Washington Foreclosure Mediation vs. Selling: Which Is Right for You

The Foreclosure Fairness Act put mediation in RCW 61.24.163. A housing counselor or an attorney has to refer you. You cannot sign yourself up. For a deed of trust, the referral comes after a notice of default and no later than 90 days before the sale date. An amended notice after a stay under RCW 61.24.130 can use a 25-day window. If you missed it, you and the beneficiary may still agree to mediate. Nobody has to.

RCW 61.24.165 covers residential property of up to four units, with exclusions for some commercial loans, seller-financed sales, and company-owned property. RCW 61.24.166 lets some smaller banks certify out. A counselor decides whether you can be referred. KindKey will not. Commerce runs the program and publishes a free line at 1-877-894-HOME (4663). Use the number on your notice if it differs.

The meeting covers reinstatement, a modification, a restructure, or another workout. Someone with authority to settle is supposed to be available for the beneficiary, and the statute requires good faith. If you were referred before the notice of sale was recorded, the trustee generally may not record it until mediation is done. If you were referred after, the sale generally waits for the mediator’s certification. That is not a promise of terms you can afford.

A mediator’s fee can apply. The statute caps the basic fee for a one-to-three hour session and splits it, unless it is waived or you agree otherwise. KindKey does not collect it. Mediation does not erase the debt. If there is no agreement, the beneficiary may go forward after the certification. Reinstatement under RCW 61.24.090 is still a payment to the trustee before the eleventh day before the sale.

A sale is a different tool. These loans are usually foreclosed without a lawsuit under chapter 61.24 RCW. The notice of default comes at least 30 days before a notice of sale, and the form describes a minimum of 120 days’ notice of the auction. RCW 61.24.040 records that notice at least 90 days before the sale, or 120 days before it if an RCW 61.24.031 letter was required. People call that the roughly 120-day timeline. If the referral window has closed, the lender is exempt, mediation ended with no deal, or you do not want to keep the house, a sale is still on the table.

Selling is also the comparison when you need equity out rather than a new payment. Equity is what remains after the payoff and other liens. If the price falls short, the lender has to agree, and there may be no check. A trustee’s sale deprives the owner of the interest in the property. Selling before that date is how owners try to pay the loan, keep what is left, and avoid a completed foreclosure on a credit report. KindKey cannot promise a score. An offer does not replace a counselor if you want to keep the house.

Ask for a cash offer while you are still in counseling. The two talks do not cancel each other. KindKey looks at the house as it is and does not charge an agent commission or a separate assignment fee. If you accept, you see a settlement statement before you deed the house away. We work fast to close before a sale date, and we do not promise a particular day or postpone the trustee by writing an offer. If a listing might net more and your attorney thinks it can finish, hire a broker.

RCW 61.34 is the distressed-property law, and KindKey does not interpret it. Do not deed the house away outside escrow. Take the notice, the counselor’s notes, and any offer to your attorney, then decide. The Auburn, Federal Way, Edgewood, and Milton guides, and the Kent page, cover local sales. You are allowed to keep the house or to sell it. Both are legitimate.