Consumer lending is regulated at both the state and federal levels. In Washington, the lending of money or extension of credit for family, personal, or household use, including the financing of residential mortgages, and secured or unsecured consumer loans, is regulated under the Consumer Loan Act, chapters  31.04 RCW and 208-620 WAC and requires a licensed unless otherwise exempt.

Regulation under the Consumer Loan Act begins with the licensing process. Licensing is required for companies but may also be required for individuals who meet the definition of mortgage loan originators.

Exemptions

There are exemptions from licensing at both the company (RCW 31.04.025 and WAC 208-620-104) and individual (WAC 208-620-105) levels.  You are exempt if:

  • You are providing loans or extending credit primarily for business, commercial, or agricultural purposes. (See RCW 31.04.025(2)(e)).
    • This exemption is not available if you secure the loan with a lien on the borrower’s primary residence.
  • You are carrying the financing on raw land, even if that raw land is zoned residential. (See RCW 31.04.025(2)(f)).
    • This exemption is not available to a person constructing or acting as a contractor for the construction of residential dwellings.
  • You are carrying the financing on the sale of the home you live in. (See WAC 208-620-104(7) and WAC 208-620-105(3)). If you are carrying the financing on the sale of a house you own but do not live in, you are not exempt from licensure but you may be eligible for a license waiver – see the waiver section below.
  • You are providing loans or extending credit to immediate family members. (See WAC 208-620-104(6) and WAC 208-620-105(2)).

Waivers

If you are not exempt from licensure, you may still be eligible for a license waiver to make five or fewer unsecured loans and 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 RCW 31.04.025(3) and WAC 208-620-232).

Note: mortgage loan originator requirements are only relevant for residential mortgage lending. If you are lending money that will not be secured by residential real property, you are not a mortgage loan originator. (See WAC 208-620-105 for mortgage loan originator exemptions).

If you are eligible for the license waiver:

  1. You must comply with the state's usury rate limit. See chapter RCW 19.52.
  2. For seller financing or third-party residential financing transactions, you must also:
    1. Provide the buyer with a disclosure prescribed by the director if you do not provide the borrower with a compliant federal disclosure of the loan terms and conditions and cost of financing; and;
    2. Follow Washington law if you pursue a foreclosure.

License Waiver Steps

  1. Print the applicable license waiver:
    1. Residential seller financing. Use when you are financing the sale of your non-primary residence.
    2. Third-party residential lending. Use when you are lending money to a borrower to purchase residential real property when the loan will be secured by the property.
    3. Third-party lending. Use when you are lending money to a borrower.
  2. Fill out the license waiver, including the declaratory portion at the bottom, and return it to the Department via:
    1. Email to SFWaivers@dfi.wa.gov;
    2. Fax to the attention of Ashley Sutherland at (360) 664-2258; or
    3. Mail a hard copy to the Department at the address at the bottom of this webpage, to the attention of Ashley Sutherland.

      Do not provide any other loan documents to the Department.

  3. When we receive the license waiver we acknowledge it with a return email with a pdf of the license waiver. Our return email is usually within five business days.
  4. Provide the completed license waiver to the escrow company, title company, or attorney, if needed.
  5. If required, use the links below to print, fill out, and provide the applicable disclosure summary to the borrower.
    1. Disclosure Summary – Fixed Rate Loan
      Print this document, fill it out and provide it to the buyer.
    2. Disclosure Summary – Variable Rate Loan
      Print this document, fill it out and provide it to the buyer.

      Do not provide the disclosure summary to the Department.

Contact Us

If you have any questions about seller financing or third-party lending, please contact Ashley Sutherland.

Phone: (360) 664-7866
Toll Free: 1-877 RING DFI (746-4334)
Email: SFWaivers@dfi.wa.gov

Mailing Address

For U.S. Postal Service:
Department of Financial Institutions
Attn: Ashley Sutherland
Division of Consumer Services
PO Box 41200
Olympia WA 98504-1200

For Overnight Delivery:
Department of Financial Institutions
Attn: Ashley Sutherland
Division of Consumer Services
150 Israel Rd SW
Tumwater WA 98501