_______________________________________________
HOUSE
BILL 1188
_______________________________________________
Passed
Legislature - 1995 Regular Session
State of Washington 54th
Legislature 1995 Regular Session
By
Read first time 01/17/95.
Referred to Committee on Financial Institutions & Insurance.
Concerning the loan
security ratio.
AN ACT
Relating to loan-to-value ratios and examination periods; and amending RCW
31.04.125 and 31.04.145.
BE IT ENACTED BY THE LEGISLATURE
OF THE STATE OF WASHINGTON:
Sec.
1. RCW
31.04.125 and 1991 c 208 s 13 are each amended to read as follows:
(1) No
licensee may make a loan with a repayment period greater than six years and
fifteen days after the loan origination date except for open-end loans or loans
secured by real estate or personal property used as a residence.
(2) No
licensee may make a loan using any method of calculating interest other than
the simple interest method; except that the add-on method of calculating
interest may be used for a loan not secured by real property or personal
property used as a residence when the repayment period does not exceed three
years and fifteen days after the loan origination date.
(3) ((No
licensee may make a loan secured by real estate in an amount in excess of
ninety percent of the value of such real estate and improvements, including all
prior liens against the property.
(4))) No
licensee may make a loan using the add-on method to calculate interest that
does not provide for a refund to the borrower or a credit to the borrower's
account of any unearned interest when the loan is repaid before the original
maturity date in full by cash, by a new loan, by refinancing, or otherwise
before the final due date. The refund must be calculated using the actuarial
method, unless a sum equal to two or more installments has been prepaid and the
account is not in arrears and continues to be paid ahead, in which case the
interest on the account must be recalculated by the simple interest method with
the refund of unearned interest made as if the loan had been made using the
simple interest method. When computing an actuarial refund, the lender may
round the annual rate used to the nearest quarter of one percent.
In
computing a required refund of unearned interest, a prepayment made on or
before the fifteenth day after the scheduled payment date is deemed to have
been made on the payment date preceding the prepayment. In the case of
prepayment before the first installment due date, the company may retain an
amount not to exceed one-thirtieth of the first month's interest charge for
each day between the origination date of the loan and the actual date of
prepayment.
(((5)))
(4) No licensee may provide credit life or disability insurance in an
amount greater than that required to pay off the total balance owing on the
date of the borrower's death net of refunds in the case of credit life
insurance, or all minimum payments that become due on the loan during the
covered period of disability in the case of credit disability insurance. The
lender may not require any such insurance.
(((6)))
(5) Except in the case of loans by mail, where the borrower has
sufficient time to review papers before returning them, no licensee may prepare
loan papers in advance of the loan closing without having reviewed with the
borrower the terms and conditions of the loan to include the type and amount of
insurance, if any, requested by the borrower.
Sec.
2. RCW
31.04.145 and 1994 c 92 s 169 are each amended to read as follows:
For
the purpose of discovering violations of this chapter or securing information
lawfully required under this chapter, the director may at any time, either
personally or by a designee, investigate the loans and business and examine,
wherever located, the books, accounts, records, and files used in the business
of every licensee and of every person who is engaged in the business described
in RCW 31.04.035, whether the person acts or claims to act as principal or
agent, or under or without the authority of this chapter. For that purpose the
director and designated representative shall have free access to the offices
and places of business, books, accounts, papers, records, files, safes, and
vaults of all such persons. The director and persons designated by the
director may require the attendance of and examine under oath all persons whose
testimony may be required about the loans or the business or the subject matter
of any investigation, examination, or hearing. The director shall make such an
examination of the affairs, business, office, and records of each licensee ((at
least once each eighteen months)) as determined by rule. The
licensee so examined shall pay to the director the actual cost of examining and
supervising each licensed place of business.
