Committee advances substitute for House Bill 2,236 to limit Housing Finance Commission retail lending, 13–4
January 22, 2026 | Legislative Sessions, Washington
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The House Housing Committee on Jan. 22 reported the proposed substitute for House Bill 2,236 out of committee with a due‑pass recommendation following a 13–4 roll‑call vote.
Staff and sponsor language explain the substitute (H‑3,020.2) updates a statute more than 40 years old. The substitute specifies that the Housing Finance Commission (HFC) may not originate residential mortgage loans directly to natural persons for owner‑occupied single‑family housing purchases or refinancing, except for certain down‑payment assistance loans. An intent section was added to state the commission is not intended to function as a retail mortgage lender and should not compete with private financial institutions; the new lending authority is intended for multifamily and non‑owner‑occupied housing.
Representative Zahn, sponsor of the substitute cleanup, said the changes were intended to modernize the statute and to reassure banking partners that the commission is not opening a retail lending program. "I do believe that that is already an underlying statute," Zahn said, referencing existing RCW language that, in her reading, prevents HFC funds from being construed as public monies.
Representative Dufo expressed continued concern that striking a specific phrase about "not using public funds" could create risks for taxpayers if the commission were to behave like a de facto state bank. "It gives me heartburn and concern that this could become a de facto state bank and it would rely on the full faith and credit of all the taxpayers of Washington state," Dufo said, and therefore she voted without recommendation.
Other members acknowledged the bill's cleanup purpose while weighing taxpayer risk; Representative Mongeres said she would vote yes but emphasized ensuring the commission does not compete with private lenders. The clerk announced a final tally of 13 ayes and 4 nays.
By vote, the substitute was reported out of committee and will proceed to the House for scheduling on the floor. Members asked staff and sponsors to continue discussions about statutory language to ensure clarity on public‑fund boundaries.
Next steps: the substitute moves to the House calendar for possible amendment or floor action.
Staff and sponsor language explain the substitute (H‑3,020.2) updates a statute more than 40 years old. The substitute specifies that the Housing Finance Commission (HFC) may not originate residential mortgage loans directly to natural persons for owner‑occupied single‑family housing purchases or refinancing, except for certain down‑payment assistance loans. An intent section was added to state the commission is not intended to function as a retail mortgage lender and should not compete with private financial institutions; the new lending authority is intended for multifamily and non‑owner‑occupied housing.
Representative Zahn, sponsor of the substitute cleanup, said the changes were intended to modernize the statute and to reassure banking partners that the commission is not opening a retail lending program. "I do believe that that is already an underlying statute," Zahn said, referencing existing RCW language that, in her reading, prevents HFC funds from being construed as public monies.
Representative Dufo expressed continued concern that striking a specific phrase about "not using public funds" could create risks for taxpayers if the commission were to behave like a de facto state bank. "It gives me heartburn and concern that this could become a de facto state bank and it would rely on the full faith and credit of all the taxpayers of Washington state," Dufo said, and therefore she voted without recommendation.
Other members acknowledged the bill's cleanup purpose while weighing taxpayer risk; Representative Mongeres said she would vote yes but emphasized ensuring the commission does not compete with private lenders. The clerk announced a final tally of 13 ayes and 4 nays.
By vote, the substitute was reported out of committee and will proceed to the House for scheduling on the floor. Members asked staff and sponsors to continue discussions about statutory language to ensure clarity on public‑fund boundaries.
Next steps: the substitute moves to the House calendar for possible amendment or floor action.
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