Washington recently passed Senate Bill 5686 (“S.B. 5686”) to expand foreclosure requirements under the Mortgage Broker Practices Act and Consumer Loan Act. The bill includes several key provisions that are intended to help homeowners facing potential foreclosure.
S.B. 5686 adds a new section to chapter 61.24 RCW that requires all residential mortgage loans closed on or after the effective date of July 27, 2025, to include a “foreclosure prevention fee” of $80. The fee is required to be assessed on any residential mortgage loan taken on a property located within Washington state, except for reverse mortgage loans issued to seniors over the age of 61. An escrow agent, or other settlement or closing agent processing a residential mortgage loan, must deposit the $80 fee into the state’s new Foreclosure Fairness Account, which supports the state’s Foreclosure Fairness Program.
The Washington Department of Commerce has issued guidance that provides a grace period until August 17, 2025, for the collection of the foreclosure prevention fee. The grace period applies to residential mortgage loans applied for prior to the July 27, 2025, effective date. Until the end of the grace period, instances of non-compliance with the fee requirement will not be referred to the department for enforcement.
The guidance states that the extension is meant to “ensure all residential mortgage loans currently being processed do not have delayed closings due to the lack of disclosure, payment, or collection and remittance of the Foreclosure Prevention Fee.”
The escrow agent, or other settlement or closing agent, is also required to provide borrowers with a notice of the foreclosure prevention fee and description of its purpose, at or before the time the foreclosure prevention fee is assessed. To meet this requirement, DocMagic has the new disclosure, “Foreclosure Fairness Act (FFA) Disclosure – Foreclosure Prevention Fee” (Form ID: WAFFAD.MSC), available on the Forms List for use. Clients may request to have the disclosure added to additional package types upon request.
To view the Foreclosure Prevention Fee Guidance and Frequently Asked Questions (FAQs) for the Foreclosure Prevention Fee, click here for the Resources section.