Consumer Loan Act.
The Consumer Loan Act (Act) authorizes the Department of Financial Institutions to regulate consumer loan companies who conduct business in Washington. Consumer loan companies include mortgage lenders and consumer finance companies. Under the Act, no person may engage in the business of making a secured or unsecured loan without a license, except for exempt entities. Residential mortgage loans are regulated under the Act and are considered loans primarily for personal, family, or household use that are secured by a mortgage, deed of trust, or other consensual security interest on a dwelling, as defined in the Truth in Lending Act, or residential real estate upon which a dwelling is, or is intended to be, constructed. The Act limits the rates and fees lenders may charge on loans, restricts certain loan provisions such as prepayment penalties, requires lenders to fully disclose loan terms, and prohibits lenders from engaging in unfair and deceptive acts and practices.
Under the Act, loan means a sum of money lent at interest, for a fee, or other charge, and includes both open-end and closed-end loan transactions. A lender may charge:
Licensees are prohibited from engaging in specified practices, including fraud, deception, failure to disclose, unfair business practices, and other acts that might adversely affect consumers or thwart the regulatory process. Violations of the Act constitute unfair or deceptive acts or practices and are violations of the Consumer Protection Act.
Home equity sharing agreement is defined as any obligation in which an advance sum of money or other thing of value is extended to a borrower in exchange for an interest or future share of equity in the real estate that is the borrower's primary dwelling at the time or a future obligation to pay a sum upon the occurrence of an agreed upon event. Home equity sharing agreements are added as residential mortgage loans under the Consumer Loan Act.