H-3432.1 _______________________________________________
HOUSE BILL 2697
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State of Washington 56th Legislature 2000 Regular Session
By Representatives Benson and McDonald
Read first time 01/18/2000. Referred to Committee on Financial Institutions & Insurance.
AN ACT Relating to payment of interest on mortgage escrow accounts; 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) Beginning January 1, 2001, every lender who collects funds under a residential real estate loan agreement for deposit in a mortgage escrow account shall pay interest to the borrower at a rate not less than the discount rate. Interest shall be computed on the average monthly balance in the escrow account and shall be paid by crediting the escrow account the amount due at least quarterly.
(2) The discount rate shall be adjusted semiannually. These adjustments shall be calculated on May 15th and November 15th each year. Adjustments calculated on May 15th shall take effect on the following July 1st, and adjustments calculated on November 15th shall take effect on the following January 1st.
NEW SECTION. Sec. 2. For purposes of this chapter, unless the context clearly requires otherwise:
(1) "Discount rate" means the auction average rate on three-month United States treasury bills, as established by the most recent auction of such treasury bills, as reported by the federal reserve, less one hundred basis points for reasonable expenses incurred by the lender or servicer. The discount rate shall be determined with reference to the most recent auction date before May 15th and November 15th each year, beginning November 15, 2000.
(2) "Residential real estate loan" means a loan secured by a first mortgage, deed of trust, real estate contract, or other first lien on the borrower's interest in a one-to-four family dwelling located in this state, including an individual cooperative unit, or a loan for the construction of the dwelling.
(3) "Lender" means any individual, corporation, association, partnership, or trust doing business under the laws of this state or the United States as mortgage servicers, banks, bank holding companies, mutual savings banks, trust companies, savings and loan associations, credit unions, consumer finance companies, investment companies, insurance companies, mortgage companies, mortgage servicing companies, pension funds, or real estate investment trusts, and affiliates, subsidiaries, and service corporations thereof.
(4) "Mortgage escrow account" means an account created in conjunction with a residential real estate loan that is intended for the placement of funds, on an incremental basis, for the purpose of paying property taxes, hazard insurance, or other obligations of the residential real estate loan customer in relation to the residential real estate loan.
NEW SECTION. Sec. 3. This chapter applies to all mortgage escrow accounts existing on January 1, 2001, and all accounts created on or after January 1, 2001, except for mortgage escrow accounts where payment of interest on these accounts specifically violates federal law or regulation. For instance, if federal law or regulation does not specifically prohibit the payment of interest on mortgage escrow accounts by federally chartered or organized lenders, then this chapter applies to the federally chartered or organized lenders regarding mortgage escrow accounts.
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 not affected.
NEW SECTION. Sec. 5. Sections 1 through 4 of this act constitute a new chapter in Title 19 RCW.
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