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                                           ENGROSSED HOUSE BILL NO. 2606

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State of Washington                               51st Legislature                              1990 Regular Session

By Representatives 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

Read first time 1/17/90 and referred to Committee on Financial Institutions & Insurance.

AN ACT Relating to mortgage insurance; amending RCW 19.148.020 and 19.148.030; and adding a new section to chapter 19.148 RCW.

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

NEW SECTION. Sec. 1.  A new section is added to chapter 19.148 RCW to read as follows:

          (1) If private mortgage insurance or mortgage guaranty insurance is required as a condition of a loan, the lender shall notify the borrower whether or not the borrower has the right to cancel the insurance.  If the borrower has the right to cancel, then the lender shall notify the borrower in writing of the following:

          (a) Any identifying loan or insurance information necessary to permit the borrower to communicate with the insurer or the lender concerning the insurance;

          (b) The conditions that are required to be satisfied before the mortgage insurance may be subject to cancellation; and

          (c) The procedure the borrower is required to follow to cancel the private mortgage insurance or mortgage guaranty insurance.

          (2) The notice required under this section shall be given to the borrower upon close of escrow or as soon thereafter as the lender knows or should know the requirements for cancellation of the private mortgage insurance or mortgage guaranty insurance.  The notice shall be provided without cost to the borrower.

        Sec. 2.  Section 2, chapter 98, Laws of 1989 and RCW 19.148.020 are each amended to read as follows:

          Unless the context requires otherwise, the definitions in this section apply throughout this chapter.

          (1) "Closing documents" means preliminary negotiations reduced to writing, estimated settlement charges, deeds or deed forms, promissory notes, final loan contracts, and any other document necessary for completion of the loan transaction.

(2) "Lender" shall mean any person in the business of making a loan.

          (((2))) (3) "Loan" shall mean any loan used to finance the acquisition of a one-to-four family owner occupied residence located in this state.

          (((3))) (4) "Purchasing servicing agent" is any person who purchases, receives through transfer or assignment, or otherwise acquires the responsibility of the servicing for a loan.

          (((4))) (5) "Person" shall include an individual, firm, association, partnership, business, trust, corporation, or any other legal entity whether resident or nonresident.

        Sec. 3.  Section 3, chapter 98, Laws of 1989 and RCW 19.148.030 are each amended to read as follows:

          (1) If the servicing for the loan is subject to sale, transfer, or assignment, a lender shall so disclose in writing at the time of or prior to loan closing and shall also disclose in the same writing that when such servicing is sold, transferred, or assigned, the purchasing servicing agent is required to provide notification to the mortgagor.  If a lender, which has not provided the notice required by this subsection, consolidates with, merges with or is acquired by another institution, and thereafter loan servicing becomes subject to sale, transfer, or assignment, that institution shall within thirty days of such transaction make the disclosure in writing to the obligor primarily responsible for repaying each loan according to the records of the lender.

          (2) If the servicing of a loan is sold, assigned, transferred, or otherwise acquired by another person, the purchasing servicing agent shall:

          (a)(i) Issue corrected coupon or payment books, if used and necessary;

          (ii) Provide notification to the mortgagor at least thirty days prior to the due date of the first payment to the purchasing servicing agent, of the name, address, and telephone number of the division from whom the mortgagor can receive information regarding the servicing of the loan; and

          (iii) Inform the mortgagor of changes made regarding the servicing requirements including, but not limited to, interest rate, monthly payment amount, and escrow balance; and

          (b) Respond within fifteen business days upon receipt of a written request for information from a mortgagor.  A written response must include the telephone number of the company division who can assist the mortgagor.

          (3) Upon request of a loan applicant, a lender shall provide copies of all closing documents to the applicant at least twenty-four 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.

(4) Any person injured by a violation of this chapter may bring an action for actual damages and reasonable attorneys' fees and costs incurred in bringing the action.