WSR 08-13-057



(Division of Credit Unions)

[ Filed June 12, 2008, 4:37 p.m. ]

Subject of Possible Rule Making: Washington state law requires financial institutions (including credit unions) that act as residential mortgage lenders to adopt subprime lending policies and procedures that incorporate the principles contained in the federal "Interagency Guidance on Nontraditional Mortgage Product Risks" and the federal "Statement on Subprime Mortgage Lending" (the "guidance"). The department of financial institutions (DFI) will apply the guidance and other provisions of chapter 108, Laws of 2008 (SHB 2770) to financial institutions.

Statutes Authorizing the Agency to Adopt Rules on this Subject: Chapter 108, Laws of 2008, RCW 31.12.516, 43.320.040.

Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: "Guidance" rules are required by statute (Section 4, chapter 108, Laws of 2008, SHB 2770). In addition, rules are needed in order to clarify the types of internal policies and procedures needed by state-chartered credit unions that provide subprime or nontraditional residential mortgage loans. Other rule making may be needed to implement other provisions of chapter 108, Laws of 2008 (SHB 2770).

Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: The National Credit Union Administration (NCUA) was one of the five federal agencies that developed the "guidance." The NCUA may do federal rule making on the "guidance," and will be kept informed of this rule-making activity.

In addition, other divisions of the DFI will initiate separate rule making regarding the "guidance," as it applies to other types of financial institutions and licensees regulated by DFI.

Process for Developing New Rule: Negotiated rule making; and consultation with credit union stakeholders (state-chartered credit unions, credit union members and other interested persons).

Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication by contacting Joanne Conrad, Regulatory Analyst, P.O. Box 41200, Olympia, WA 98504-1200, phone (360) 902-8813, fax (360) 704-6490, Interested parties can participate in this rule making by attending hearings on the proposed rule, monitoring the DFI web site, and contacting the division of credit unions in writing, including fax and e-mail. All drafts and comments, as well as the audio of hearings, will be posted on the web site.

June 12, 2008

Linda Jekel, Director

Division of Credit Unions

Washington State Code Reviser's Office