Washington Legislature Begins Addressing Mortgage Crisis

Last night the the State Senate passed SHB 2770. (After passing through the legislature without an opposing vote it would be quie surprising if the governor did not sign this.) The original sponsors of the bill were Representatives Kenney, Lantz, Upthegrove, Conway, Morrell, Schual-Berke, McIntire, Hudgins, Simpson, Rolfes. This bill takes a very positive step to avoiding many of the mortgage-related difficulties that have beset so many home owners and gives the State Department of Financial Institutions rule making authority to address further details. It is important to remember that this bill does not cover national banks and federal institutions.

The bill imposes limits on prepayment penalties, prohibits negative amortization home loans, and makes it a felony for a mortgage broker to steer a home owner to a loan for which he or she is not qualified or for the broker to make a materially false statement. The broker is held to a strict standard of good faith.

The deed of trust act is amended to provide that the notice of foreclosure must include a notice identifying the various legitimate options available to the homeowner. (This is something that was absent from a bill I previously discussed.)

This bill addresses a portion of the foreclosure crisis. Other bills, particularly the foreclosure recovery scam legislation recommended by the Attorney General’s Office, are still pending.

Washington Legislature Begins Addressing Mortgage Crisis
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