With Support From Ballard Spahr, a Win for Lenders and Borrowers Alike at Washington Supreme Court

Ballard Spahr represented the Community Bankers of Washington (CBW) in supporting a successful motion for reconsideration of the Washington Supreme Court’s published decision in Vargas v. RRA CP Opportunity Trust 1, et al. The Washington Supreme Court’s order withdrawing the Vargas decision is significant for commercial and residential lenders doing business in Washington State.

Ballard Spahr Bankruptcy, Creditors' Rights, and Restructuring Partner Gregory R. Fox and Commercial Litigation and Dispute Resolution Partner Rachel Constantino-Wallace wrote an amicus brief filed on behalf of CBW, the Washington Bankers Association (WBA), and GoWest Credit Union Association (GoWest). The amicus brief supported reconsideration of the Washington Supreme Court’s April 2026 ruling in Vargas, which deprived Washington State lenders of the right to nonjudicially foreclose real estate loans, except on the rare occasion when such a loan is evidenced by a negotiable instrument.

The amicus brief notes that the decision would hurt borrowers, as well as lenders, since nonjudicial foreclosure presents several advantages to borrowers compared to the judicial process. The now-withdrawn Vargas decision would have had a negative impact on the Washington residential and commercial lending market, by increasing the costs and risks of all types of residential and commercial loans, resulting in higher priced loans and the withdrawal of certain loan products altogether.

The Washington Supreme Court withdrew its decision in its entirety on September 4, for further review and later decision, paving the way for lenders to proceed cautiously with nonjudicial foreclosures pending a dispositive outcome of the case.

The Ballard Spahr team would like to thank CBW for leading the amicus effort, and for the contributions of WBA and GoWest to the amicus brief. For further information on the April 2026 Vargas v. RRA CP Opportunity Trust 1, et al. decision, please see this alert.

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