Thursday, August 06, 2009
Lyn Peters, Director of Communications
PH (360) 349-8501 firstname.lastname@example.org
Deb Bortner, Director of Consumer Services
PH (360) 902-0511 email@example.com
FOR IMMEDIATE RELEASE:
New DFI-Enforced Legislation Is Designed To Protect Consumers And Make Licensing More Streamlined
Changes impact Washington’s payday loan, reverse mortgage and foreclosure laws
OLYMPIA – The Washington State Department of Financial Institutions is working to ensure timely implementation and enforcement of several new laws aimed at protecting consumers and providing more consistent regulation of its mortgage industry and payday loan company licensees.
“We’re pleased to be able to enforce stronger protections for consumers and more consistent licensing methods for our licensees,” DFI Director Scott Jarvis said. “These new laws will help make Washington a better place to live and do business.”
ESHB 1709, Chapter 510 Laws of 2009 (PDF)* Payday Loans
Effective Jan. 1, 2010
- Limits the total loan(s) amount to $700 or 30% of the borrower’s gross monthly income.
- Limits the number of loans a borrower can take to eight (8) in a 12-month period.
- Creates a single database for all payday loan companies to enter borrower data, thereby preventing lenders from making larger loans or more loans than is legally allowed.
- Replaces the previous payment plan with an installment plan for borrowers who can not pay back their loan as agreed. The installment plan is available at the borrower’s request at any time before their loan is due. The installment plan provides a longer payback time with no additional fees.
- New loans may not be made to borrowers in default or in an installment plan on existing loans.
“This law will help DFI protect consumers while retaining access to these short-term loans for those who may not have access to alternatives,” DFI Director of Consumer Services Deb Bortner said.
SB 5164, Chapter 13 Laws of 2009 (PDF)* Payday Loan Collection Practices
Effective July 26, 2009
In the past, when a payday loan company collected its own debts it was not subject to Washington’s collection agency practices act which has many protections for consumers. With this law, consumers are protected from harassing or intimidating behavior when payday loan companies collect their own debts.
“Many of the complaints we receive regarding payday loan companies are of harassment or intimidating behavior,” Bortner explained. “This law makes such activities illegal in the State of Washington.”
SHB 1621, Chapter 120 Laws of 2009 (PDF)* Consumer Loan Companies
Effective July 26, 2009 and July 2010
DFI previously licensed and regulated mortgage loan originators under the Mortgage Broker Practices Act. This law directs DFI to implement the licensing and regulation of mortgage loan originators working for consumer loan companies using the Nationwide Mortgage Licensing System and Registry or NMLSR. This change provides consistent background checks, testing, licensing and education of all mortgage loan originators in Washington State.
SHB 1749, Chapter 528 Laws of 2009 (PDF)* Mortgage Brokers
Effective July 26, 2009 and Jan. 1, 2010
This law amends Washington’s regulation of mortgage brokers and loan originators, providing greater consistency with the Federal Secure And Fair Enforcement (S.A.F.E.) Act and use of the NMLSR. Many of the provisions of the S.A.F.E. Act have been in effect in Washington since 2007.
“These laws (1621 & 1749) level the field across mortgage industries within Washington and also across state lines,” Bortner said. “All people in the mortgage lending business will have similar standards. These laws make the requirements consistent for various licensees.”
EHB 1311, Chapter 149 Laws of 2009 (PDF)* Reverse Mortgages
Effective July 26, 2009
This law allows regulation of proprietary reverse mortgages. The FHA-guaranteed reverse mortgage, the Home Equity Conversion Mortgage, or HECM, is heavily regulated at the federal level. This law allows DFI to regulate products not otherwise regulated. The law also corrects unintended consequences of SB 6471 which prohibited the compounding interest on all loans, including reverse mortgages, a product dependent on compound interest. Non-depository lenders in Washington can now lend reverse mortgages.
“With the number of reverse mortgages growing rapidly in Washington, the regulatory oversight provided in this law of a previously unregulated industry is critical,” Bortner noted. “Reverse mortgages can be useful for a specific portion of our population, but they are also complex and it’s important there be sound consumer protection practices in place. This law does that.”
ESB 5810, Chapter 292 Laws of 2009 (PDF)* 30-day notice of foreclosure
Effective July 26, 2009
This law requires lenders to send written notification to homeowners 30 days prior to filing notice of default. The letter must also provide a toll-free number for DFI, HUD and the Washington Civil Legal Aid hotline for possible assistance and referrals to approved professionals.
“With foreclosures on the rise throughout the nation, homeowners need more assistance and guidance in gaining access to agencies and organizations that may help them avoid foreclosure,” DFI Director Scott Jarvis said. “This law effectively adds another 30 days to the foreclosure timeline and helps point homeowners in the right direction to get help.”
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877.746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department has won numerous awards for its financial literacy and outreach programs developed to protect consumers from financial fraud. In addition to posting information about licensees and administrative actions, the DFI’s Web site features consumer tips on a variety of financial fraud-related topics. DFI also hosts a financial education blog http://finlit.blogspot.com, a financial education Twitter page http://twitter.com/fined4all, a financial education YouTube page (where we've compiled a host of financial education videos from a variety of reliable resources) http://www.youtube.com/wadfi, a consumers Twitter page http://twitter.com/dficonsumers and a financial education calendar for Washington State http://dfi.wa.gov/financial-education/calendar.htm.
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