SENATE BILL REPORT

SB 6515

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

As Reported by Senate Committee On:

Financial Institutions, Housing & Insurance, February 1, 2012

Title: An act relating to the rescission of a trustee's foreclosure sale.

Brief Description: Concerning the rescission of a trustee's foreclosure sale.

Sponsors: Senators Kline, Hobbs, Kastama, Fain, Litzow and Harper.

Brief History:

Committee Activity: Financial Institutions, Housing & Insurance: 2/01/12 [DPS].

SENATE COMMITTEE ON FINANCIAL INSTITUTIONS, HOUSING & INSURANCE

Majority Report: That Substitute Senate Bill No. 6515 be substituted therefor, and the substitute bill do pass.

Signed by Senators Hobbs, Chair; Prentice, Vice Chair; Benton, Ranking Minority Member; Fain and Haugen.

Staff: Alison Mendiola (786-7483)

Background: Under the Deeds of Trust statute, the following may be trustees:

Under the Deeds of Trust statute, the trustee's deed conveys all of the right, title and interest in the real and personal property sold at the trustee's sale which the grantor had or had the power to convey at the time of the execution of the deed of trust. If a trustee accepts a bid, the trustee's sale is final if it is recorded within 15 days. After a trustee's sale, there is no right by statute or otherwise, to redeem the property sold at the trustee's sale.

Summary of Bill: The bill as referred to committee not considered.

Summary of Bill (Recommended Substitute): A domestic limited liability corporation incorporated under specific statutes may be a trustee under the Deeds of Trust Act.

Up to 11 days following the trustee's sale, the trustee, beneficiary, or agent for the beneficiary may declare the trustee's sale and trustee's deed void for the following reasons:

The trustee is to refund the bid amount together with interest to the purchaser.

No later than 15 days following the voided trustee's sale, the trustee is to send a notice, as proscribed by statute, to all parties entitled to the notice.

If the rescission is based on an erroneous bid amount or an agreement to postpone the sale, the trustee may set a new sale date at least 45 days following the mailing of the notice of rescission of trustee's sale. The trustee is to:

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: PRO: This bill helps when a home that is in foreclosure is sold in error. There may have been an error on the bid price, the borrower could be involved in loss mitigation, and the borrower could have reinstated the loan. Some changes are needed, but this bill is supported.

Persons Testifying: PRO: Brian Sommer, Routh, Crabtree, and Olsen; Bruce Neas, Columbia Legal Services; and Denny Eliason, WA Bankers Assn., United Financial Lobby.