Washington Administrative Code › Title 208 - Financial Institutions, Department of (See also Titles 50, 419, and 460) › Chapter 208-600 - Mortgage lending and home ownership › Section 208-600-200 - Residential mortgage loan one page disclosure summary

Current through Register Vol. 24-14, July 15, 2024
(1)
Purpose and scope of rule.
This rule is the result of legislation recommended by the Washington state task
					force on homeowner security. The legislation was enacted by the Washington
					state legislature, at chapter 108, Laws of 2008, and codified in chapter 19.144
					RCW. The stated intent of the law is to enhance responsible mortgage lending,
					protect borrowers, and preserve access to credit in the residential real estate
					market. The law requires disclosure of certain material terms of residential
					mortgage loans. The law also provides the department of financial institutions
					(DFI) with the discretionary regulatory authority to require disclosure of
					additional information, to clarify material terms, and to otherwise protect
					borrowers as needed in the residential mortgage loan market. The law mandates
					the one page disclosure summary in
					RCW
					   19.144.020(2), and
					authorizes DFI, under
					RCW
					   19.144.020(3), to require
					additional disclosures for the purpose of protecting borrowers.
(2)
Definitions.
For the
					purposes of this section, the following definitions apply:
(a) "Application" means the same as in the
					Real Estate Settlement Procedures Act (RESPA), Regulation X,  24 C.F.R. Sec.
					3500.2(b).
(b) "Business day" means
					any day of the week except Sunday and federally recognized bank
					holidays.
(c) "Closing" means the
					process of signing the loan documents and disbursing the loan funds under the
					following two scenarios:
(i) Where the
					borrower is provided a right of rescission under the Truth in Lending Act,
					closing occurs at the expiration of the rescission period; or
(ii) Where the borrower is not provided a
					right of rescission under the Truth in Lending Act, closing occurs at the time
					the loan documents are signed.
(d) "Discount points" or "points" refer to a
					fee paid by the borrower to the lender to reduce the interest rate. The points
					are expressed as a percent of the loan amount. The higher the points paid, the
					lower the interest rate.
(e)
					"Finance charge" means the same as in the Truth in Lending Act, Regulation Z,
					 12 C.F.R. Sec. 226.4  excluding prepaid finance charges.
(f) The "fully indexed rate" is:
(i) The current value of the rate index used
					by a particular adjustable rate mortgage (ARM) at the time a residential
					mortgage loan is made; plus
(ii) A
					margin applied to that ARM which may vary from one transaction to another but
					stays the same throughout the life of that particular ARM.
(g) The "maximum interest rate" is the
					highest interest rate allowed under the loan agreement. It is not the default
					rate.
(h) "Reduced documentation"
					or "stated income" loan means a loan for which the lender may charge more
					because the borrower does not provide full documentation of income or
					assets.
(i) "Residential mortgage
					loan" means an extension of credit secured by residential real property located
					in this state upon which is constructed or intended to be constructed, a
					single-family dwelling or multiple-family dwelling of four or less units. It
					does not include a reverse mortgage or a borrower credit transaction that is
					secured by rental property. It does not include a bridge loan. It does not
					include loans to individuals making or acquiring a residential mortgage loan
					solely with his or her own funds for his or her own investment. For purposes of
					this subsection, a "bridge loan" is any temporary loan, having a maturity of
					one year or less, for the purpose of acquisition or construction of a dwelling
					intended to become the borrower's principal dwelling.
For purposes of this definition, residential mortgage loan
						means a loan used to purchase an owner-occupied, primary residence, or second
						home.
For purposes of this definition, a residential mortgage loan
						does not include an extension of credit secured by residential real property
						located in this state for business, commercial, or agricultural purposes, or an
						extension of credit secured by residential real property located in this state
						for the primary purpose of financing income or investment property.
For purposes of this definition, a residential mortgage loan
						does not include an extension of credit secured by residential real property
						located in this state for an open or closed-end home equity line of credit
						(HELOC).