The proposed bill introduces a new chapter in Title 31 RCW that regulates home equity sharing agreements in Washington State. It defines essential terms related to these agreements and clarifies that they are distinct from traditional mortgage loans. The bill requires individuals or entities acting as home equity sharing agreement originators to obtain a license from the Department of Financial Institutions by July 1, 2026, which involves an application process, background checks, and maintaining a surety bond of at least $30,000. The director of the Department of Financial Institutions is granted authority to issue, deny, suspend, or revoke licenses based on compliance with regulations, and the bill outlines penalties for violations, including fines and cease and desist orders.

Key provisions of the bill include a mandatory three-day rescission period for homeowners, a requirement for homeowners to maintain at least 10% equity in their property, and stipulations for appraisals to be conducted by independent third parties. The bill also prohibits certain practices by licensees, such as charging penalties for early settlement and engaging in deceptive practices. It establishes that violations of the chapter are considered unfair and deceptive practices under the Consumer Protection Act, providing cumulative remedies. Additionally, the bill includes a good faith exception for civil penalties or criminal liability based on the director's guidance and outlines the application of the Administrative Procedure Act to enforcement actions. Overall, the legislation aims to create a transparent and fair environment for homeowners involved in home equity sharing agreements.