Robert R. Rowley PS

Attorney at Law


Washington Residential Seller Financing Requirements

Washington Residential Seller Financing Requirements

Residential Seller Financing

The activity of financing the sale of residential real estate is regulated at both the state and federal levels. In Washington the Consumer Loan Act, chapter 31.04 RCW and chapter 208-620 WAC, regulates the lending of money or extension of credit for family, personal, or household use. This includes financing residential mortgages and that can include financing the sale of raw land or vacant lots. Regulation under the Consumer Loan Act begins with the licensing process. Licensing is twofold in that both companies and individual mortgage loan originators must license.

There are some exemptions from licensing at both the company and individual levels. The company level exemptions are found at RCW 31.04.025. The individual level exemptions are found at WAC 208-620-105.

A license waiver is available pursuant to RCW 31.04.025(3) for eligible transactions under the Consumer Loan Act. We will issue a license waiver for eligible seller financed residential mortgage loan transactions. An eligible transaction is one in which the seller owns the property being sold, is selling to a buyer for their family, personal or household use, is carrying the financing taking an interest in the property, and who is not subject to the federal law that requires the licensing of mortgage loan originators. Please access the link below at “More Information” to continue reading about seller financing.

More Information: About Residential Seller Financing in Washington (PDF)*

Updates

Rule Adopted to Implement License Waiver

DFI has adopted a rule to implement the license waiver at RCW 31.04.025(3). The rule states:

WAC 208-620-232

Can I make a small number of residential mortgage loans without being licensed at the company level?

Pursuant to RCW 31.04.025(3) you may be eligible to make five or fewer residential mortgage loans during a calendar year without holding a company level license if you are not subject to licensing as a mortgage loan originator. See WAC 208-620-105. If you are eligible for the license waiver you must comply with the following conditions:

(1) If you do not provide the borrower with a compliant federal disclosure of the loan terms and conditions and cost of financing you must provide the buyer with a disclosure prescribed by the director.

(2) You must comply with the state’s usury rate limit. See chapter 19.52 RCW.

(3) You must follow Washington law if you pursue a foreclosure.

License Waiver Steps

Print the License Waiver (PDF)*

Fill out the license waiver, including the declaratory portion at the bottom, and return it to the Department via email to [email protected], via fax to the attention of Cindy Fazio at 360-664-2258, or via hard copy to the Department at the address at the bottom of this webpage, to the attention of Cindy Fazio. You can now provide the completed License Waiver to the escrow or title company or attorney. Do not provide any other loan documents to the Department.

As to Item No. 1 in the License Waiver, access the links below to print, fill out and provide the applicable disclosure summary to the borrower. Do not provide the disclosure summary to the Department.

Disclosure Summary Forms for use with License Waiver

Disclosure Summary – Fixed Rate Loan (PDF)*

Print this document, fill it out and provide it to the buyer. Do not provide to DFI.

Disclosure Summary – Variable Rate Loan (PDF)*

Print this document, fill it out and provide it to the buyer. Do not provide to DFI.

Contact Us

via Residential Seller Financing.