SENATE BILL REPORT

EHB 2606

BYRepresentatives Ferguson, Beck, Haugen, Ballard, Jones, Chandler, Nutley, Winsley, Anderson, Miller, Van Luven, Holland, Nealey, Fuhrman, Forner, Raiter, Wolfe, Doty, Wood, Cooper, Tate, Youngsman, Zellinsky, D. Sommers, Nelson, Sayan, Wineberry, K. Wilson, Phillips, Belcher, Dorn, Day, Crane, Baugher, Wang, Dellwo, Jacobsen, Rector, Kremen, Padden, Smith, Horn, Betrozoff, Moyer, Scott, Bowman, Hankins and Schoon

Requiring disclosure of the right to cancel mortgage insurance.

House Committe on Financial Institutions & Insurance

Senate Committee on Financial Institutions & Insurance

Senate Hearing Date(s):February 23, 1990

Majority Report:  Do pass.

      Signed by Senators von Reichbauer, Chairman; Johnson, Vice Chairman; Fleming, McCaslin, Rasmussen, Sellar, West.

Senate Staff:Benson Porter (786-7470)

                  February 23, 1990

AS REPORTED BY COMMITTEE ON FINANCIAL INSTITUTIONS & INSURANCE, FEBRUARY 23, 1990

BACKGROUND:

When a borrower seeks a home mortgage loan, the lender requires the borrower to meet certain financial standards. These standards include a requirement that the borrower be able to make a downpayment for a certain percentage of the purchase price of the home.  This percentage can vary from 0 to 10 percent depending upon the type of mortgage loan being granted.  Until the borrower's equity in the home reaches a certain percentage (e.g. 20-25 percent), the borrower may be required to pay for mortgage insurance that protects the lender from borrower default on the loan.  Some loan programs permit the borrower to cancel the mortgage insurance when the borrower's equity reaches the required level.

SUMMARY:

If mortgage insurance is required for a residential mortgage loan, the lender must advise the borrower whether or not the borrower has the right to cancel the mortgage insurance.  If the borrower has such a right, the lender must provide written notification at loan closing time of the procedures and conditions that must be met by the borrower to cancel the insurance.

Upon request of a loan applicant, a lender shall provide copies of all closing documents to the applicant at least 24 hours prior to loan closing.  Each lender must advise a loan applicant at the time of application that the applicant has the right to request and receive copies of closing documents prior to loan closing.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Senate Committee - Testified: Scott Jarvis, Insurance Department; Basil Badley, AIA; Clark Sitzes, Independent Agents