S-0668.1  _______________________________________________

                         SENATE BILL 5279

          _______________________________________________

State of Washington      54th Legislature     1995 Regular Session

By Senators Prentice, Roach, Prince, Spanel, Hale, Heavey, Kohl, Sellar and C. Anderson

Read first time 01/18/95.  Referred to Committee on Financial Institutions & Housing.

Authorizing fees for certain small loans.

    AN ACT Relating to fees for making small loans; and amending RCW 31.04.005 and 31.04.105.

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

    Sec. 1.  RCW 31.04.005 and 1991 c 208 s 1 are each amended to read as follows:

    The legislature finds that borrowers who represent a higher than average credit risk are unable to obtain credit except at interest rates higher than permitted under other statutory provisions governing interest rates for loans.  Further, the legislature finds that borrowers with limited access to credit have difficulty in obtaining short-term cash to meet emergency needs.  Therefore, it is the purpose of this chapter to authorize higher interest rates and fees for certain types of loans, subject to the conditions and limitations contained in this chapter in order to ensure credit availability.

    Sec. 2.  RCW 31.04.105 and 1994 c 92 s 167 are each amended to read as follows:

    Every licensee may:

    (1) Lend money at a rate that does not exceed twenty-five percent per annum as determined by the simple interest method of calculating interest owed;

    (2) In connection with the making of a loan, charge the borrower a nonrefundable, prepaid, loan origination fee not to exceed fifteen dollars per hundred dollars up to five hundred dollars of principal, and, for loans of five hundred dollars or more, four percent of the first twenty thousand dollars and two percent thereafter of the principal amount of the loan advanced to or for the direct benefit of the borrower, which fee may be included in the principal balance of the loan;

    (3) Agree with the borrower for the payment of fees for title insurance, appraisals, recording, reconveyance, and releasing when such fees are actually paid by the licensee to a third party for such services or purposes and may include such fees in the amount of the loan.  However, no charge may be collected unless a loan is made, except for reasonable fees properly incurred in connection with the appraisal of property by a qualified, independent, professional, third-party appraiser selected by the borrower and approved by the lender or in the absence of borrower selection, selected by the lender;

    (4) Charge and collect a penalty of ten cents or less on each dollar of any installment payment delinquent ten days or more;

    (5) Collect from the debtor reasonable attorneys' fees, actual expenses, and costs incurred in connection with the collection of a delinquent debt, a repossession, or a foreclosure when a debt is referred for collection to an attorney who is not a salaried employee of the licensee;

    (6) Make open-end loans as provided in this chapter;

    (7) Charge and collect a fee for dishonored checks in an amount approved by the director; and

    (8) In accordance with Title 48 RCW, sell insurance covering real and personal property, covering the life or disability or both of the borrower, and covering the involuntary unemployment of the borrower.

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