H-0796.1 _______________________________________________
HOUSE BILL 1874
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State of Washington 52nd Legislature 1991 Regular Session
By Representatives Braddock, Ebersole, Dellwo, Cole, Belcher, Spanel, Sprenkle and Anderson.
Read first time February 13, 1991. Referred to Committee on Financial Institutions & Insurance.
AN ACT Relating to interest on mortgage impound accounts; and adding a new chapter to Title 19 RCW.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1. Lenders earn significant interest from funds of mortgage customers held in impound accounts for the purpose of paying taxes, insurance, and other obligations of the mortgage customer in relation to residential mortgage loans. It is the intent of the legislature to require lenders to allow their mortgage customers to choose how the interest on mortgage impound accounts should be spent.
NEW SECTION. Sec. 2. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.
(1) "Lender" means any person doing business under the laws of this state or the United States relating to banks, bank holding companies, mutual savings banks, trust companies, savings and loan associations, credit unions, consumer finance companies, industrial loan companies, insurance companies, or real estate investment trusts as defined in 26 U.S.C. Sec. 856, and the affiliates, subsidiaries, and service corporations thereof.
(2) "Residential mortgage loan" means any loan primarily for personal, family, or household use secured by a mortgage or deed of trust on residential real estate upon which is constructed or intended to be constructed a single-family dwelling or multiple-family dwelling of four or fewer units.
NEW SECTION. Sec. 3. (1) Lenders shall provide, to all persons acquiring a residential mortgage loan, written notification that the interest earned on any impound account created in conjunction with the loan will be distributed in one of the following ways, at the option of the mortgage customer:
(a) Paid to the mortgage customer in a lump sum annually;
(b) Applied to the loan principal; or
(c) Retained by the lender.
(2) The lender's costs for administration of the impound account are limited to an amount equal to costs charged to holders of passbook savings accounts.
NEW SECTION. Sec. 4. Sections 1 through 3 of this act shall constitute a new chapter in Title 19 RCW.