Washington State Department of Financial Institutions

Consumer Loan Act Interpretive Letters Archive

2003-1999 | 1998 | 1997 | 1996 | 1995 | 1993-1992

The opinions expressed in the interpretive letters are informal and non-binding. These opinions reflect the position of the Division of Consumer Services (DCS) at the time they were produced. The DCS could learn of additional facts, which would cause us to change our position. The letters may also contain policy statements providing a written description of the current approach of DCS to implementation of a statute or other provision of law.

Readers are cautioned that the opinions in both the interpretive letters and policy statements may have changed because of statute or rule revisions or other additional facts presented. Consult your attorney for advice regarding the current state of the law and how it may apply to the issue or situation you have in mind.

Withdrawn Letters: View interpretive letters that have been withdrawn by the Division of Consumer Services.

Note: Only letters directed to all consumer loan companies and other interested parties are available by "hyperlink" from this page. If the letter you're interested in does not have a live hyperlink to the letter text, you may order a copy using the Public Records Request Form.


2003-1999 Interpretive Letters

Number 03-01 CL
Date 12/5/03
Statute RCW 31.04
Subject WA prohibition on prepayment penalties
Summary Reestablishes prohibition on prepayment penalties on second mortgages and non-real estate borrowings following OTS’ amendment of AMTPA rules.  Effective July 1, 2003.

Number 02-02CL
Date 3/11/02
Statute RCW 31.04
Subject Preemption of WA Consumer Loan Act
Summary Licensing provision in RCW 31.04.035 is a voluntary standard.  The exemption from usury conveyed by the Act is a privilege of licensing that a company may choose to obtain, a privilege that grants the authority to make loans at rates in excess of Washington’s usury limits. The licensing provision of the Consumer Loan Act is not a requirement.  Within this context, the Department views the exemption provisions in RCW 31.04.025 as a “belts and suspenders” restatement of the most favored lender doctrine and an exemption for depository institutions with existing state or federal charters.  The issue of whether a subsidiary of a federal thrift or bank has access to the most favored lender doctrine is still an open question of law.

Number 00-01CL
Date 01/07/00
Statute RCW31.04.015 (7)
Subject Prepaid Interest and Compound Interest Prohibited
Summary Collecting prepaid interest at time of closing to extend first payment is considered a violation. Interest collected on prepaid interest is considered compounded interest.

Number 00-02CL
Date 03/07/00
Statute RCW 31.04.105 & WAC 208-620-210
Subject Children’s life insurance policy sold as an incidental product.
Summary Licensees are allowed to sell insurance covering real and personal property, the life and/or disability of the borrower. This product is not for the borrower. So long as the insurance on the life of a child is not financed from proceeds of the loan, the product and it’s sale fall outside of the scope of the Consumer Loan Act. The insurance product however, must be approved for sale in Washington by the Insurance Commissioner. The Department of Financial Institutions will look at practices of licensees, reviewing the sale of insurance products as a part of regularly scheduled examinations.

Number 99-01CL
Date 05/27/99
Statute 31.04.075
Subject Loan officer working at RE office.
Summary RCW 31.04.075 states a licensee may not maintain more than one place of business under the same license. RCW 31.04.035 states no person may engage in the business of making loans at rates authorized without a license.

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