S-2235               _______________________________________________

 

                                         SUBSTITUTE SENATE BILL NO. 5790

                        _______________________________________________

 

State of Washington                               51st Legislature                              1989 Regular Session

 

By Senate Committee on Financial Institutions & Insurance (originally sponsored by Senators von Reichbauer, Fleming, Johnson, McCaslin and McMullen)

 

 

Read first time 2/27/89.

 

 


AN ACT Relating to residential mortgage loans; adding a new chapter to Title 19 RCW; and providing an effective date.

 

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

 

          NEW SECTION.  Sec. 1.     The ability of individuals to obtain information relating to their residential mortgage loans is vital to the financial needs of mortgagors in Washington.  The public interest is adversely affected when a residential mortgage loan's servicing is sold or transferred with insufficient notification given to the mortgagor.  In addition, mortgagors may experience difficulty in obtaining various mortgage loan information including information concerning mortgage loan prepayments, reserve accounts, and adjustments to monthly payments.  The legislature finds that the legitimate interests of mortgagors and mortgage loan servicers are served if the disclosure of the potential sale of loan servicing is made to the mortgagor, reasonable notification of a residential mortgage loan servicing's sale is made, and continued mortgagor access to information regarding the mortgage loan is promoted.

 

          NEW SECTION.  Sec. 2.     Unless the context requires otherwise, the definitions in this section apply throughout this chapter.

          (1) "Lender" shall include any corporation organized under Title 30, 31, 32, or 33 RCW or any other person making a loan or advance of credit.

          (2) "Loan or advance of credit" shall be any loan or advance of credit used to finance a one-to-four family owner occupied residence located in this state.

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

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

 

          NEW SECTION.  Sec. 3.     (1) A lender shall disclose at the time of loan closing whether or not the servicing for the loan is subject to sale, transfer, or assignment.  If the loan servicing is subject to sale, transfer, or assignment, the lender shall provide a written and oral disclosure of this fact prior to the loan's closing.  If the ownership or control changes for a lender which has not provided the notice required by this chapter, the new lender shall provide the notice within thirty days of the consummation of the change in control or ownership.

          (2) If the servicing of a loan or advance of credit is sold, assigned, transferred, or otherwise acquired by another person the purchasing lender 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 lender, 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 any changes made regarding the mortgage escrow accounts or 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) 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.

 

          NEW SECTION.  Sec. 4.     Sections 1 through 3 of this act shall constitute a new chapter in Title 19 RCW.

 

          NEW SECTION.  Sec. 5.     This act shall take effect on January 1, 1990.