H-2280.1          _______________________________________________

 

                            SUBSTITUTE HOUSE BILL 1717

                  _______________________________________________

 

State of Washington              52nd Legislature             1991 Regular Session

 

By House Committee on Financial Institutions & Insurance (originally sponsored by Representatives Mielke, Day, Tate, Dellwo, Moyer, Belcher, Wood, Padden, Zellinsky, Bowman, Paris, Morton, Anderson, Holland, Broback, Ferguson, Ballard, P. Johnson, Brumsickle, Betrozoff, Chandler, Fuhrman, Nealey, Casada, D. Sommers, Forner, Horn, Wineberry, Scott, Wang, Van Luven, Winsley, Wynne, Brough, Miller, May and Mitchell).

 

Read first time March 6, 1991.  Requiring disclosure of the right to cancel mortgage insurance.


     AN ACT Relating to mortgage insurance; amending RCW 19.148.020 and 19.148.030; and adding a new section to chapter 19.148 RCW.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

 

     NEW SECTION.  Sec. 1.  A new section is added to chapter 19.148 RCW to read as follows:

     (1) If private mortgage insurance or mortgage guaranty insurance is required as a condition of a loan closed on or after the effective date of this act, and there is no written agreement between the borrower and lender setting forth when such requirement ends, the lender shall notify the borrower in writing:

     (a) That the borrower should contact the loan servicing agent for the conditions that are required to be satisfied;

     (b) Of the procedures to be followed before such insurance may be considered for cancellation; and

     (c) Of the then most common loan to value ratio required before cancellation will be considered.

     (2) The notice required under this section shall be given to the borrower before or upon closing.  The notice shall be provided without cost to the borrower.

 

     Sec. 2.  RCW 19.148.020 and 1989 c 98 s 2 are each amended to read as follows:

     Unless the context requires otherwise, the definitions in this section apply throughout this chapter.

     (1) "Closing documents" means preliminary negotiations reduced to writing, estimated settlement charges, security instruments (e.g., mortgages and deeds of trust), promissory notes, riders to promissory notes and/or security instruments, and any other primary document required by the lender to effect the loan closing.  Incidental forms and statements promulgated by the lender to be executed at closing to complete loan approval shall not be determined closing documents for purposes of this definition.

     (2) "Lender" shall mean any person in the business of making a loan.

     (((2))) (3) "Loan" shall mean any loan used to finance the acquisition of a one-to-four family owner occupied residence located in this state.

     (((3))) (4) "Purchasing servicing agent" is any person who purchases, receives through transfer or assignment, or otherwise acquires the responsibility of the servicing for a loan.

     (((4))) (5) "Person" shall include an individual, firm, association, partnership, business, trust, corporation, or any other legal entity whether resident or nonresident.

 

     Sec. 3.  RCW 19.148.030 and 1989 c 98 s 3 are each amended to read as follows:

     (1) If the servicing for the loan is subject to sale, transfer, or assignment, a lender shall so disclose in writing at the time of or prior to loan closing and shall also disclose in the same writing that when such servicing is sold, transferred, or assigned, the purchasing servicing agent is required to provide notification to the mortgagor.  If a lender, which has not provided the notice required by this subsection, consolidates with, merges with or is acquired by another institution, and thereafter loan servicing becomes subject to sale, transfer, or assignment, that institution shall within thirty days of such transaction make the disclosure in writing to the obligor primarily responsible for repaying each loan according to the records of the lender.

     (2) If the servicing of a loan is sold, assigned, transferred, or otherwise acquired by another person, the purchasing servicing agent shall:

     (a)(i) Issue corrected coupon or payment books, if used and necessary;

     (ii) Provide notification to the mortgagor at least thirty days prior to the due date of the first payment to the purchasing servicing agent, of the name, address, and telephone number of the division from whom the mortgagor can receive information regarding the servicing of the loan; and

     (iii) Inform the mortgagor of changes made regarding the servicing requirements including, but not limited to, interest rate, monthly payment amount, and escrow balance; and

     (b) Respond within fifteen business days upon receipt of a written request for information from a mortgagor.  A written response must include the telephone number of the company division who can assist the mortgagor.

     (3) Upon timely request of a loan applicant, a lender shall provide copies of closing documents to the applicant at least twenty-four hours prior to loan closing.  Each lender must advise a loan applicant at the time of application that the applicant has the right to request and receive copies of closing documents or document forms prior to loan closing.

     (4) Any person injured by a violation of this chapter may bring an action for actual damages and reasonable attorneys' fees and costs incurred in bringing the action.