S-3681.1  _______________________________________________

                         SENATE BILL 6623

          _______________________________________________

State of Washington   57th Legislature        2002 Regular Session

By Senators Gardner and Winsley

Read first time 01/23/2002.  Referred to Committee on Labor, Commerce & Financial Institutions.

Creating a task force to study consumer mortgage lending issues.

    AN ACT Relating to a task force to study mortgage lending; creating a new section; and providing an expiration date.

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

NEW SECTION. Sec. 1.  (1) The legislature finds that many consumers may not be eligible for home loans under traditional standards used by banks and they may borrow from subprime lenders at terms that are disadvantageous to them and are not justified by the slight increase in risk they might represent to a lender.  The legislature further finds that some of the problems with subprime and predatory lending in the mortgage lending market include:  High-interest rate loans; excessive closing costs and fees; prepayment penalties; single-premium credit insurance; negative amortization and balloon payments; steering and using bait and switch tactics; financing of fees; making loans based only upon the equity in the property and not the ability to pay; servicing loans in a deceptive manner; and failing to include payment of homeowners' insurance and property taxes without telling the borrower.

    (2) To review methods for removing unnecessary and unfair burdens from borrowers in the home mortgage market, a legislative joint task force shall review and make recommendations for legislation.  Issues that should be reviewed include:  (a) The adequacy of notice requirements; (b) methods to encourage greater participation by prime lenders in low and moderate-income mortgage lending; (c) the application of a suitability standard in residential mortgage loans; (d) the use of residential mortgage foreclosure by subprime lenders; (e) methods of improving compliance with lenders' responsibilities under state and federal law; and (f) any other issues considered relevant by the task force.

    (3) The joint task force shall consist of eight members, two  members from each caucus of the senate labor, commerce, and financial institutions committee, appointed by the chair of the committee, and two members from each caucus of the house of representatives financial institutions and insurance committee, appointed by the chair of the committee.  In addition, the department of financial institutions shall cooperate with the task force and maintain a liaison with the task force.  The task force shall choose its chair or cochairs from among its membership.

    (4) The task force shall report its findings and recommendations to the appropriate committees of the legislature by December 1, 2002.

    (5) This section expires June 1, 2003.

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