SB 6025 — Protecting consumers from predatory loans.

(i) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;

(ii) Bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;

(iii) Negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than in connection with providing financing with respect to such a transaction;

(iv) Engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law;

and (v) Offering to engage in any activity, or act in any capacity, described in (c)(i) through (iv) of this subsection.

(d) This subsection does not apply to employees of a housing counseling agency approved by the United States department of housing and urban development unless the employees of a housing counseling agency are required under federal law to be individually licensed as mortgage loan originators.

(19) "Nationwide mortgage licensing system" means a licensing system developed and maintained by the conference of state bank supervisors for licensing and registration.

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4 SB 6025 (20) "Officer" means an official appointed by the company for the purpose of making business decisions or corporate decisions.

(21) "Person" includes individuals, partnerships, associations, limited liability companies, limited liability partnerships, trusts, corporations, and all other legal entities.

(22) "Principal" means any person who controls, directly or indirectly through one or more intermediaries, alone or in concert with others, a ((ten)) 10 percent or greater interest in a partnership;

company;

association or corporation;

or a limited liability company, and the owner of a sole proprietorship.

(23) "Registered mortgage loan originator" means any individual who meets the definition of mortgage loan originator and is an employee of a depository institution;

a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency;

or an institution regulated by the farm credit administration and is registered with, and maintains a unique identifier through, the nationwide mortgage licensing system.

(24) "Residential mortgage loan" means any loan primarily for personal, family, or household use that is secured by a mortgage, deed of trust, or other consensual security interest on a dwelling, as defined in the truth in lending act, or residential real estate upon which is constructed or intended to be constructed a dwelling.

(25) "Residential mortgage loan modification" means a change in one or more of a residential mortgage loan's terms or conditions.

Changes to a residential mortgage loan's terms or conditions include but are not limited to forbearances;

repayment plans;

changes in interest rates, loan terms, or loan types;

capitalizations of arrearages;

or principal reductions.

(26) "Residential mortgage loan modification services" includes negotiating, attempting to negotiate, arranging, attempting to arrange, or otherwise offering to perform a residential mortgage loan modification for compensation or gain.

"Residential mortgage loan modification services" also includes the collection of data for submission to an entity performing mortgage loan modification services.

(27) "S.A.F.E.

act" means the secure and fair enforcement for mortgage licensing act of 2008, Title V of the housing and economic recovery act of 2008 ("HERA"), P.L.

110-289, effective July 30, 2008.

(28) "Senior officer" means an officer of a licensee at the vice president level or above.

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5 SB 6025 (29) "Service or servicing a loan" means on behalf of the lender or investor of a residential mortgage loan:

(a) Collecting or receiving payments on existing obligations due and owing to the lender or investor, including payments of principal, interest, escrow amounts, and other amounts due;

(b) collecting fees due to the servicer;

(c) working with the borrower and the licensed lender or servicer to collect data and make decisions necessary to modify certain terms of those obligations either temporarily or permanently;

(d) otherwise finalizing collection through the foreclosure process;

or (e) servicing a reverse mortgage loan.

(30) "Service or servicing a reverse mortgage loan" means, pursuant to an agreement with the owner of a reverse mortgage loan:

Calculating, collecting, or receiving payments of interest or other amounts due;

administering advances to the borrower;

and providing account statements to the borrower or lender.

(31) "Simple interest method" means the method of computing interest payable on a loan by applying the annual percentage interest rate or its periodic equivalent to the unpaid balances of the principal of the loan outstanding for the time outstanding.

(a) On a nonresidential loan each payment is applied first to any unpaid penalties, fees, or charges, then to accumulated interest, and the remainder of the payment applied to the unpaid balance of the principal until paid in full.

In using such method, interest must not be payable in advance nor compounded.

The prohibition on compounding interest does not apply to reverse mortgage loans made in accordance with the Washington state reverse mortgage act.

The director may adopt by rule a more detailed explanation of the meaning and use of this method.

(b) On a residential mortgage loan payments are applied as determined in the security instrument.

(32) "Student education loan" means any loan solely for personal use to finance postsecondary education and costs of attendance at an educational institution.

A student education loan includes a loan made to refinance a student education loan.

A student education loan does not include a payment plan or accounts receivable at a higher education institution as defined in RCW 28B.07.020(4) only during the time of a student's enrollment in the higher education institution, not to include a refinanced payment plan or accounts receivable, an extension of credit under an open-end consumer credit plan, a reverse p.

6 SB 6025 mortgage transaction, a residential mortgage transaction, or any other loan that is secured by real property or a dwelling.

(33) "Student education loan borrower" means:

(a) Any resident of this state who has received or agreed to pay a student education loan;

or (b) any person who shares responsibility with such resident for repaying the student education loan.

(34) "Student education loan servicer" means any person, wherever located, responsible for the servicing of any student education loan to any student education loan borrower.

(35) "Student education loan servicing" or "service a student education loan" means:

(a) Receiving any scheduled periodic payments from a student education loan borrower pursuant to the terms of a student education loan;

(b) applying the payments of principal and interest and such other payments with respect to the amounts received from a student education loan borrower, as may be required pursuant to the terms of a student education loan;

(c) working with the student education loan borrower to collect data, or collecting data, to make decisions to modify the loan;

or (d) performing other administrative services with respect to a student education loan including collection activities.

"Student education loan servicing" does not include third-party student education loan modification services.

(36) "Third-party residential mortgage loan modification services" means residential mortgage loan modification services offered or performed by any person other than the owner or servicer of the loan.

(37) "Third-party service provider" means any person other than the licensee or a mortgage broker who provides goods or services to the licensee or borrower in connection with the preparation of the borrower's loan and includes, but is not limited to, credit reporting agencies, real estate brokers or salespersons, title insurance companies and agents, appraisers, structural and pest inspectors, or escrow companies.

(38) "Third-party student education loan modification services" means for compensation or other consideration by or on behalf of the borrower working with the student education loan borrower or his or her representative to collect data or prepare or submit documents, or collecting data and preparing or submitting documents, to modify, refinance, or consolidate the loan, or change repayment plans.

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7 SB 6025 (39) "Unique identifier" means a number or other identifier assigned by protocols established by the nationwide mortgage licensing system.

Sec.

3.

(1) Each loan made to a resident((resident ofof)) or a person physically located in this state by a licensee, or persons subject to this chapter, is subject to the authority and restrictions of this chapter.

or making, offering, assisting, or arranging a debtor to obtain a loan with a greater rate of interest, consideration, or charge than permitted by this chapter through any method, including mail, telephone, internet, p.or any electronic means regardless of whether the person has a physical location in the state.

1(3) SSBIf 6025a orloan anyexceeds electronicthe meansrate regardlesspermitted under this chapter, a person is a lender making a loan subject to the requirements of whetherthis chapter notwithstanding the fact that the person haspurports ato physicalact locationas an agent, service provider, or in theanother state.capacity for another person that is exempt from this act, if, among other things:

(3) If a loan exceeds the rate permitted under this chapter, a person is a lender making a loan subject to the requirements of this chapter notwithstanding the fact that the person purports to act as an agent, service provider, or in another capacity for another person that is exempt from this chapter, if, among other things:

(c) ((Entities)) Any person conducting transactions under chapter 63.14 RCW (retail installment sales of goods and services), unless credit is extended to purchase merchandise certificates, coupons, open or closed loop stored value, or other similar items issued and redeemablep. by a retail seller other than the retail seller extending the credit;

8 SB 6025 redeemable by a retail seller other than the retail seller extending the credit;

p.(h) ((Entities)) Any person making loans under chapter 43.185A RCW (housing trust fund);

2 SSB 6025 (h) ((Entities)) Any person making loans under chapter 43.185A RCW (housing trust fund);

and (m) ((Entities)) Any person licensed under chapter 18.44 RCW that process payments on seller-financed loans secured by liens on real or personal property;property.

and(((3))) (n)(5) AnyThe persondirector thatmay, extendsat moneyhis or credither todiscretion, anotherwaive personapplicability on a nonrecourse basis in exchange for a contingent right to receive an amount of the potentialconsumer proceedsloan ofcompany anylicensing award,provisions judgment,of settlement,p. verdict, or other resolution from a pending legal action.

This9 exemptionSB does6025 notthis applychapter to anyother personpersons, thatnot requiresincluding repaymentindividuals insubject theto event the personS.A.F.E. does not prevail in their civil proceeding.

(((3))) (5) The director may, at his or her discretion, waive applicability of the consumer loan company licensing provisions of this chapter to other persons, not including individuals subject to the S.A.F.E.

p.Sec.

34. SSB 6025 Sec.

3.

(h) Negligently make any false statement or knowingly and willfully make any omission of material fact in connection with any reportsp. filed with the department by a licensee or in connection with any investigation conducted by the department;

10 SB 6025 reports filed with the department by a licensee or in connection with any investigation conducted by the department;

p.(k) Obtain at the time of closing a release of future damages for usury or other damages or penalties provided by law or a waiver of the provisions of this chapter;

4 SSB 6025 (k) Obtain at the time of closing a release of future damages for usury or other damages or penalties provided by law or a waiver of the provisions of this chapter;

(b) Misrepresent or omit any material information in connection with the servicing of a student education loan including, but not limited to, misrepresenting the amount, nature, conditions, or terms of any fee or payment due or claimed to be due on a student education loan, the terms and conditions of the loan agreement, the availability of loan discharge or forgiveness options, the availabilityp. and terms of and process for enrolling in income-driven repayment, or the borrower's obligations under the loan;

11 SB 6025 availability and terms of and process for enrolling in income-driven repayment, or the borrower's obligations under the loan;

However, p.the student education loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the student education loan borrower;

5 SSB 6025 the student education loan servicer may adopt procedures reasonably related to verifying that the representative is in fact authorized to act on behalf of the student education loan borrower;

4.5.

(1)p. No person may ((make secured or unsecured loans of money or things in action, or extend credit, or service or modify the terms or conditions of residential mortgage loans, or service or modify student education loans,)) engage in any activity subject to this chapter without first obtaining and maintaining a license in accordance with this chapter((, except those exempt under RCW 31.04.025 or not subject to licensure under RCW 31.04.420)).

12 SB 6025 (1) No person may ((make secured or unsecured loans of money or things in action, or extend credit, or service or modify the terms or conditions of residential mortgage loans, or service or modify student education loans,)) engage in any activity subject to this chapter without first obtaining and maintaining a license in accordance with this chapter((, except those exempt under RCW 31.04.025 or not subject to licensure under RCW 31.04.420)).

and p.(b) ((Fees or interest charged in the making of a nonresidential loan must be refunded to the borrower)) Loan that is not a residential mortgage loan is null, void, uncollectable, and unenforceable.

6 SSB 6025 (b) ((Fees or interest charged in the making of a nonresidential loan must be refunded to the borrower)) Loan that is not a residential mortgage loan is null, void, uncollectable, and unenforceable.

713 SSBSB 6025