Washington overwhelmingly uses the deed of trust as its primary security instrument. The three-party structure enables non-judicial foreclosure:
This structure enables non-judicial foreclosure (RCW Chapter 61.24) — faster and less expensive than judicial foreclosure.
1. Borrower defaults on the loan 2. Lender records a Notice of Default and serves it on the borrower and other parties with recorded interests 3. 30-day cure period: Borrower can reinstate the loan by paying all arrears, fees, and costs 4. If not cured: Trustee records and serves a Notice of Trustee's Sale at least 90 days before the sale 5. Foreclosure Fairness Act (FFA): For owner-occupied residential property, lenders must notify borrowers of their right to mediation before completing non-judicial foreclosure 6. Reinstatement right: Borrower may reinstate up to 11 days before the trustee's sale date 7. The sale: Public auction; trustee's deed issued to winning bidder
After non-judicial foreclosure on a deed of trust secured by a borrower's residence, the lender is generally prohibited from pursuing a deficiency judgment against the borrower under RCW 61.24.100. If the property sells for less than the loan balance, the lender absorbs the loss. This is a major consumer protection that distinguishes non-judicial from judicial foreclosure in Washington.
Judicial foreclosure is also available for deeds of trust (and for mortgages) but is rarely used because it is slower and more expensive. Judicial foreclosure CAN result in a deficiency judgment AND creates a redemption right for the borrower (up to 8 months for residential property under RCW 61.12.093; up to 12 months in limited circumstances such as abandonment).
Washington's Foreclosure Fairness Act requires lenders initiating non-judicial foreclosure on owner-occupied residential property to notify borrowers of their right to request mediation. In mediation, the borrower and lender (with a trained mediator) explore alternatives: loan modification, repayment plans, short sales, or deeds in lieu of foreclosure. The lender must participate in good faith; failure to comply can delay or invalidate the foreclosure.
Real-world example: A Tacoma homeowner misses 4 mortgage payments. The lender records a Notice of Default. The homeowner has 30 days to bring the loan current (pay all missed payments plus fees). She cannot cure within 30 days. The lender then records a Notice of Trustee's Sale set for 90 days out — but first must notify her of FFA mediation rights. She requests mediation and meets with the lender and mediator. The lender offers a loan modification; she accepts. The foreclosure is cancelled.
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Quiz Questions:
Q1. In Washington's non-judicial foreclosure process, how many days' notice is required before the scheduled trustee's sale?
A) 30 days B) 60 days C) 90 days D) 120 days
Answer: C — The Notice of Trustee's Sale must be recorded and served at least 90 days before the scheduled sale. This is a distinct period from the 30-day cure period following the Notice of Default.
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Q2. A Washington lender completes a non-judicial foreclosure on a borrower's primary residence. The sale produces $270,000 in proceeds, but the outstanding loan balance is $305,000. Can the lender sue the borrower for the $35,000 shortfall?
A) Yes, lenders can always pursue deficiency judgments after any foreclosure B) Yes, but only within 6 months of the trustee's sale C) No, Washington's anti-deficiency rule prohibits deficiency judgments after non-judicial foreclosure on a borrower's residence D) No, unless the lender gave proper notice and the borrower waived anti-deficiency rights in the loan documents
Answer: C — RCW 61.24.100 prohibits deficiency judgments following non-judicial foreclosure on a borrower's residence. This is a significant consumer protection that is a frequently tested Washington-specific rule. The lender's only recovery is the sale proceeds.
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Q3. A Washington borrower facing non-judicial foreclosure wants to reinstate their loan at the last possible moment. What is the deadline?
A) The day before the scheduled sale B) 11 days before the scheduled trustee's sale C) 30 days before the scheduled sale D) Anytime before the trustee's deed is recorded
Answer: B — Washington law allows the borrower to reinstate the loan (pay all arrears, fees, and costs) up to 11 days before the trustee's sale date. After that 11-day window, reinstatement is no longer available; the borrower's only option is to pay off the full loan balance or negotiate with the lender.
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Q4. The Foreclosure Fairness Act (FFA) requires Washington lenders to:
A) Reduce interest rates for all borrowers in default by at least 2% B) Notify borrowers of the right to mediation before completing non-judicial foreclosure on owner-occupied residential property C) Wait 180 days after the first missed payment before initiating foreclosure D) Offer at least three loan modification options before proceeding with any foreclosure
Answer: B — The FFA requires lenders initiating non-judicial foreclosure on owner-occupied residential property to notify borrowers of their right to request mediation. Mediation gives borrowers an opportunity to explore alternatives with the lender in a structured setting. The lender must participate in good faith, but is not required to agree to any particular modification.
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Q5. A Washington lender decides to pursue judicial foreclosure instead of non-judicial foreclosure on a deed of trust. Which of the following is true about judicial foreclosure that is NOT true about non-judicial foreclosure?
A) Judicial foreclosure is faster and less expensive than non-judicial foreclosure B) Judicial foreclosure creates a redemption period of up to 8 months for residential property and allows the lender to pursue a deficiency judgment C) Judicial foreclosure is unavailable in Washington for deeds of trust D) Judicial foreclosure eliminates the borrower's right to cure the default
Answer: B — Judicial foreclosure is available for deeds of trust in Washington (though rarely used). Unlike non-judicial foreclosure, judicial foreclosure can result in a deficiency judgment AND creates a statutory redemption period (up to 8 months for residential property, up to 12 months in cases of abandonment). The tradeoff is that judicial foreclosure is slower and more expensive.