Washington State Law Regulating Foreclosure Rescue Signed Into Law

In Washington State, The Peninsula Gateway reports:

• It’s going to become more difficult to scam Washington homeowners with unscrupulous foreclosure rescue schemes. Gov. Chris Gregoire signed into law Tuesday a bill that will protect those at risk of foreclosure from being duped into signing their homes over to third parties.

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• House Bill 2791 cracks down on so-called “foreclosure rescue scams,” in which a third party claiming to act in the homeowner’s best interest offers to buy the home that is in danger of being foreclosed upon. They allow homeowners to lease their homes back, with the idea that they can re-purchase the home when their financial situations improve.

• “Instead, the lease terms are as out of reach as the original mortgage, and the homeowner ends up defaulting on them,” [state representative Pat] Lantz said. The bill will require all contracts in writing, allow a five-day right of cancellation for the homeowner that cannot be waived, and give those who peddle foreclosure rescue services a fiduciary duty. That means they are required by law to act in the best interest of the homeowner, and if they do not, they can be sued for up to triple the damages under the new law.

The effective date of the new law is June 12, 2008. For more, see Governor signs bill to help families.

For the statute, see HB 2791 - 2007-08 Concerning distressed property conveyances (bill history) (full text of passed legislation).