» Washington Implements New $80 Foreclosure Prevention Fee on Residential Loans

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Washington Implements New $80 Foreclosure Prevention Fee on Residential Loans

August 4, 2025

Washington State has enacted new legislation—Senate Bill 5686—that introduces a mandatory $80 Foreclosure Prevention Fee on most residential mortgage loans. The measure is designed to expand funding for the state’s Foreclosure Fairness Program, which provides critical resources to homeowners facing financial hardship or risk of foreclosure.

1.What You Need to Know

Starting July 27, 2025, an $80 fee must be assessed on residential mortgage loans for properties located in Washington. This requirement applies to purchase transactions, assumption loans, and non-delegated correspondent loans. The only exception is for reverse mortgage loans issued to borrowers over the age of 61. The fee must be disclosed in Section E of both the Loan Estimate and Closing Disclosure. It may be financed in the loan amount, paid from the loan proceeds, or paid by the borrower in cash at closing. Settlement agents are responsible for collecting and remitting the fee to the state’s newly established Foreclosure Fairness Account. They are also required to provide borrowers with a separate Foreclosure Prevention Fee Disclosure that outlines the purpose of the fee.

2.Temporary Grace Period

To help ease implementation, the Washington Department of Commerce has announced a grace period that extends through August 17, 2025. During this time, loans that were applied for prior to the July 27, 2025, effective date will not be referred to the Department for enforcement if the foreclosure prevention fee is not collected. This grace period is intended to avoid delays in loan closings due to disclosure or collection issues during the transition period. Lenders and brokers should use this time to ensure processes are updated and stakeholders are aligned.

3.Action Items for Lenders and Brokers

While no immediate action is required for brokers, it is important to begin working with settlement agents and document preparation providers to ensure compliance by the effective date. You’ll want to confirm that disclosures are updated, closing packages are aligned with the new requirements, and settlement teams are prepared to collect and remit the fee properly. This is also a good time to communicate internally with your teams so everyone is aware of the changes and understands how the grace period impacts loans currently in process.

We’ll continue to track additional guidance and keep you informed. If you have questions or need support updating your internal processes, feel free to reach out, we’re here to help.