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Withdrawn Letters: View interpretive letters that have been withdrawn by the Division of Consumer Services.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


1996 Interpretive Letters

Number 96-02 CL
Date 1/12/96
Statute 31.04.105(2)
Subject Limitation on fee
Summary Under 31.04.105(2), a licensee may not charge a fee on amounts not advanced to or for the direct benefit of the borrower.

Number 96-03 CL
Date 1/1/96
Statute 31.04
Subject Exemption from licensing
Summary The practices provisions of the Act only apply to licensees. Provided that a lender complies with the provisions of the Depository Institutions Deregulation and Monetary Control Act of 1980 (P.L. No. 96-221, tit.V, §501), there is no state restriction on the interest rate a lender may charge in connection with 1st lien loans on manufactured homes. Such lenders are exempt from licensing in the CL Act.

Number 96-05 CL
Date 3/20/96
Statute 31.04.035
Subject Exemption from licensing
Summary If the interest rates charged are authorized by federal law, a company making loans secured by real estate is not required to be licensed under the WA Consumer Loan Act.

Number 96-06 CL
Date 4/22/96
Statute 31.04.105(2)
Subject Limitations on fees
Summary Lenders who close loans w/ interest rates greater than 12%, they must be licensed under ch. 31.04. RCW 31.04.105(2) set maximum origination fees a licensee may charge. The National Housing Act allows Title 1 and 2 loans to preempt state usury laws, and loans under Titles 1 and 2 do not have to comply with the maximum fees allowed in the Consumer Loan Act, RCW 31.04.105(2).

Number 96-07 CL
Date 4/26/96
Statute  
Subject Records retention
Summary It is acceptable under the Consumer Loan Act to maintain optically scanned copies of loan documents in the company’s Sacramento office, available for retrieval by authorized employees. The original file would be sent to the investor’s trustee, with no hard copy maintained by the company. The records could be accessed by DFI either optically in Sacramento or by having hard copies printed from the system an delivered to a branch office. If loans are rejected or withdrawn, the hard-copy files will be maintained in the originating branch office.

Number 96-08 CL
Date 6/11/96
Statute 31.04.105
Subject Credit cards
Summary RCW 31.04.105 permits open-end loans, so a CL licensee can offer a credit card program if it complies with the statue and WAC.

Number 96-08 CL
Date 6/11/96
Statute 31.04.105
Subject Due on demand clauses
Summary Historically, due on sale clauses have been included in notes for real estate, as have due on demand clauses which become effective when collateral pledged for a loan becomes damaged or is deteriorating or if the borrower defaults on the loan. DFI has not cited for violations in these cases.

Number 96-09 CL
Date 7/9/96
Statute 31.04
Subject Arbitration agreements
Summary Ch. 31.04 is interpreted narrowly. DFI allows only what is expressly permitted. The Act does not provide for arbitration clauses, so they are not allowable as part of a loan transaction.

Number 96-10 CL
Date 8/28/96
Statute 31.04
Subject "Partials"
Summary The sale of the right to collect payments, when the underlying lenders remains a guarantor, is a loan under the Usury Act, Ch. 19.52 RCW. In order to avoid violation of the Usury Act, the purchaser should be licensed under the Consumer Loan Act.

Number 96-11 CL
Date 9/26/96
Statute 208-620.140
Subject Published index
Summary The prime rate, as published in the Wall Street Journal, meets the requirements for a "commonly published index.

Number 96-11 CL
Date 9/26/96
Statute 31.04
Subject Doing business at branch office of affiliate
Summary A consumer loan licensee may execute loan documents in the branch office of an affiliate only if that branch office is a licensed location.

Number 96-11 CL
Date 9/26/96
Statute 31.04
Subject Operating under other statutes while a CL licensee
Summary A licensee may operate under other statutes while also operating under the Consumer Loan Act. The licensee must choose the statute under which it offers a particular service and comply with the provisions of that statute. This might include the offering of a credit card program. If a licensee operates under authority granted by another state or federal statute, the licensee, although exempt from the specific requirements of the Act, must still comply with the disclosure requirements of the Act. In addition, the licensee remains subject to DFI’s authority to investigate and regulate its business activity.

Number 96-11 CL
Date 9/26/96
Statute 31.04
Subject 1st mortgage loans under federal preemption
Summary A licensee may make 1st mortgage loans in excess of the usury rates under federal preemption, but the licensee must comply with the consumer protection laws of the Act and associated WAC’s.

Number 96-12 CL
Date 10/14/96
Statute 31.04
Subject When licensing required
Summary A Sacramento office would be required to have a consumer loan license if it charged interest rates in excess of the usury limits. If a Bellevue office participates "in the business of making secured or unsecured loans" in excess of the usury limits, it must also be licensed, since the license allows the licensee to do business at the location specified in the application.

Number 96-13 CL
Date 11/13/96
Statute  
Subject Deferred payment program
Summary As long as the origination fees and interest computations comply with the Consumer Loan Act, nothing in the Act prohibits a licensee from offering a 90-day deferred payment plan in which a borrower may defer payment the normal 30 and 60 day payments, which are then amortized over the life of the loan. The interest continues to accrue during the deferral period and is not capitalized.

Number 96-15 CL
Date 12/24/96
Statute 31.04.105
Subject Limitations on fees
Summary The 90% loan to value limitation was removed in July, 1995, however the 4%/2% fee limitation is still in effect. A borrower cannot choose to buy down the points on a loan and thereby exceed the fee limitations. The fee limitation also applies for combined mortgage broker/lender fees.

[Top]

DFI