S-4362               _______________________________________________

                                                   SENATE BILL NO. 6634

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State of Washington                              50th Legislature                              1988 Regular Session

By Senator McCaslin

Read first time 1/28/88 and referred to Committee on Financial Institutions & Insurance.

AN ACT Relating to real property; amending RCW 61.12.050, 61.12.070, and 61.24.100; and creating a new section.

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

        Sec. 1.  Section 409, page 207, Laws of 1854 as last amended by section 610, Code of 1881 and RCW 61.12.050 are each amended to read as follows:

(1) When there is no express agreement in the mortgage nor any separate instrument given for the payment of the sum secured thereby, the remedy of the mortgagee shall be confined to the property mortgaged.

(2) Subsection (1) of this section notwithstanding, when the indebtedness for which the mortgage is security is based on an inflated appraisal, the remedy of the mortgagee shall be confined to the mortgaged property and no action may be commenced on the underlying note or other evidence of indebtedness.  As used in this subsection, "inflated appraisal" means an appraisal above the actual fair market value of the mortgaged property at the time of the appraisal.

        Sec. 2.  Section 411, page 208, Laws of 1854 as last amended by section 4, chapter 196, Laws of 1961 and RCW 61.12.070 are each amended to read as follows:

          When there is an express agreement for the payment of the sum of money secured contained in the mortgage or any separate instrument, the court shall direct in the decree of foreclosure that the balance due on the mortgage, and costs which may remain unsatisfied after the sale of the mortgaged premises, shall be satisfied from any property of the mortgage debtor:  PROVIDED, ((HOWEVER)), That:

(1) In all cases where the mortgagee or other owner of such mortgage has expressly waived any right to a deficiency judgment in the complaint, as provided by RCW 6.23.020, there shall be no such judgment for deficiency, and the remedy of the mortgagee or other owner of the mortgage shall be confined to the sale of the property mortgaged; and

(2) If the indebtedness for which the mortgage is security is based on an inflated appraisal, as defined in RCW 61.12.050, there shall be no such judgment for deficiency, and the remedy of the  mortgagee or other owner of the mortgage shall be confined to a sale of the property mortgaged.

        Sec. 3.  Section 10, chapter 74, Laws of 1965 and RCW 61.24.100 are each amended to read as follows:

          Foreclosure, as in this chapter provided, shall satisfy the obligation secured by the deed of trust foreclosed, regardless of the sale price or fair value, and no deficiency decree or other judgment shall thereafter be obtained on such obligation.  Where foreclosure is not made under this chapter, the beneficiary shall not be precluded from enforcing the security as a mortgage nor from enforcing the obligation by any means provided by law:  PROVIDED, That when the obligation for which a deed of trust is security is based on an inflated appraisal, the beneficiary shall be precluded from enforcing the obligation and shall be confined to foreclosure under this chapter or enforcing the security as a mortgage.  As used in this section, "inflated appraisal" means an appraisal above the actual fair market value of the property at the time of the appraisal.

NEW SECTION. Sec. 4.     This act applies to mortgages and deeds of trust executed after the effective date of this section.