Foreclosure Fairness Act

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As of July 22, Washington state’s new foreclosure mediation program, established by the Foreclosure Fairness Act (FFA), provides a mechanism for borrowers facing foreclosure to pursue modified loan agreements with the help of a professional advocate and a neutral mediator. For beneficiaries, trustees and their agents, the mediation program is an opportunity to further explore alternatives to foreclosure, but it also establishes additional requirements that must be fulfilled before a foreclosure can be completed.

Under Washington’s Deeds of Trust Act (RCW 61.24, et seq.), which governs nonjudicial foreclosures, the beneficiary or its authorized agent must send the borrower an initial contact letter at least 30 days before issuing a notice of default. Under the FFA amendments, this letter must now inform the borrower that if he or she responds within 30 days, he or she will have an additional 60 days to meet with the lender before a notice of default is issued. This letter must also advise the borrower of the right to contact an approved housing counselor or an attorney.

Significantly, borrowers cannot institute the mediation process on their own. If the housing counselor or attorney determines that mediation is appropriate and no notice of sale has been recorded, he or she may send a request for mediation to the state Department of Commerce. Within 10 days of the request, the department will notify the beneficiary, borrower, trustee and referring counselor or attorney of the selected mediator and the documents and information they must provide in advance of the mediation. Once the mediator is selected, mediation must occur within 45 days, unless the parties agree upon a later date. Before the mediation, the homeowner must provide a financial statement and future income information, debts and obligations, and the past two years’ tax returns. The beneficiary must provide the loan balance, an itemized list of fees and charges, payment history and other requested documents.

The goal of mediation is to avoid foreclosure by reaching a mutually satisfactory agreement. This may include reinstatement, modification of the loan, restructuring of the debt or some other workout plan. The parties must consider the borrower’s current and future income, debts and financial obligations, as well as the net present value of receiving modified payments compared to the anticipated net recovery following foreclosure. They must also consider any loan modification and net present value calculations required under the Home Affordable Modification Program or other applicable federal mortgage relief programs. Within seven business days of the mediation, the mediator must certify that mediation occurred. The certification must include basic information (e.g., time, date and place of mediation), as well as whether the parties mediated in good faith, the conclusion reached and a description of the net present value test used.

Participants in the mediation program must mediate in good faith, and a violation of this requirement may give the homeowner a defense to the foreclosure action. Violations of this duty include failure to timely participate, provide required information, or to designate a representative with sufficient authority to negotiate on the beneficiary’s behalf. A mediator’s certification that the net present value of a modified loan exceeds the anticipated net recovery from a foreclosure also provides a defense to the foreclosure. However, if the borrower defaults on a modification agreement, the beneficiary’s lack of good faith is no longer a defense. If the parties do not come to a new agreement, the existing loan agreement remains in place. Once the trustee receives a certification that the mediation has been completed, it may record a notice of sale.

It remains to be seen how effective the mediation program will be in promoting modified loan agreements that work for both parties. What is certain is that borrowers, beneficiaries, trustees and the attorneys who represent them must adapt to the program’s impact on the nonjudicial foreclosure process and related litigation.

JOHN S. DEVLIN is a shareholder at Lane Powell, chair of the firm’s Mortgage and Consumer Finance Litigation Industry Team, and a member of the Securities Class Action and Financial Institutions Practice Groups. He can be reached at devlinj@lanepowell.com or 206.223.6280.

ANDREW G. YATES  is an attorney at Lane Powell and a member of the firm’s Mortgage and Consumer Finance Litigation Industry Team and Financial Institutions Practice Group. He can be reached at yatesa@lanepowell.com or 206.223.7034.

The 2016 Washington Manufacturing Awards: Legacy Award

The 2016 Washington Manufacturing Awards: Legacy Award

Winner: Belshaw Adamatic Bakery Group
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Legacy Award
Belshaw Adamatic Bakery Group
Auburn › belshaw-adamatic.com
When it’s time to make doughnuts — or loaves of bread, or sheets of rolls — it could well be a Belshaw Adamatic piece of equipment that’s turning out the baked goods. From a 120,000-square-foot plant in Auburn, Belshaw Adamatic produces the ovens, fryers, conveyors and specialty equipment like jelly injectors used by wholesale and retail bakeries.
 
The firm’s two legacy companies — Belshaw started in 1923, Adamatic in 1962 — combined forces in 2007. Italy’s Ali Group North America is the parent.
 
It it takes work to maintain a legacy. A months-long strike in 2013 damaged morale and forced a leadership change. Frank Chandler was named president and CEO of Belshaw Adamatic in September 2013. The company has since strived to mend workplace relationships while also introducing a stream of new products, such as a convection oven, the BX Eco-touch, with energy saving features and steam injection that can be programmed for precise times in baking. The company energetically describes it as “an oven that saves time, reduces errors, makes an awesome product, and is fun to use and depend on every day!”
 
So far, more than 3,000 have been installed in quick-service restaurants, bakeries, cafés and supermarkets in the United States. They are the legacy of Thomas and Walter Belshaw, former builders of marine engines, who began producing patented manual and automated doughnut-making machines in Seattle 90 years ago. They sold thousands worldwide and, today, Belshaw Adamatic is the nation’s largest maker and distributor of doughnut-making equipment.