Bill Funds Legal Representation, Expands Mediation Program and Establishes New Funding Model to Help Homeowners Avoid Foreclosure
OLYMPIA, WA – May 20, 2025 As foreclosure rates continue to climb nationwide and surge 54% in Washington state over the past year, Governor Bob Ferguson today signed into law E2SSB 5686, significantly expanding the Foreclosure Fairness Act and funding the state’s foreclosure mediation program to help homeowners avoid losing their homes.
“The alarming 54% spike in our state’s foreclosure rates shows that low-income families across Washington are facing severe economic hardship and urgently need support to keep their homes,” said Abigail Daquiz, Executive Director of Northwest Justice Project (NJP), which is the only statewide legal aid organization providing no-cost representation to homeowners facing foreclosure. “This bill will be a lifeline for struggling families in these rough economic times.”
The bill includes a new, sustainable funding source to provide crucial resources for legal representation of homeowners. The funding is directed to the Office of Civil Legal Aid, which funds NJP’s Foreclosure Prevention Unit. Last year alone, NJP prevented 222 foreclosures, saving $50.12 million in equity for homeowners. NJP’s legal expertise and knowledge of client challenges helped inform this novel solution for fairness in foreclosure.
Senator Tina Orwall (D-33rd District), who has championed housing justice since 2011, was the bill’s lead sponsor. “This legislation represents our commitment to keeping Washington families in their homes during challenging economic times,” Senator Orwall said. “By expanding our foreclosure mediation program and creating sustainable funding, we’re providing real tools and resources to help homeowners navigate financial difficulties before foreclosure becomes inevitable. This proactive approach will strengthen communities from Burien to Kent and across our state.”
Strong coalition backs comprehensive approach
The broad coalition supporting the legislation included realtors, bankers, the Department of Commerce, and the National Consumer Law Center, and bipartisan legislators, among others.
The bill establishes a new funding mechanism through an $80 foreclosure prevention fee assessed on each residential mortgage loan at closing (excluding reverse mortgages for seniors over 61), which operates alongside the existing $250 fee that mortgage lenders pay after issuing a notice of default.
The bill also extends the existing foreclosure mediation program to include unit owners in condominiums and homeowner associations who are delinquent on their assessments, allowing them to access housing counseling and mediation services starting January 1, 2026.
“At a time of rising need, this bill modernizes our foreclosure mediation system, and will bring clarity, fairness and increased accessibility for struggling borrowers,” said Meredith Bruch, Statewide Advocacy Counsel with NJP, who led the Foreclosure Prevention Unit from 2021 to 2024. “It represents an inspiring example of diverse stakeholders coming together to develop creative solutions during times of crisis.”
The legislation comes at a critical time as national foreclosure data shows concerning trends. In April 2025, the U.S. housing market saw 36,033 properties with foreclosure filings—up 13.9% from a year ago. Foreclosure starts jumped 16.1% year-over-year, while completed foreclosures increased 23.3% annually. Washington state has been particularly hard hit, with foreclosure rates up 54% from one year ago.
The bill takes effect 90 days after the end of the legislative session, with key provisions beginning January 1, 2026.