WSBA Alternative Dispute Resolution

Promoting Informed Use and Best Practices for ADR in Washington

Those of you following this discussion group may have been aware that a huge issue for the mediation community is to provide immunity from civil liability for foreclosure mediators. The obligation the FFA places on mediators to certify whether the parties participated in good faith made this imperative.

All mediator organizations - the ADR Section, WMA and ResWA - have been working on that and other issues of interest to mediators and are working to to make the mediation process more efficient and effective for all participants.  

The ADR Section took the extraordinary step of formally adopting a legislative position proposing specific language to amend the FFA to provide immunity for all foreclosure mediators. 

Representatives of ResWA, WMA and the ADR Section have been involved in an all-stakeholder work group that has been convened to address techinical fixes as amendments to the FFA. This group includes dozens of representatives from financial institutions, servicers, trustees, housing counselors, homeowner advocates, and the Department of Commerce. It was monitored by staff from the Treasurer's office and both chambers of the legislature as well.

In the course of the work group's discussions, all stakeholders unanimously consented, not only that immunity for all foreclosure mediators was  imperative, but that it should be adopted on an emergency basis. The ADR Section's language regarding immunity was adopted as the consensus language of the work group.

Accordingly, a bill was introduced during the current special legislative session that in its original form provided immunity for all foreclosure mediators. It also removed the requirement that the parties sign the waiver form. See SSB 5988. The ADR Section's language regarding immunity provided the language of the original bill as introduced.

The bill was amended earlier this week. The amendment restricted the immunity to apply only to DRC mediators. As amended, other mediators - judges, housing counselors, lawyers - have no statutory immunity under this bill. Today the bill passed both chambers with that amendment. It is expected to be signed by the Governor and when she does, being enacted on an emergency basis, it will come into effect and become law immediately.

Today at the meeting of all stakeholders in the technical fix work group we received assurances from all that we will continue to address the urgent need for all foreclosure mediators to be protected and be immune from civil liability for providing this important public service.

I personally am cautiously optimistic that this work group will, as part of its addressing all technical issues for consideration in the 2012 Regular Session, again unanimously recommend that all foreclosure mediators be immune from civil liability. However, any such immunity is not likely to become effective, at best, for several months.

Tags: FFA, Immunity, Legislature

Views: 185

Replies to This Discussion

I've mistated the extent of the immunity in SSB 5988. Like the immunity in the DRC enabling statute, RCW 7.75.100, it provides immunity only to a foreclosure mediator who is "an employee or volunteer" of a DRC. 

Query: Why not seek to remove the section that says foreclosure meditations are not covered by the Uniform Meditations Act? It's a much easier sell to legislators to say this needs to fall into the general mediation scheme of things than to seek specific releases from potential liability. The later raises suspicions. The former "promotes uniformity".

Good work, Jeff, and thanks for the report! Any idea how soon the Governor will sign the bill?

Selden, I appreciate the sentiment, but I'm afraid I don't agree. I'm extremely disappointed with this outcome.

A double-standard has been created where different standards of liability are imposed depending on who the mediator is. I am very concerned about the consequences to the mediation program resulting from this development. I have no indication that the legislature is aware what it has done. We did not get a chance to explain.

I am encouraged by the stakeholder process, and believe that we have a really good shot at coming to some very well-crafted consensus solutions making a positive improvements. I'm even more encouraged that it would include a single standard of immunity for all foreclosure mediators. But now having had this experience with what the legislature did this last week to the stakeholders' work, I am very concerned with what it may do to what we develop for introduction in the next session.

The governor has 20 days to sign from end of the session, which may have been today. My guess is it will be signed this week or early next.

Well, I understand, Jeff, your concerns about the double standard. Without having witnessed this process, I just felt that it was a good start and I hope the legislation will be expanded to cover all mediators. But you are right that it is an odd and disconcerting concept to have two different standards of liability. Anyway, again, thanks for the report.

Selden, my apologies. You offered a compliment and encouragement and I used it to vent my discouragement and frustration. You deserved better. Instead, let me say in response, and heartfelt this time, "Thank You."

Not a bad description, but being able to do foreclosure mediations isn't exactly what I'd call candy. It's something I thought I could do to help as a public service. But now, I can't.

The legislature has now stated as public policy that lawyers acting as foreclosure mediators are not immune from liability. My stopgap mediation agreement is worthless. I can't expose myself and my family to this financial risk. I'm returning my cases to Commerce and accepting no referrals until the situation is fixed.

I'm afraid there is little time for relaxing this holiday. The situation, bad before, is now worse. Not only have we failed to make it easier for lawyers to provide this important public service, the legislature has now made it harder. If we want a different result from the 2012 Regular Session, we'll have to do something different, and do it before the start of the session.

I too am optimistic that this issue of immunity will be re-addressed by the work group and the legislature in the upcoming regular session.  Perhaps it is because I'm generally optimistic that reason will prevail.  Not knowing  the rationale behind the amendment makes it difficult to assess any chance of success in getting the newly amended act changed.  In the interim, despite the fact that the bill has not been signed and enacted into law, it is a legislative pronouncement on the policy of the State of Washington.  There is little doubt that the policy will be enacted by law.  That policy is that private mediators who are not volunteers or employees of a Dispute Resolution Center are liable under theories of common negligence for findings that are required to be made under the Act.  Those findings go beyond the traditional role of a mediator, are required by public policy under the act, and have significant legal consequences for the parties affecting their pecuniary rights.  Such findings made on behalf of the state are generally considered a quasi-judicial function and are, as under the act, subject to judicial review.  Such decision making authority  is usually bestowed with a statutory immunity on the individual making such decision.  Under the Fairness Foreclose Act as amended the legislature has decided to bestow such immunity on only some of the mediators, depending on the entity through which they mediate, and then only if they are a volunteer or employee of such  entity.

I know that the issue of the liability of a mediator has arisen in several of the cases processed under the act.  I also know that some mediators have requested the parties to sign agreements that waive any claims against the mediator.  I doubt that such agreements have adequate consideration and are enforceable.  I know some of the parties to those agreements agree with that assessment.

Some of those who are mediating these case have a low tolerance for the issue of liability.  Others have a higher tolerance.  Regardless of one's tolerance to the issue of liability, it is difficult to accept a statutory provision that provides that immunity for liability for making a finding under the act is something that is given to some who make the findings but not others.  And for those who think that a contract will bestow sufficient immunity from liability, I would suggest that you re-think that position.

Nicely put, Paul.

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