Foreclosure Mediation in Transition: Key Changes for Attorneys and Community Mediators

BY PAULA EMERY AND JODY LEFF

Housing Stability Outlook in Washington

Washington continues to face significant challenges in housing stability, shaped by rising housing costs, limited affordable housing supply, and lingering financial strain on homeowners and unit owners following the pandemic years. Foreclosure filings, while not at the peaks seen during the Great Recession, have been gradually increasing in recent years, particularly among households with limited financial resilience. At the same time, homeowners’ associations and condominium boards are reporting higher delinquency rates on assessments, which has created additional risk of foreclosure for unit owners.

The Legislature’s updates to the Foreclosure Fairness Program through Senate Bill 5686¹1 Washington State Legislature, Senate Bill 5686 (2025), full bill text and history at https://app.leg.wa.gov/BillSummary/?BillNumber=5686%20&Year=2025&Initiative=false. earlier this year reflect recognition of these pressures. By expanding mediation access to unit owners, refining timelines for communication and resolution, and securing a more stable funding stream, the program is positioned to prevent unnecessary foreclosures and promote negotiated solutions. Over the next three years, these changes are expected to help stabilize housing by offering homeowners and unit owners structured opportunities to explore repayment plans, loan modifications, and other alternatives to foreclosure in a neutral setting.

For the legal and dispute resolution communities, this means a likely increase in referrals, as well as a need for continued collaboration with housing counselors, legal aid providers, and community mediators. The program will not resolve broader issues of housing affordability on its own, but it provides a critical tool to mitigate foreclosure’s destabilizing effects on families and neighborhoods. In doing so, it supports both individual stability and the wider goal of preserving community well-being across Washington.

Updated Legislation

Senate Bill (SB) 5686, passed in the 69th Legislature (2025) and signed by the governor, makes significant revisions to Washington’s Foreclosure Mediation Program, including expanding eligibility, establishing a new funding mechanism, refining processes and timelines, enhancing transparency and resources, and has staggered effective dates, many of which began July 27, 2025, with others being phased in through Jan. 1, 2028. The legislation’s stated intent is to expand access to and permanently fund Washington’s foreclosure/foreclosure-mediation system and explicitly extend it to unit owners delinquent on association assessments.

National and statewide data indicate that there is a large and growing population of homeowners living in community associations. The Community Association Institute indicates that there are roughly 10,850community associations in Washington and nearly 1 million homes in those associations.²2 Community Associations Institute (CAI), Washington State Fact Book (2023–24)
Statistics on community associations and homes in Washington available through CAI Foundation for Community Association Research, available at www.caionline.org/advocacy/washington-legislative-resources/. 

The Foreclosure Fairness Program provides homeowner foreclosure assistance through free housing counseling, civil legal aid, and foreclosure mediation. The program, created by the 2011 Foreclosure Fairness Act, helps homeowners and lenders explore possible alternatives to foreclosure and reach a resolution whenever possible. Before initiating foreclosure, the Act requires lenders to notify homeowners of the availability of foreclosure counseling and the potential for mediation and to participate in mediation with homeowners referred to the Mediation Program.

-Washington State Department of Commerce³3 Washington State Department of Commerce, Foreclosure Fairness Program. Program description, resources, and reporting obligations available at www.commerce.wa.gov/homeownership/foreclosure-fairness/. 

Expansion of Mediation Eligibility

SB 5686 extends mediation access beyond homeowners to unit owners whose property is included within a common interest community (CIC), such as condominiums who are delinquent, or at risk of delinquency, on association assessments. This means individuals facing potential foreclosure due to unpaid common-interest community fees now have access to foreclosure mediation, a notable broadening of relief. 

This change in the law has implications for attorneys representing homeowners and CICs, including informing clients of potential foreclosure actions from unpaid assessments, even when there is no delinquency in mortgage payments. Washington’s HOA lien foreclosure statutes (RCW 64.38 for HOAs; RCW 64.34 for condos⁴4 RCW 64.38 (Homeowners’ Associations Act) and RCW 64.34 (Washington Condominium Act).) do allow foreclosure of unpaid assessments.⁵5 See Summerhill Vill. Homeowners Ass’n v. Roughley, 166 Wn. App. 625, 289 P.3d 645 (2012). (Example of an HOA foreclosure litigation. Confirms enforceability of HOA lien foreclosure for unpaid assessments.) Mediators should be ready to facilitate discussions between unit owners and their associations, focusing on payment plans, assessments adjustments, or reinstatement agreements.

Funding Through a New Foreclosure Prevention Fee

This law establishes an $80 fee on each residential mortgage loan origination, collected by the escrow or closing agent and deposited into the Foreclosure Fairness Account (FFA).⁶6 Office of Financial Management (OFM) Fiscal Notes, SB 5686 (2025). Revenue estimate: approx. $7.12 million annually from $80 foreclosure prevention fee (based on approx. 89,000 annual loan originations). Information available through the bill’s fiscal note page: OFM Fiscal Notes. Reverse mortgages for seniors (62 years and older) are exempt.

Meet-and-Confer Process and Mediation Logistics

SB 5686 refines existing procedures and timelines such that a notice of delinquency must be mailed to a unit owner within 30 days of an assessment becoming past due. Further, meet-and-confer sessions between the unit owner and association must occur, but associations do have to wait 15 days post-notice before taking further action. There is a prohibition during mediation: If a unit owner has been referred to mediation, the association cannot proceed with foreclosure until mediation concludes. 

Remote mediation and meet-and-confer sessions are allowed under the law. Unit owners must provide proof of payments not reflected in records, hardship statements, and any proposed payment plan. 

Reporting & Transparency Enhancements

The Washington State Department of Commerce must report to appropriate legislative committees (not just Senate Housing) with expanded data on:

• Number of unit owners referred and involved in mediations.
• Failures to mediate in good faith and reasons.
• Numbers of delinquent assessments restructured or modified.
• Changes in assessment payments and reductions in penalties or interest.
• Recurrence of delinquency within a year of restructuring.

Commerce must also make information on CIC (common interest communities) foreclosures publicly available online, including translated notices and guidance. This replaces the prior mandate for a separate resource center. 

Staggered Effective Dates & Expirations

• Effective July 27, 2025: Core expansions, fee establishment, and general procedural changes go into effect.
• Jan. 1, 2026: Sections 1–4 and 11–14 (likely definitions and CIC-specific additions) become effective. 
• Jan. 1, 2028: Sections 5–7 take effect, and some provisions will expire on Jan. 1, 2028—creating a sunset for certain components. 

This statute provides an opportunity for attorney mediators and community mediators to engage in cross-sector collaboration, aligning with housing counselors, the Office of the Attorney General, and legal aid to serve clients comprehensively. To ensure seamless integration and uphold high mediation standards, consider taking these steps:

1. Review the full text of SB 5686 and summary documents. 
2. Update mediation protocols, intake forms, and templates to reflect new timelines, document requirements, and remote options.
3. Partner with housing counselors and legal aid organizations to manage referral flows, especially for CIC-related cases.
4. Host or attend training webinars focused on CIC foreclosure mediation, procedural changes, and documentation practices.
5. Educate potentially interested parties, including unit owners and associations, about mediation rights, timelines, and the moratorium during mediation.
6. Monitor Commerce reports to assess trends and outcomes—use data to improve service delivery and advocate for ongoing support.

In summary, SB 5686 marks a pivotal enhancement of Washington’s foreclosure mediation system, strengthening both its reach and resources. For the many professional practitioners contributing to this caseload, staying ahead of these changes means evolving practices to serve a broader client base, complying with updated processes, leveraging new resources, and reinforcing the role of mediation as a vital tool in community and homeowner stability. Bill history may be found by visiting https://app.leg.wa.gov/billsummary/ and searching “5686.” Additional information about the program from the Washington State Department of Commerce can be found at www.commerce.wa.gov/homeownership/foreclosure-fairness. 

NOTES

1. Washington State Legislature, Senate Bill 5686 (2025), full bill text and history at https://app.leg.wa.gov/BillSummary/?BillNumber=5686%20&Year=2025&Initiative=false. 

2. Community Associations Institute (CAI), Washington State Fact Book (2023–24)
Statistics on community associations and homes in Washington available through CAI Foundation for Community Association Research, available at www.caionline.org/advocacy/washington-legislative-resources/. 

3. Washington State Department of Commerce, Foreclosure Fairness Program. Program description, resources, and reporting obligations available at www.commerce.wa.gov/homeownership/foreclosure-fairness/. 

4. RCW 64.38 (Homeowners’ Associations Act) and RCW 64.34 (Washington Condominium Act).

5. See Summerhill Vill. Homeowners Ass’n v. Roughley, 166 Wn. App. 625, 289 P.3d 645 (2012). (Example of an HOA foreclosure litigation. Confirms enforceability of HOA lien foreclosure for unpaid assessments.)

6. Office of Financial Management (OFM) Fiscal Notes, SB 5686 (2025). Revenue estimate: approx. $7.12 million annually from $80 foreclosure prevention fee (based on approx. 89,000 annual loan originations). Information available through the bill’s fiscal note page: OFM Fiscal Notes. 

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