Two kinds of borrowers skip it entirely, and the start date is almost here
Washington's new law adds an $80 foreclosure prevention fee to most home loans tied to state property, and closing agents must collect it.
The change comes from Substitute Senate Bill 5938, which Gov. Bob Ferguson signed on March 23, 2026. It amends RCW 61.24.157, the statute behind Washington's foreclosure prevention fee, and takes effect June 11, 2026. The bill cleared both chambers comfortably, passing the Senate on March 9 and the House on March 3 before heading to the governor's desk.
The mechanics are simple. For every residential mortgage loan connected to Washington property - whether the loan starts inside or outside the state - an $80 foreclosure prevention fee is assessed at closing. The escrow or settlement agent processing the loan collects it and pays it into the state's foreclosure fairness account. The fee can be financed into the loan and paid from the loan proceeds, so it does not have to come out of the borrower's pocket at the table.
Two exemptions are spelled out. Reverse mortgage loans made to anyone 60 or older are exempt, as are chattel loans or retail installment contracts to buy a dwelling secured as personal property. Those carve-outs narrow the universe of loans the fee touches, but the vast majority of standard residential mortgages still fall squarely within it.
A narrower rule covers buyers using state housing programs. If someone buys residential property of up to four units and finances any part of it through programs under chapter 43.185A RCW, the covenant homeownership program under chapter 43.181 RCW, or a homeownership program run by the Washington State Housing Finance Commission under chapter 43.180 RCW, the fee can only be collected on the first lien loan. In practice, that prevents the fee from stacking across multiple liens on those program-backed purchases.
Compliance teams should note the disclosure rules. The fee must be disclosed under federal and state law, but it may be left out of the finance charge calculation. Before the fee is assessed, the closing agent has to give the borrower a notice explaining the fee and its purpose. The state will create a notice form agents can use, and it must include the toll-free numbers for the statewide foreclosure hotline recommended by the housing finance commission.
The bill also gives the department broad discretion to set collection policies, strike individual remittance agreements, and adopt enforcement rules.
For mortgage professionals, the to-do list is clear. Fold the $80 fee into closing workflows, update disclosures, flag the exempt loans, and have the borrower notice ready before June 11.
