Home equity sharing

AN ACT Relating to home equity sharing agreements; adding a new 1
chapter to Title 31 RCW; and prescribing penalties.2
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:3
NEW SECTION. Sec. 1. DEFINITIONS. The definitions in this 4
section apply throughout this chapter unless the context clearly 5
requires otherwise.6
(1) "Agreed home value" means the value of the property at the 7
time of origination, as agreed to by both the homeowner and the home 8
equity sharing agreement originator and does not include any discount 9
or risk adjustment. 10
(2) "Annualized cost" means the annualized cost of a home equity 11
sharing agreement, expressed as a percentage and calculated as 12
follows: (((home equity sharing agreement settlement payment / 13
investment amount)^(365 / term days))-1). 14
(3) "Beginning home equity" means the unencumbered equity in a 15
homeowner's property after the home equity sharing agreement is 16
consummated, expressed as a percentage and calculated as follows: (1-17
((Senior secured debt + investment amount)/ agreed home value)).18
(4) "Department" means the department of financial institutions 19
as established under chapter 43.320 RCW. 20
H-0165.3
HOUSE BILL 1464
State of Washington 69th Legislature 2025 Regular Session
By Representatives Hackney, Walen, and Wylie
Read first time 01/21/25. Referred to Committee on Consumer
Protection & Business.
p. 1 HB 1464
(5) "Director" means the director of the department of financial 1
institutions. 2
(6) "Home equity sharing agreement" means any nonrecourse 3
obligation in which an advance sum of money is extended to a 4
homeowner in exchange for an interest or future share of equity in 5
the homeowner's primary dwelling or a future obligation to pay a sum 6
upon the occurrence of an agreed-upon event. A home equity sharing 7
agreement is not a residential mortgage loan or other form of loan as 8
defined in RCW 31.04.015. 9
(7) "Home equity sharing agreement application" means the 10
submission of a homeowner's financial and property information for 11
purposes of entering a home equity sharing agreement.12
(8) "Home equity sharing agreement holder" means, with respect to 13
a home equity sharing agreement, the person or persons that are 14
entitled to receive the settlement payment under such agreement.15
(9) "Home equity sharing agreement originator" means a person who 16
for compensation or gain or with the expectation of compensation or 17
gain, either takes a home equity sharing agreement application or 18
offers or negotiates terms of a home equity sharing agreement. "Home 19
equity sharing agreement originator" does not include a person 20
engaged solely as a processor or underwriter for home equity sharing 21
agreements. 22
(10) "Homeowner" means the owner of the property that applies for 23
or enters into a home equity sharing agreement. 24
(11) "Investment amount" means the gross proceeds of a home 25
equity sharing agreement that is provided to the homeowner, before 26
any deduction of third-party fees or amounts charged by the home 27
equity sharing agreement originator. 28
(12) "Licensee" means a person to whom a license under this 29
chapter has been issued. 30
(13) "Person" means an individual, partnership, association, 31
limited liability company, limited liability partnership, trust, 32
corporation, and any other legal entity. 33
(14) "Senior secured debt" means any obligation secured by a lien 34
on the property that would be senior to the lien securing obligations 35
under the home equity sharing agreement after application of any 36
proceeds from the home equity sharing agreement at closing to reduce 37
the amount of any such senior obligations. 38
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(15) "Service" means performing administrative functions and 1
collecting settlement payments on behalf of the home equity sharing 2
agreement holder or home equity sharing agreement originator.3
(16) "Settle" or "settlement" means the process by which a 4
homeowner terminates a home equity sharing agreement, as set out in 5
the terms of the home equity sharing agreement. 6
(17) "Settlement payment" means the dollar amount that the 7
homeowner will pay to settle a home equity sharing agreement, 8
excluding any amounts paid by the homeowner pursuant to the terms of 9
the home equity sharing agreement as reimbursement for payments made 10
on behalf of the homeowner or administrative fees charged to the 11
homeowner during the term of the home equity sharing agreement or 12
interest required not otherwise prohibited by law.13
(18) "Term days" means the exact number of days that passed 14
between the effective date and the settlement date of the home equity 15
sharing agreement. 16
NEW SECTION. Sec. 2. APPLICATION OF CHAPTER. (1) Any home 17
equity sharing agreement made concerning a homeowner's primary 18
dwelling physically located in this state by a licensee, or persons 19
subject to this chapter, is subject to the authority and restrictions 20
of this chapter.21
(2) Notwithstanding any other provision of law, home equity 22
sharing agreements offered and provided by a licensee in accordance 23
with this chapter are not a mortgage loan, residential mortgage loan, 24
residential mortgage loan modification, or a reverse mortgage loan.25
NEW SECTION. Sec. 3. LICENSE REQUIRED. Beginning July 1, 2026:26
(1) No person may conduct business as a home equity sharing 27
agreement originator and may not offer or originate a home equity 28
sharing agreement in this state without first obtaining and 29
maintaining a license in accordance with this chapter.30
(2) Any person licensed as a home equity sharing agreement 31
originator in accordance with this chapter, or as a consumer loan 32
company in accordance with chapter 31.04 RCW, may also service home 33
equity sharing agreements. 34
NEW SECTION. Sec. 4. LICENSE— APPLICATION— BACKGROUND CHECKS — 35
FEE— SURETY BOND. (1) A person subject to this chapter shall apply for 36
a license required under this chapter by submitting an application in 37
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the form prescribed by the director. The application must contain at 1
least the following information: 2
(a) The name and the business addresses of the applicant;3
(b) If the applicant is a partnership, limited liability company, 4
or association, the application must include the names of every 5
member; 6
(c) If the applicant is a corporation, the application must 7
include the names, residential addresses, and telephone numbers of 8
each officer and director; 9
(d) The street address, county, and municipality from which 10
business is to be conducted or a statement that the business is to be 11
conducted entirely online; and 12
(e) Other information as the director may require by rule, 13
necessary to fulfill the purpose of this section. 14
(2)(a) As part of or in connection with an application for any 15
license under this section, or periodically upon license renewal, 16
each officer, director, and owner applicant must furnish identifying 17
information, including: 18
(i) Fingerprints for submission to the Washington state patrol, 19
the federal bureau of investigation, or any governmental agency or 20
entity authorized to receive this information for a state and 21
national criminal history background check; 22
(ii) Personal history; 23
(iii) Experience; 24
(iv) Business record; 25
(v) Purposes; and 26
(vi) Other pertinent facts, as the director may reasonably 27
require. 28
(b) As part of or in connection with an application for a license 29
under this chapter, or periodically upon license renewal, the 30
director is authorized to receive criminal history record information 31
that includes nonconviction data as defined in RCW 10.97.030. The 32
department may only disseminate nonconviction data obtained under 33
this section to criminal justice agencies. 34
(3) At the time of filing an application for a license under this 35
chapter, each applicant shall pay to the director an investigation 36
fee and the license fee in an amount determined by rule by the 37
director to be sufficient to cover the director's costs in 38
administering this chapter. 39
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(4) Each applicant must file and maintain a surety bond, approved 1
by the director, executed by the applicant as obligor and by a surety 2
company authorized to do a surety business in this state as surety, 3
whose liability as such surety must not exceed in the aggregate the 4
penal sum of the bond. The penal sum of the bond must be a minimum of 5
$30,000. The bond must run to the state of Washington as obligee for 6
the use and benefit of the state and of any person or persons who may 7
have a cause of action against the obligor under this chapter. The 8
bond must be conditioned that the obligor as licensee will faithfully 9
conform to and abide by this chapter and all the rules adopted under 10
this chapter. The bond will pay to the state and any person or 11
persons having a cause of action against the obligor all moneys that 12
may become due and owing to the state and those persons under and by 13
virtue of this chapter. The bond must be continuous and may be 14
canceled by the surety upon the surety giving written notice to the 15
director of its intent to cancel the bond. The cancellation applies 16
45 days after the notice is received by the director. Instead of a 17
surety bond, if the applicant is a Washington business corporation, 18
the applicant may maintain unimpaired capital, surplus, and long-term 19
subordinated debt in an amount that at any time its outstanding 20
promissory notes or other evidences of debt (other than long-term 21
subordinated debt) in an aggregate sum do not exceed three times the 22
aggregate amount of its unimpaired capital, surplus, and long-term 23
subordinated debt. The director may define qualifying "long-term 24
subordinated debt" for purposes of this section. 25
(5) The director may waive one or more requirements of this 26
section or permit an applicant to submit other information instead of 27
the required information. 28
NEW SECTION. Sec. 5. LICENSE— DIRECTOR'S DUTIES. (1) The 29
director shall issue and deliver a license to the applicant to offer 30
and provide home equity sharing agreements in accordance with this 31
chapter if, after investigation, the director finds that:32
(a) The applicant has paid all required fees; 33
(b) The applicant has submitted a complete application in 34
compliance with section 4 of this act; 35
(c) Neither the applicant nor its officers or principals have had 36
a license issued under this section or any other section, in this 37
state or another state, revoked or suspended within the last five 38
years of the date of filing of the application; 39
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(d) Neither the applicant nor any of its officers or principals 1
have been convicted of a gross misdemeanor involving dishonesty or 2
financial misconduct or a felony or a violation of the banking laws 3
of this state or of the United States within seven years of the 4
filing of an application; and 5
(e) The financial responsibility, experience, character, and 6
general fitness of the applicant are such as to command the 7
confidence of the community and to warrant a belief that the business 8
will be operated honestly, fairly, and efficiently within the 9
purposes of this chapter. 10
(2) If the director does not find the conditions of subsection 11
(1) of this section have been met, the director shall not issue the 12
license. The director shall notify the applicant of the denial and 13
return to the applicant the bond posted and the sum paid by the 14
applicant as a license fee, retaining the investigation fee to cover 15
the costs of investigating the application. The director shall 16
approve or deny every application for license under this chapter 17
within 90 days from the filing of a complete application with the 18
fees and the approved bond. 19
NEW SECTION. Sec. 6. LICENSE— INFORMATION CONTAINED. (1) The 20
license must display the following information:21
(a) The address at which the business is to be conducted or 22
whether the business is to be conducted entirely online;23
(b) The full name of the licensee, and if the licensee is a 24
copartnership or association, the names of its members; and25
(c) If the licensee is a corporation, the date and place of its 26
incorporation. 27
(2) The license is not transferable or assignable.28
NEW SECTION. Sec. 7. LICENSE— ASSESSMENT— BOND— TIME OF PAYMENT. 29
A licensee shall, for each license held, on or before the first day 30
of each March, pay to the director an annual assessment as determined 31
by rule by the director. The licensee shall be responsible for 32
payment of the annual assessment for the previous calendar year if 33
the licensee had a license for any time during the preceding calendar 34
year, regardless of whether they surrendered their license during the 35
calendar year or whether their license was suspended or revoked. At 36
the same time the licensee shall file with the director the required 37
bond or otherwise demonstrate compliance with section 4 of this act.38
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NEW SECTION. Sec. 8. LICENSING— APPLICATIONS— REGULATION OF 1
LICENSEES— DIRECTOR'S DUTIES AND AUTHORITY — FINES— ORDERS— STATUTE OF 2
LIMITATIONS. (1) The director shall enforce all laws and rules 3
relating to the licensing and regulation of licensees and persons 4
subject to this chapter.5
(2) The director may deny applications for licenses for:6
(a) Failure of the applicant to demonstrate within its 7
application for a license that it meets the requirements for 8
licensing in sections 4 and 5 of this act; 9
(b) Violation of an order issued by the director under this 10
chapter or another chapter administered by the director, including 11
but not limited to cease and desist orders and temporary cease and 12
desist orders; 13
(c) Revocation or suspension of a license to offer or provide 14
home equity sharing agreements by this state, another state, or by 15
the federal government within five years of the date of submittal of 16
a complete application for a license; or 17
(d) Filing an incomplete application when that incomplete 18
application has been filed with the department for 60 or more days, 19
provided that the director has given notice to the licensee that the 20
application is incomplete, informed the applicant why the application 21
is incomplete, and allowed at least 20 days for the applicant to 22
complete the application. 23
(3) The director may condition, suspend, or revoke a license 24
issued under this chapter if the director finds that:25
(a) The licensee has failed to pay any fee due to the state of 26
Washington, has failed to maintain in effect the bond or permitted 27
substitute required under this chapter, or has failed to comply with 28
any specific order or demand of the director lawfully made and 29
directed to the licensee in accordance with this chapter;30
(b) The licensee, either knowingly or without the exercise of due 31
care, has violated any provision of this chapter or any rule adopted 32
under this chapter; 33
(c) A fact or condition exists that, if it had existed at the 34
time of the original application for the license, clearly would have 35
allowed the director to deny the application for the original 36
license; or 37
(d) The licensee failed to comply with any directive, order, or 38
subpoena issued by the director under this chapter.39
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(4) The director may condition, revoke, or suspend the license 1
with respect to which grounds for conditioning, revocation, or 2
suspension may occur or exist. 3
(5) The director may impose fines of up to $100 per day, per 4
violation, upon the licensee or other person subject to this chapter 5
for: 6
(a) Any violation of this chapter; or 7
(b) Failure to comply with any directive, order, or subpoena 8
issued by the director under this chapter. 9
(6) The director may issue an order directing the licensee or 10
other person subject to this chapter to: 11
(a) Cease and desist from conducting business in a manner that is 12
injurious to the public or violates any provision of this chapter;13
(b) Take such affirmative action as is necessary to comply with 14
this chapter; 15
(c) Make a refund or restitution to a consumer who is damaged as 16
a result of a violation of this chapter; or 17
(d) Refund all fees received through any violation of this 18
chapter. 19
(7) The director may issue an order removing from office or 20
prohibiting from participation in the affairs of any licensee, or 21
both, any officer, principal, or any person subject to this chapter 22
for: 23
(a) False statements or omission of material information from an 24
application for a license that, if known, would have allowed the 25
director to deny the original application for a license;26
(b) Conviction of a gross misdemeanor involving dishonesty or 27
financial misconduct or a felony; 28
(c) Suspension or revocation of a license to offer or provide 29
home equity sharing agreements in this state or another state;30
(d) Failure to comply with any order or subpoena issued under 31
this chapter; or 32
(e) Failure to obtain a license for activity that requires a 33
license. 34
(8) Except to the extent prohibited by another statute, the 35
director may engage in informal settlement of complaints or 36
enforcement actions including, but not limited to, payment to the 37
department for purposes of financial literacy and education programs 38
authorized under RCW43.320.150. If any person subject to this chapter 39
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makes a payment to the department under this section, the person may 1
not advertise such payment. 2
(9) Whenever the director determines that the public is likely to 3
be substantially injured by delay in issuing a cease and desist 4
order, the director may immediately issue a temporary cease and 5
desist order. The order may direct the licensee to discontinue any 6
violation of this chapter, to take such affirmative action as is 7
necessary to comply with this chapter, and may include a summary 8
suspension of the licensee's license and may order the licensee to 9
immediately cease the conduct of business under this chapter. The 10
order becomes effective at the time specified in the order. Every 11
temporary cease and desist order must include a provision that a 12
hearing will be held upon request to determine whether the order will 13
become permanent. Such hearing must be held within 14 days of receipt 14
of a request for a hearing unless otherwise specified in chapter 15
34.05 RCW. 16
(10) A licensee may surrender a license by delivering to the 17
director written notice of surrender, but the surrender does not 18
affect the licensee's civil or criminal liability, if any, for acts 19
committed before the surrender, including any administrative action 20
initiated by the director to suspend or revoke a license, impose 21
fines, compel the payment of restitution to borrowers or other 22
persons, or exercise any other authority under this chapter. The 23
statute of limitations on actions not subject to RCW 4.16.160 that 24
are brought under this chapter by the director is five years.25
(11) The revocation, suspension, or surrender of a license does 26
not impair or affect the obligation of a preexisting lawful contract 27
between the licensee and a consumer. 28
(12) Every license issued under this chapter remains in force and 29
effect until it has been surrendered, revoked, or suspended in 30
accordance with this chapter. However, the director may reinstate 31
suspended licenses or issue new licenses to a licensee whose license 32
or licenses have been revoked if the director finds that the licensee 33
meets all the requirements of this chapter. 34
(13) A license issued under this chapter expires upon the 35
licensee's failure to comply with the annual assessment requirements 36
in section 7 of this act. The department must provide notice of the 37
expiration to the address of record provided by the licensee. On the 38
15th day after the department provides notice, if the assessment 39
remains unpaid, the license expires. The licensee must receive notice 40
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before expiration and have the opportunity to stop the expiration as 1
set forth in rule. 2
NEW SECTION. Sec. 9. LICENSEE'S OBLIGATIONS. A person required 3
to be licensed under this chapter shall comply with the following 4
requirements:5
(1) A person providing a home equity sharing agreement shall 6
provide at least three business days in which the homeowner may 7
rescind their acceptance of the home equity sharing agreement before 8
the home equity sharing agreement becomes effective and binding for 9
the homeowner. The homeowner shall submit the rescission notice in 10
writing to the home equity sharing agreement originator within such 11
designated rescission period. 12
(2) Except in connection with a home purchase transaction, after 13
application of the investment amount to pay down existing liens 14
secured by the property if applicable, the homeowner's beginning home 15
equity must be equal to or greater than 10 percent.16
(3) All appraisals or other valuation reports must meet industry 17
standards and be conducted by an independent third party, unless an 18
affiliated appraisal or valuation is disclosed and consented to in 19
writing by the homeowner. Copies of all valuation reports must be 20
provided to the homeowner. 21
(4) The annualized cost of a home equity sharing agreement may 22
not exceed 25 percent. 23
NEW SECTION. Sec. 10. DISCLOSURE REQUIREMENTS. (1) Before 24
entering into a home equity sharing agreement, a home equity sharing 25
agreement originator shall provide a disclosure to the homeowner in a 26
form prescribed by the director. The disclosure shall contain at 27
least the following information:28
(a) A clear and conspicuous statement that (i) by entering into 29
the home equity sharing agreement, a lien will be placed on the 30
property and that failure to comply with the terms of the home equity 31
sharing agreement or an inability to settle the home equity sharing 32
agreement may result in the homeowner losing their property, and (ii) 33
that the homeowner should obtain the advice of an attorney before 34
proceeding with the transaction; 35
(b) A summary of the terms of the home equity sharing agreement 36
including: 37
(i) The investment amount; 38
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(ii) An itemization of any charges and payments to third parties 1
and any fees paid to the home equity sharing agreement originator 2
that are deducted from the investment amount; 3
(iii) The net proceeds to be delivered to the homeowner at 4
closing; 5
(iv) The maximum term of the home equity sharing agreement;6
(v) How the homeowner can settle the home equity sharing 7
agreement together with an explanation of how the settlement cost 8
will be calculated; and 9
(vi) A summary of the types of fees that may be charged in 10
connection with settling the home equity sharing agreement;11
(c)(i) The agreed home value without adjustment and the method 12
used to determine the agreed home value; and 13
(ii) If the agreed home value is adjusted for any discounts, risk 14
adjustments, or enhancements for purposes of the home equity sharing 15
agreement, the amount of the adjustments and the value of the 16
property used for purposes of calculating the share of appreciation 17
or equity; 18
(d) The method of determining the final value of the property 19
that is the subject of the home equity sharing agreement upon 20
settlement of the home equity sharing agreement; 21
(e) The maximum share of appreciation or equity in the property 22
that the home equity sharing agreement originator may receive under 23
the terms of the home equity sharing agreement or an explanation of 24
any other limits on the amount that the home equity sharing agreement 25
originator may receive under the home equity sharing agreement;26
(f) Any other amounts charged in connection with the home equity 27
sharing agreement; 28
(g) Settlement examples for the home equity sharing agreement 29
after three years, five years, 10 years, 15 years, and 30 years, in 30
each case up to the maximum term of the applicable home equity 31
sharing agreement. 32
(i) For each settlement time frame, examples must be provided 33
based on: 34
(A) No change in the value of the property; 35
(B) A total depreciation of 10 percent; 36
(C) Annual appreciation of 3.5 percent; 37
(D) Annual appreciation of 5.5 percent; and 38
(E) The actual annualized change in value of residential real 39
property in Washington over the prior five-year period, measured from 40
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the most recent available data point in the all-transactions house 1
price index as published by the federal reserve bank of St. Louis.2
(ii) For each combination of settlement time frame and property 3
change in value specified in (g)(i) of this subsection, the home 4
equity sharing agreement originator shall provide the homeowner with:5
(A) The projected final value of the property; 6
(B) The share of appreciation or equity that the home equity 7
sharing agreement originator would be entitled to receive expressed 8
as a percentage of projected final property value; 9
(C) The dollar value of such share of appreciation or equity, and 10
if any cap applies, the capped dollar value required to settle the 11
home equity sharing agreement; and 12
(D) An annual percentage rate equivalent based on the investment 13
amount, the gross estimated cost of settlement, and the number of 14
days from closing to settlement. 15
(2) Home equity sharing agreement originators may provide 16
homeowners with additional disclosures if the form disclosure 17
prescribed by the director is used and there is no inconsistency 18
between the disclosures. 19
NEW SECTION. Sec. 11. PROHIBITED ACTS BY LICENSEES. A person 20
required to be licensed under the authority of this chapter is 21
prohibited from engaging in any of the following:22
(1) Charging any penalty for settling a home equity sharing 23
agreement before the end of the home equity sharing agreement's 24
specified term; 25
(2) Preventing the homeowner from renting or using the property 26
as the homeowner chooses, provided that such use complies with 27
applicable law. Nothing in this subsection prohibits a home equity 28
sharing agreement from: 29
(a) Requiring that the homeowner notify the home equity sharing 30
agreement holder or their designee of a change in use;31
(b) Requiring the homeowner to obtain commercially appropriate 32
property insurance in connection with any use of the property; or33
(c) Imposing risk-based pricing adjustments for properties other 34
than the owner's principal residence; 35
(3) Requiring the use of an appraisal or valuation report 36
prepared or managed by an appraiser, appraisal management company, or 37
other valuation service provider affiliated with the home equity 38
sharing agreement originator, except the homeowner and home equity 39
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sharing agreement originator may agree to the use of an affiliated 1
appraiser or appraisal management company to the extent that such 2
affiliation is disclosed and consented to in writing by the 3
homeowner; 4
(4) Agreeing to a valuation that differs from the value obtained 5
by the appraisal or other third-party means unless:6
(a) At least one third-party valuation report is obtained and 7
shared with the homeowner to provide an indication of market value; 8
and 9
(b) The value that differs from the appraisal or third-party 10
valuation report is fully disclosed to the homeowner and the 11
homeowner agrees to the alternative value in writing;12
(5) Including provisions in the home equity sharing agreement 13
that prohibit the homeowner from refinancing a mortgage or lien on 14
the primary dwelling, provided that: 15
(a) Nothing in this subsection obligates a home equity sharing 16
agreement holder to subordinate their lien to any other lien holder; 17
and 18
(b) If the homeowner is seeking a cash out refinancing, the home 19
equity sharing agreement may require that the proceeds of such 20
refinancing be used to settle the home equity sharing agreement;21
(6) Charging an amount to settle a home equity sharing agreement 22
that exceeds the amount permitted under the annualized cost limit, 23
plus reimbursement for payments made on behalf of the homeowner or 24
administrative fees charged to the homeowner during the term of the 25
home equity sharing agreement; and 26
(7) Taking any action in violation of RCW 19.86.020 in connection 27
with a home equity sharing agreement. 28
NEW SECTION. Sec. 12. VIOLATIONS. It is a violation of this 29
chapter for a licensee, its officers, board members, or any other 30
person subject to this chapter to:31
(1) Directly or indirectly employ any scheme, device, or artifice 32
to defraud or mislead any person; 33
(2) Directly or indirectly engage in any unfair or deceptive 34
practice toward any person; 35
(3) Directly or indirectly obtain property by fraud or 36
misrepresentation; 37
(4) Solicit or enter into a contract with a homeowner that 38
provides in substance that the home equity sharing agreement 39
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originator may earn a fee or commission through the home equity 1
sharing agreement originator's best efforts to obtain a home equity 2
sharing agreement even though no home equity sharing agreement is 3
actually obtained from the homeowner; 4
(5) Solicit, advertise, or enter into a contract with specific 5
home equity sharing agreement terms unless the terms are generally 6
available at the time of soliciting, advertising, or contracting;7
(6) Fail to make disclosures to applicants as required by this 8
chapter and any other applicable state or federal law;9
(7) Make, in any manner, any false or deceptive statement or 10
representation with regard to the costs or other terms or conditions 11
of a home equity sharing agreement or engage in bait and switch 12
advertising; 13
(8) Negligently make any false statement or knowingly and 14
willfully make any omission of material fact in connection with any 15
reports filed with the department by a licensee or in connection with 16
any investigation conducted by the department; 17
(9) Advertise, print, display, publish, distribute, or broadcast 18
or cause or permit to be advertised, printed, displayed, published, 19
distributed, or broadcast, in any manner whatsoever, any statement or 20
representation with regard to the terms and conditions of home equity 21
sharing agreements that is false, misleading, or deceptive;22
(10) Make any payment, directly or indirectly, to any appraiser 23
of a property for the purpose of influencing the independent judgment 24
of the appraiser with respect to the value of the property;25
(11) Obtain at the time of closing a waiver or release of future 26
claims for damages or penalties provided by law, including a waiver 27
of the provisions of this chapter; 28
(12) Violate any applicable state or federal law relating to the 29
activities governed by this chapter; or 30
(13) Engage in any device, subterfuge, or pretense to evade the 31
requirements of this chapter including, but not limited to, making, 32
offering, or assisting a homeowner to obtain a home equity sharing 33
agreement with a greater cost than is permitted by this chapter.34
NEW SECTION. Sec. 13. SUBPOENA AUTHORITY— APPLICATION— CONTENTS35
— NOTICE— FEES. (1) The director or authorized assistants may apply 36
for and obtain a superior court order approving and authorizing a 37
subpoena in advance of its issuance. The application may be made in 38
the county where the subpoenaed person resides or is found, or the 39
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county where the subpoenaed documents, records, or evidence are 1
located, or in Thurston county. The application must:2
(a) State that an order is sought under this section;3
(b) Adequately specify the documents, records, evidence, or 4
testimony; and 5
(c) Include a declaration made under oath that an investigation 6
is being conducted for a lawfully authorized purpose related to an 7
investigation within the department's authority and that the 8
subpoenaed documents, records, evidence, or testimony are reasonably 9
related to an investigation within the department's authority.10
(2) When an application under this section is made to the 11
satisfaction of the court, the court must issue an order approving 12
the subpoena. An order under this subsection constitutes authority of 13
law for the agency to subpoena the documents, records, evidence, or 14
testimony. 15
(3) The director or authorized assistants may seek approval and a 16
court may issue an order under this section without prior notice to 17
any person, including the person to whom the subpoena is directed and 18
the person who is the subject of an investigation. An application for 19
court approval is subject to the fee and process set forth in RCW 20
36.18.012(3). 21
NEW SECTION. Sec. 14. INVESTIGATIONS AND EXAMINATIONS — 22
DIRECTOR'S DUTIES AND POWERS — PRODUCTION OF INFORMATION — COSTS. (1) 23
For the purpose of discovering violations of this chapter or securing 24
information lawfully required under this chapter, the director may at 25
any time, either personally or by designees, investigate or examine 26
the home equity sharing agreements and business and, wherever 27
located, the books, accounts, records, papers, documents, files, and 28
other information used in the business of every licensee and of every 29
person subject to this chapter, whether the person acts or claims to 30
act as principal or agent, or under or without the authority of this 31
chapter. The director or designated representative:32
(a) Must have free access to the employees, offices, and places 33
of business, books, accounts, papers, documents, other information, 34
records, files, safes, and vaults of all such persons during normal 35
business hours; 36
(b) May require the attendance of and examine under oath all 37
persons whose testimony may be required about the home equity sharing 38
agreements or the business or the subject matter of any 39
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investigation, examination, or hearing, and may require such person 1
to produce books, accounts, papers, records, files, and any other 2
information the director or designated persons deem relevant to the 3
inquiry; 4
(c) May require by directive, subpoena, or any other lawful means 5
the production of original books, accounts, papers, records, files, 6
and other information; may require that such original books, 7
accounts, papers, records, files, and other information be copied; or 8
may make copies of such original books, accounts, papers, records, 9
files, or other information; 10
(d) May issue a subpoena or subpoena duces tecum requiring 11
attendance by any person identified in this section or compelling 12
production of any books, accounts, papers, records, files, or other 13
documents or information identified in this section.14
(2) The director must make such periodic examinations of the 15
affairs, business, office, and records of each licensee as determined 16
by rule. 17
(3) Every licensee examined or investigated by the director or 18
the director's designee must pay to the director the cost of the 19
examination or investigation of each licensed place of business as 20
determined by rule by the director. 21
(4) In order to carry out the purposes of this section, the 22
director may: 23
(a) Retain attorneys, accountants, or other professionals and 24
specialists as examiners, auditors, or investigators to conduct or 25
assist in the conduct of examinations or investigations;26
(b) Enter into agreements or relationships with other government 27
officials or regulatory associations in order to improve efficiencies 28
and reduce regulatory burden by sharing resources, standardized or 29
uniform methods or procedures, and documents, records, information, 30
or evidence obtained under this section; 31
(c) Use, hire, contract, or employ public or privately available 32
analytical systems, methods, or software to examine or investigate 33
the licensee, individual, or person subject to this chapter;34
(d) Accept and rely on examination or investigation reports made 35
by other government officials, within or without this state;36
(e) Accept audit reports made by an independent certified public 37
accountant for the licensee, individual, or person subject to this 38
chapter in the course of that part of the examination covering the 39
same general subject matter as the audit and may incorporate the 40
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audit report in the report of the examination, report of 1
investigation, or other writing of the director; or2
(f) Assess the licensee, individual, or person subject to this 3
chapter the cost of the services in (a) of this subsection.4
NEW SECTION. Sec. 15. LICENSEE— RECORDKEEPING— DIRECTOR'S ACCESS5
— REPORT REQUIREMENT — FAILURE TO REPORT. The licensee shall keep and 6
use in the business such books, accounts, records, papers, documents, 7
files, and other information as will enable the director to determine 8
whether the licensee is complying with this chapter and with the 9
rules adopted by the director under this chapter. The director shall 10
have free access to such books, accounts, records, papers, documents, 11
files, and other information wherever located. Every licensee shall 12
preserve the books, accounts, records, papers, documents, files, and 13
other information relevant to a home equity sharing agreement for at 14
least three years after making the final entry on any home equity 15
sharing agreement. No licensee or person subject to examination or 16
investigation under this chapter shall withhold, abstract, remove, 17
mutilate, destroy, or secrete any books, accounts, records, papers, 18
documents, files, or other information.19
Each licensee shall, on or before the first day of March of each 20
year, file a report with the director giving such relevant 21
information as the director may reasonably require concerning the 22
business and operations of each licensed place of business conducted 23
during the preceding calendar year. The report must be made under 24
oath and must be in the form prescribed by the director, who shall 25
make and publish annually an analysis and recapitulation of the 26
reports. Every licensee that fails to file a report that is required 27
to be filed by this chapter within the time required under this 28
chapter is subject to a penalty of $50 per day for each day's delay. 29
The attorney general may bring a civil action in the name of the 30
state for recovery of any such penalty. 31
NEW SECTION. Sec. 16. DIRECTOR— BROAD ADMINISTRATIVE DISCRETION32
— RULE MAKING — ACTIONS IN SUPERIOR COURT. (1) The director has the 33
power, and broad administrative discretion, to administer and 34
interpret this chapter to facilitate the delivery of home equity 35
sharing agreement services to the citizens of this state by persons 36
subject to this chapter. The director shall adopt all rules necessary 37
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to administer this chapter and to ensure complete and full disclosure 1
by licensees of home equity sharing agreements governed by this 2
chapter. 3
(2) If it appears to the director that a licensee is conducting 4
business in an injurious manner or is violating any provision of this 5
chapter, the director may order or direct the discontinuance of any 6
such injurious or illegal practice. 7
(3) The director or designated persons, with or without prior 8
administrative action, may bring an action in superior court to 9
enjoin the acts or practices that constitute violations of this 10
chapter and to enforce compliance with this chapter or any rule or 11
order made under this chapter. Upon proper showing, injunctive relief 12
or a temporary restraining order shall be granted. The director shall 13
not be required to post a bond in any court proceedings.14
(4) For purposes of this section, "conducting business in an 15
injurious manner" means conducting business in a manner that violates 16
any provision of this chapter, or that creates the reasonable 17
likelihood of a violation of any provision of this chapter.18
NEW SECTION. Sec. 17. VIOLATIONS— NO PENALTY PRESCRIBED — GROSS 19
MISDEMEANOR— GOOD FAITH EXCEPTION. (1) A person who violates, or 20
knowingly aids or abets in the violation of any provision of this 21
chapter, for which no penalty has been prescribed, and a person who 22
fails to perform any act that is the person's duty to perform under 23
this chapter and for which no penalty has been prescribed for failure 24
to do so, is guilty of a gross misdemeanor.25
(2) No provision imposing civil penalties or criminal liability 26
under this chapter or rule adopted under this chapter applies to an 27
act taken or omission made in good faith in conformity with a written 28
notice, interpretation, or examination report of the director or the 29
director's agent. 30
NEW SECTION. Sec. 18. APPLICATION OF ADMINISTRATIVE PROCEDURE 31
ACT. The proceedings for denying license applications, issuing cease 32
and desist orders, suspending or revoking licenses, and imposing 33
civil penalties or other remedies under this chapter, and any review 34
or appeal of such action, shall be governed by the provisions of the 35
administrative procedure act, chapter 34.05 RCW.36
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NEW SECTION. Sec. 19. ENFORCEMENT OF CHAPTER — DIRECTOR'S 1
DISCRETION— HEARING— SANCTIONS— RECOVERY OF COSTS. (1) The director or 2
designated persons may, at their discretion, take such action as 3
provided for in this chapter to enforce this chapter. If the person 4
subject to such action does not appear in person or by counsel at the 5
time and place designated for any administrative hearing that may be 6
held on the action, then the person is deemed to consent to the 7
action. If the person subject to the action consents, or if after 8
hearing the director finds by a preponderance of the evidence that 9
any grounds for sanctions under this chapter exist, then the director 10
may impose any sanction authorized by this chapter.11
(2) The director may recover the state's costs and expenses for 12
prosecuting violations of this chapter including staff time spent 13
preparing for and attending administrative hearings and reasonable 14
attorneys' fees unless, after a hearing, the director determines no 15
violation occurred. 16
NEW SECTION. Sec. 20. APPLICATION OF CONSUMER PROTECTION ACT. 17
The legislature finds that the practices governed by this chapter are 18
matters vitally affecting the public interest for the purpose of 19
applying the consumer protection act, chapter 19.86 RCW. A violation 20
of this chapter is not reasonable in relation to the development and 21
preservation of business and is an unfair and deceptive act or 22
practice and unfair method of competition in the conduct of trade or 23
commerce in violation of RCW 19.86.020. Remedies provided by chapter 24
19.86 RCW are cumulative and not exclusive.25
NEW SECTION. Sec. 21. Sections 1 through 20 of this act 26
constitute a new chapter in Title 31 RCW.27
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