When SB 6471 was signed into law last summer, it required lenders in Washington state to be licensed under the Consumer Loan Act. Under the CLA, non-bank lenders are forbidden from originating compounding-interest loans. This unintentionally affected reverse mortgage lending and forced non-bank lenders to stop originating reverse mortgages in the state.
To lift the restriction, HB 1311 was introduced in January and now the engrossed version of the bill was passed by both the House and Senate and delivered to the Governor for her signature yesterday.
Besides lifting the restrictions on non banks offering reverse mortgages, EB 1311 requires that all proprietary reverse mortgage products be approved by the Department of Financial Institutions before they’re made available. Lenders offering the products will be required to maintain a letter of credit from an approved financial institution to fund all proprietary products for 12 months or $3 million, whichever is greater.
Proprietary reverse mortgage loans must also comply with a list of requirements listed in EB 1311 (prepayment penalties, disclosures, age restrictions, ect).
“NRMLA worked very closely with the WA Department of Financial Institutions on the drafting of this bill, and I see no reason why the governor won’t sign it,” said Sarah Hulbert, CEO of Senior Financial Corp.
