BILL REQ. #:  H-0798.3 

Read first time 01/19/11.   Referred to Committee on Business & Financial Services.

     AN ACT Relating to flood insurance; and adding a new chapter to Title 19 RCW.

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

NEW SECTION.  Sec. 1   (1) For the purposes of this section:     
     (a) "Residential mortgage loan" means an extension of credit secured by residential real property located in this state upon which is constructed a single-family dwelling or multiple-family dwelling of four or less units.
     (b) "Lender" means any person or entity loaning money for the purpose of making a residential mortgage loan. "Lender" includes financial institutions as defined in RCW 30.22.041, consumer loan companies subject to regulation under chapter 31.04 RCW, and mortgage brokers and lenders subject to regulation under chapter 19.146 RCW.
     (2) A lender that purchases or otherwise receives a residential mortgage loan from another lender may not require a homeowner to purchase flood insurance in connection with that residential mortgage loan unless:
     (a) The original lender required flood coverage;
     (b) The determination by the original lender to not require flood insurance was incorrect at the time the loan was made and flood coverage was required by federal law based on federal emergency management agency maps in order for the original loan to be made; or
     (c) The federal emergency management agency has reclassified the area where the home is located and the flood insurance is now required by federal law based on federal emergency management agency maps in order for a residential mortgage loan for a home in that locale.
     (3) If a county, city, or town makes a determination regarding the location of the property and the classification of the flood risk of that property, a lender is required to use that determination for the purposes of determining whether or not flood insurance was required under subsection (2)(a) of this section or is required under subsection (2)(b) of this section.

NEW SECTION.  Sec. 2   The legislature finds that the practices covered by section 1 of this act are matters vitally affecting the public interest for the purpose of applying the consumer protection act, chapter 19.86 RCW. A violation of section 1 of this act is not reasonable in relation to the development and preservation of business and is an unfair or deceptive act in trade or commerce and an unfair method of competition for the purpose of applying the consumer protection act, chapter 19.86 RCW.

NEW SECTION.  Sec. 3   Sections 1 and 2 of this act constitute a new chapter in Title 19 RCW.

NEW SECTION.  Sec. 4   If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is also invalid.