H-98                 _______________________________________________

                                                    HOUSE BILL NO. 903

                        _______________________________________________

State of Washington                              49th Legislature                              1985 Regular Session

By Representatives Sanders and Vekich

Read first time 2/8/85 and referred to Committee on Financial Institutions & Insurance.

AN ACT Relating to financial institutions; and amending RCW 30.04.505 and 30.04.510.

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

        Sec. 1.  Section 11, chapter 301, Laws of 1977 ex. sess. and RCW 30.04.505 are each amended to read as follows:

          As used in RCW 30.04.505 through 30.04.515:

          (1) "Financial institution" means any bank or trust company, mutual savings bank, credit union, mortgage company, or savings and loan association which operates or has a place of business in this state whether regulated by the state or federal government.

          (2) "Particular type of loan" refers to a class of loans which is substantially similar with respect to the following:

          (a) FHA, VA, or conventional as defined in RCW 19.106.030(2);

          (b) Uniform or nonuniform payment;

          (c) Uniform or nonuniform rate of interest;

          (d) Purpose; and

          (e) The location of the real estate offered as security for the loan as being inside or outside of that financial institution's lending area.

          (3) "Varying the terms of a loan" includes, but is not limited to the following practices:

          (a) Requiring a greater down payment than is usual for the particular type of a loan involved;

          (b) Requiring a shorter period of amortization than is usual for the particular type of loan involved;

          (c) Charging a higher interest rate than is usual for the particular type of loan involved;

          (d) A deliberate underappraisal of the value of the property offered as security;

(e) Requiring property taxes to be paid directly to the financial institution,  except that this subparagraph does not apply to loans insured by the federal housing authority or loans made by the Washington state housing finance commission.

        Sec. 2.  Section 12, chapter 301, Laws of 1977 ex. sess. and RCW 30.04.510 are each amended to read as follows:

          Subject to RCW 30.04.515, it shall be unlawful for any financial institution, in processing any application for a loan to be secured by a single-family residence to:

          (1) Deny or vary the terms of a loan on the basis that a specific parcel of real estate offered as security is located in a specific geographical area, unless building, remodeling, or continued habitation in such specific geographical area is prohibited or restricted by any local, state, or federal law or rules or regulations promulgated thereunder.

          (2) Utilize lending standards that have no economic basis. (3) Deny a loan because borrower does not choose to exercise an option to pay property tax assessments directly to the financial institution, except that this subsection does not apply to loans insured by the federal housing authority or loans made by the Washington state housing finance commission.