Date Adopted: December 29, 2003.

     Purpose: To establish procedures to guide prosecutorial agencies in making application for grants from the mortgage lending fraud prosecution fund, as directed by the legislature, and to guide the Department of Financial Institutions in processing the applications.

     Statutory Authority for Adoption: RCW 43.320.040, 36.22.181, (section 1, chapter 289, Laws of 2003).

      Adopted under notice filed as WSR 03-21-175 on October 22, 2003.

     Changes Other than Editing from Proposed to Adopted Version: "Training" is added to the list of expenses of prosecution that may be reimbursed. Clarification is added regarding the source of mortgage lending fraud information that may lead to a prosecution and an application for a grant from the fund.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 4, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 4, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.

     Effective Date of Rule: Thirty-one days after filing.

December 29, 2003

Helen P. Howell

Director

     (1) "Department" means the Department of Financial Institutions.

     (2) "Director" means the Director of the Department.

     (3) "Mortgage lending fraud prosecution account" or "account" means the account established under RCW 36.22.181, RCW 40.320.140, and RCW 43.320.1401 (chapter 289, Laws of 2003).

     (4) "Mortgage lending process" means the process through which a person seeks or obtains a residential mortgage loan including, but not limited to, solicitation, application or origination, negotiation of terms, third party provider services, underwriting, signing and closing, and funding of the loan.

     (5) "Person" means a natural person, corporation, company, limited liability corporation, partnership, or association.

     (6) "Prosecutorial agency" means the office of the Washington Attorney General, the office of the United States Attorney, or the office of any county prosecutor in the State of Washington.

     (7) "Residential mortgage loan" means any loan primarily for personal, family, or household use secured by a mortgage or deed of trust on residential real estate upon which is constructed or intended to be constructed a single family dwelling or multiple family dwelling of four or fewer units.

     (8) "Third-party provider" means any person other than a mortgage broker or lender who provides goods or services in connection with the preparation of a borrower's loan and includes, but is not limited to, credit reporting agencies, title companies, appraisers, structural and pest inspectors, or escrow companies.

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     Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.

[NEW SECTION]WAC 208-700-020   Authorization for use of funds.   The Director is authorized to disburse funds held under this chapter to cover the expenses of any prosecutorial agency for the purposes of prosecuting fraudulent activities in the mortgage lending process, whether the knowledge of such activity arises from a direct complaint or the independent investifation of the Department of any law enforcement agency. Such prosecution expenses may include, but are not limited to:

     (1) Training.

     (2) Investigation.

     (3) Discovery.

     (4) Trial preparation and trial.

     (5) Witness expenses.

     (6) Sentencing.

     (7) Appeal.

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     Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.

     Reviser's note: The spelling error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.

[NEW SECTION]WAC 208-700-030   Application and approval for disbursement of funds.   (1) At the Director's discretion, the Department may establish any of the following means for application, approval and disbursement of funds:

     a. A written agreement or memorandum of understanding with a prosecutorial agency covering expenses for a set period of time or the expenses for a particular prosecution. Each agreement or memorandum of understanding shall identify the effective period, the expenses to be covered, the dollar limit, the manner and form of billing expenses and the process for disbursement of the funds, and shall be signed by an authorized representative of the prosecutorial agency, and the Director or the Director's designee.

     b. A written application submitted to the Department for payment of prosecution expenses. Such written application shall be in a form acceptable to the Director and shall include at a minimum the following information:

     i. The prosecutorial agency applicant name, address and contact information.

     ii. The case name and description including the details of persons and crimes under consideration.

     iii. The court and county where the charges are or may be filed.

     iv. The expenses or range of expenses to be reimbursed.

     c. An invoice and voucher submitted after the prosecutorial expenses have been incurred, which shall include all the information required under "b", above.

     (2) The Department will approve or deny the application in a written letter. The letter of approval shall contain the terms of payment including the maximum amount to be reimbursed, the billing process to be followed by the prosecutorial agency, reporting requirements to the Department and the procedures by which the Department shall disburse the funds.

     (3) A completed invoice or voucher in a form acceptable to the Director shall be submitted for all prosecution expenses for which payment or reimbursement from the account is sought.

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     Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.

[NEW SECTION]WAC 208-700-040   Disbursement limitation   The Director is not required to disburse any funds unless the mortgage lending fraud prosecution account contains sufficient funds to cover planned disbursements under an agreement, memorandum of understanding or approved application. At no time shall the Director or the Department be required to make disbursements from the Department's own operating funds.

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     Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.