files such a claim is prohibited from filing for24 record a lis pendens without prior permission of a court, as provided25 for in RCW 4.28.320, or any other document purporting to create a26 similar effect, related to the real property foreclosed upon;27 (e) The claim may not otherwise operate to encumber or cloud the28 title to the property that was subject to the foreclosure sale, except29 to the extent that a judgment on the claim in favor of the grantor may,30 consistent with RCW 4.56.190, become a judgment lien on real property31 then owned by the lender; and32 (f) The relief that may be granted for judgment upon the claim is33 limited to actual damages. However, if the grantor brings in the same34 civil action a claim for violation of chapter 19.86 RCW, arising out of35 the same alleged facts, relief under chapter 19.86 RCW is limited to36 actual damages, treble damages as provided for in RCW 19.86.090, and37 the costs of suit, including a reasonable attorney's fee.



1 (4) This section applies only to foreclosures of an owner-occupied 2 one-to-four, single-family residence, condominium unit, residential 3 cooperative unit, residential unit in any other type of planned unit 4 development, or manufactured home in which title has been eliminated 5 under RCW 65.20.040, which is the grantor's principal place of 6 residence. 7 (5) This section does not apply to the foreclosure of a deed of 8 trust used to secure a debt incurred for business, investment, or 9 commercial purposes or to secure a guaranty.

10 Sec. 6. RCW 61.24.010 and 2008 c 153 s 1 are each amended to read11 as follows:12 (1) The trustee of a deed of trust under this chapter shall be:13 (a) Any domestic corporation incorporated under Title 23B, 30, 31,14 32, or 33 RCW of which at least one officer is a Washington resident;15 or16 (b) Any title insurance company authorized to insure title to real17 property under the laws of this state, or ((its agents)) any title18 insurance agent licensed under chapter 48.17 RCW; or19 (c) Any attorney who is an active member of the Washington state20 bar association at the time the attorney is named trustee; or21 (d) Any professional corporation incorporated under chapter 18.10022 RCW, any professional limited liability company formed under chapter23 25.15 RCW, any general partnership, including limited liability24 partnerships, formed under chapter 25.04 RCW, all of whose25 shareholders, members, or partners, respectively, are either licensed26 attorneys or entities, provided all of the owners of those entities are27 licensed attorneys, or any domestic corporation wholly owned by any of28 the entities under this subsection (1)(d); or29 (e) Any agency or instrumentality of the United States government;30 or31 (f) Any national bank, savings bank, or savings and loan32 association chartered under the laws of the United States.33 (2) The trustee may resign at its own election or be replaced by34 the beneficiary. The trustee shall give prompt written notice of its35 resignation to the beneficiary. The resignation of the trustee shall36 become effective upon the recording of the notice of resignation in37 each county in which the deed of trust is recorded. If a trustee is



1 not appointed in the deed of trust, or upon the resignation, 2 incapacity, disability, absence, or death of the trustee, or the 3 election of the beneficiary to replace the trustee, the beneficiary 4 shall appoint a trustee or a successor trustee. Only upon recording 5 the appointment of a successor trustee in each county in which the deed 6 of trust is recorded, the successor trustee shall be vested with all 7 powers of an original trustee. 8 (3) The trustee or successor trustee shall have no fiduciary duty 9 or fiduciary obligation to the grantor or other persons having an10 interest in the property subject to the deed of trust.11 (4) ((The trustee or successor trustee shall act impartially12 between the borrower, grantor, and beneficiary.)) The trustee or13 successor trustee has a duty of good faith to the borrower as defined14 in section 1 of this act, beneficiary, grantor, or other persons having15 an interest in the property subject to the deed of trust.

16 Sec. 7. RCW 61.24.030 and 2008 c 153 s 2 and 2008 c 108 s 22 are17 each reenacted and amended to read as follows:18 It shall be requisite to a trustee's sale:19 (1) That the deed of trust contains a power of sale;20 (2) That the deed of trust contains a statement that the real21 property conveyed is not used principally for agricultural purposes;22 provided, if the statement is false on the date the deed of trust was23 granted or amended to include that statement, and false on the date of24 the trustee's sale, then the deed of trust must be foreclosed25 judicially. Real property is used for agricultural purposes if it is26 used in an operation that produces crops, livestock, or aquatic goods;27 (3) That a default has occurred in the obligation secured or a28 covenant of the grantor, which by the terms of the deed of trust makes29 operative the power to sell;30 (4) That no action commenced by the beneficiary of the deed of31 trust is now pending to seek satisfaction of an obligation secured by32 the deed of trust in any court by reason of the grantor's default on33 the obligation secured: PROVIDED, That (a) the seeking of the34 appointment of a receiver shall not constitute an action for purposes35 of this chapter; and (b) if a receiver is appointed, the grantor shall36 be entitled to any rents or profits derived from property subject to a37 homestead as defined in RCW 6.13.010. If the deed of trust was granted



1 to secure a commercial loan, this subsection shall not apply to actions 2 brought to enforce any other lien or security interest granted to 3 secure the obligation secured by the deed of trust being foreclosed; 4 (5) That the deed of trust has been recorded in each county in 5 which the land or some part thereof is situated; 6 (6) That prior to the date of the notice of trustee's sale and 7 continuing thereafter through the date of the trustee's sale, the 8 trustee must maintain a street address in this state where personal 9 service of process may be made, and the trustee must maintain a10 physical presence and have telephone service at such address; and11 (7) That at least thirty days before notice of sale shall be12 recorded, transmitted or served, written notice of default shall be13 transmitted by the beneficiary or trustee to the borrower and grantor14 at their last known addresses by both first-class and either registered15 or certified mail, return receipt requested, and the beneficiary or16 trustee shall cause to be posted in a conspicuous place on the17 premises, a copy of the notice, or personally served on the borrower18 and grantor. This notice shall contain the following information:19 (a) A description of the property which is then subject to the deed20 of trust;21 (b) Each county in which the deed of trust is recorded and the22 document number given to the deed of trust upon recording by each23 county auditor or recording officer;24 (c) That the beneficiary has declared the borrower or grantor to be25 in default, and a concise statement of the default alleged;26 (d) An itemized account of the amount or amounts in arrears if the27 default alleged is failure to make payments;28 (e) An itemized account of all other specific charges, costs, or29 fees that the borrower, grantor, or any guarantor is or may be obliged30 to pay to reinstate the deed of trust before the recording of the31 notice of sale;32 (f) The total of (d) and (e) of this subsection, designated clearly33 and conspicuously as the amount necessary to reinstate the note and34 deed of trust before the recording of the notice of sale;35 (g) That failure to cure the alleged default within thirty days of36 the date of mailing of the notice, or if personally served, within37 thirty days of the date of personal service thereof, may lead to



1 recordation, transmittal, and publication of a notice of sale, and that 2 the property described in (a) of this subsection may be sold at public 3 auction at a date no less than one hundred twenty days in the future; 4 (h) That the effect of the recordation, transmittal, and 5 publication of a notice of sale will be to (i) increase the costs and 6 fees and (ii) publicize the default and advertise the grantor's 7 property for sale; 8 (i) That the effect of the sale of the grantor's property by the 9 trustee will be to deprive the grantor of all their interest in the10 property described in (a) of this subsection;11 (j) That the borrower, grantor, and any guarantor has recourse to12 the courts pursuant to RCW 61.24.130 to contest the alleged default on13 any proper ground; and14 (k)(i) That before the notice of sale is recorded, transmitted, or15 served, the trustee: (A) Has proof that the beneficiary is the actual16 holder of any promissory note or other obligation secured by the deed17 of trust; or (B) has possession of the original of any promissory note18 secured by the deed of trust with the proper endorsements so that the19 entity initiating the foreclosure sale has the authority to enforce the20 terms of the promissory note. In the event that an original of a21 promissory note is lost, a copy of any promissory note secured by the22 deed of trust and a notarized statement, made by the beneficiary under23 the penalty of perjury, that the original promissory note has been lost24 may be provided.25 (ii) Proof that the beneficiary is the actual holder of the26 promissory note or other obligation secured by the deed of trust must27 be made by way of an affidavit made by a person with personal knowledge28 of the physical location of the promissory note or other obligation.29 (l) In the event the property secured by the deed of trust is30 owner-occupied residential property, a statement, prominently set out31 at the beginning of the notice, which shall state as follows:32 "You should take care to protect your interest in your home. This33 notice of default (your failure to pay) is the first step in a process34 that could result in you losing your home. You should carefully review35 your options. For example:36 Can you pay and stop the foreclosure process?37 Do you dispute the failure to pay?38 Can you sell your property to preserve your equity?



1 Are you able to refinance this loan with a new loan from another 2 lender with payments, terms, and fees that are more affordable? 3 Do you qualify for any government or private homeowner assistance 4 programs? 5 Do you know if filing for bankruptcy is an option? What are the 6 pros and cons of doing so? 7 Do not ignore this notice; because if you do nothing, you could 8 lose your home at a foreclosure sale. (No foreclosure sale can be held 9 any sooner than ninety days after a notice of sale is issued and a10 notice of sale cannot be issued until thirty days after this notice.)11 Also, if you do nothing to pay what you owe, be careful of people who12 claim they can help you. There are many individuals and businesses13 that watch for the notices of sale in order to unfairly profit as a14 result of borrowers' distress.15 You may feel you need help understanding what to do. There are a16 number of professional resources available, including home loan17 counselors and attorneys, who may assist you. Many legal services are18 lower-cost or even free, depending on your ability to pay. If you19 desire legal help in understanding your options or handling this20 default, you may obtain a referral (at no charge) by contacting the21 county bar association in the county where your home is located. These22 legal referral services also provide information about lower-cost or23 free legal services for those who qualify. You may contact the24 Department of Financial Institutions, the Washington State Bar25 Association, or the Office of Civil Legal Aid for possible assistance26 or referrals."

27 Sec. 8. RCW 61.24.040 and 2008 c 153 s 3 are each amended to read28 as follows:29 A deed of trust foreclosed under this chapter shall be foreclosed30 as follows:31 (1) At least ninety days before the sale, the trustee shall:32 (a) Record a notice in the form described in ((RCW33 61.24.040(1)))(f) of this subsection in the office of the auditor in34 each county in which the deed of trust is recorded;35 (b) To the extent the trustee elects to foreclose its lien or36 interest, or the beneficiary elects to preserve its right to seek a37 deficiency judgment against a borrower or grantor under RCW



1 61.24.100(3)(a), and if their addresses are stated in a recorded 2 instrument evidencing their interest, lien, or claim of lien, or an 3 amendment thereto, or are otherwise known to the trustee, cause a copy 4 of the notice of sale described in ((RCW 61.24.040(1)))(f) of this 5 subsection to be transmitted by both first-class and either certified 6 or registered mail, return receipt requested, to the following persons 7 or their legal representatives, if any, at such address: 8 (i) The borrower and grantor; 9 (ii) The beneficiary of any deed of trust or mortgagee of any10 mortgage, or any person who has a lien or claim of lien against the11 prop

Documents

Stafne Trumbull LLC.dkt 30 Judical Notice of Legislative History.mickelson Case