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Reverse Mortgages in Washington

Washington Reverse MortgageReverse mortgages have been a touchy subject in the state of Washington in the past few years due to the passing of a number of senate bills effecting the future of these loans. When Senate Bill 6471 was passed in 2008, reverse mortgages were essentially banned in the state of Washington. The provisions of SB 6471 required licensed lenders to use the simple interest method as a caveat of the Consumer Loan Act to calculate interest rates. However, the simple interest method does not include interest calculation for negative amortization loans; which is the category that reverse mortgages fall under.

Due to the unfavorable outcome of this bill a new bill was passed, SB 5400. SB 5400 counters the mistakes of SB 6471 in that it established new requirements for lenders and borrowers alike. It frees Washington reverse mortgages from the provisions of SB 6471 in areas, such as billing and interest calculations.

Washington reverse mortgage loan limits can be up to $300,000 more than the national average. These higher limits are typically characteristic of the western side of the state, encompassing several counties, such as King, Snohomish and Pierce Counties. The vast majority of WA reverse mortgages originate in the greater Seattle area of Washington state, as this area is home to the highest home values.

The WA Reverse Mortgage Process

Borrowers in comfortable financial situations take the normal plan of action for a reverse mortgage in Washington (counsel, apply, appraise, underwrite, close). Once you have met with a WA approved HECM conuselor, you can take the first steps in the loan application process with a lender.

However, those who are financially vulnerable can take advantage of the Washington Department of Revenue’s Property Tax Deferral for the Elderly, which is a single purpose reverse mortgage.