Jun. 16, 2008 at 1:09pm

DFI starts mortgage protection efforts

The state Department of Financial Institutions is currently conducting rule-making sessions to implement five new laws that will affect the mortgage industry in Washington. DFI is conducting the meetings with input from business managers to ensure economic stability of those affected businesses while still protecting consumers. 

State legislators approved several bills relating to the mortgage industry and its regulation during the 2008 session. Gov. Chris Gregoire and the Legislature responded to the sub-prime lending troubles and their subsequent home foreclosures with the emergency enactment of SB 6272, which provides free counseling to state homeowners in financial distress concerning the purchase of a home.

The other bills went into effect on June 12, and are written with consumer protection set as a priority.

HB 2770, regarding homeownership security, will require additional disclosure of key mortgage conditions to borrowers. It will also prohibit certain prepayment penalties, negative amortization for sub-prime borrowers in residential loans, as well as the steering of consumers into higher cost loans. In addition, it will establish a framework and penalties for crimes related to mortgage fraud.

SB 6381 establishes that mortgage brokers have a fiduciary duty to borrowers, requiring that they act in the borrower's best interest and in good faith.

SB 6471 amends the Consumer Loan Act to become a general lender law. It also requires mortgage lenders currently exempt from licensing to become licensed.

SB 6711 establishes the Smart Ownership Choices program, which which will assist eligible homeowners who are delinquent on their mortgage payments with funds that will be paid off while they attend a mortgage counseling program.

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