Title of Rule and Other Identifying Information: Making the brief adjudicative proceeding process under RCW 34.05.482 through 34.05.494 available to applicants who have had license applications denied under the Mortgage Broker Practices Act, chapter 19.146 RCW.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The proposal will give applicants access to the brief adjudicative proceeding process if their license application under the Mortgage Broker Practices Act is denied.

     Reasons Supporting Proposal: By having access to the brief adjudicative proceeding process, applicants can achieve a quicker resolution of an appeal to their licensing application denial without sacrificing any other remedies available to them.

     Statutory Authority for Adoption: RCW 43.320.040, 19.146.223, chapter 19, Laws of 2006.

     Statute Being Implemented: Chapter 19.146 RCW.

     Rule is not necessitated by federal law, federal or state court decision.

     Name of Proponent: Department of financial institutions, governmental.

     Name of Agency Personnel Responsible for Drafting: Cindy Fazio, 150 Israel Road, Tumwater, WA, (360) 902-8800; Implementation and Enforcement: Deborah Bortner, 150 Israel Road, Tumwater, WA, (360) 902-0511.

March 27, 2007

Deborah Bortner, Director

Division of Consumer Services

     (a) Pass a licensing test. You must take and pass a test that assesses your knowledge of the mortgage business and related regulations. See WAC 208-660-360, Loan originators -- Testing.

     (b) Submit an application. The application form will be prescribed by the director.

     (c) Prove your identity. You must provide information to prove your identity.

     (d) Pay the application fee. You must pay an application fee to cover the department's cost of processing and reviewing applications. See WAC 208-660-550, Department fees and costs.

     (2) In addition to reviewing my application, what else will the department consider to determine if I qualify for a loan originator license?

     (a) General fitness and prior compliance actions. The department will investigate your background to see that you demonstrate the experience, character, and general fitness that commands the confidence of the community and creates a belief that you will conduct business honestly and fairly within the purposes of the act. This investigation may include a review of the number and severity of complaints filed against you, or any person you were responsible for, and a review of any investigation or enforcement activity taken against you, or any person you were responsible for, in this state, or any jurisdiction.

     (b) License suspensions or revocations. You are not eligible for a loan originator license if you have been found to be in violation of the act or the rules, or have had a license issued under the act or any similar state statute suspended or revoked within five years of the filing of the present application.

     (c) Criminal history. You are not eligible for a loan originator license if you have been convicted of a gross misdemeanor involving dishonesty or financial misconduct, or a felony, within seven years of the filing of the present application.

     (3) May I originate residential mortgage loans in Washington without a loan originator license? Persons conducting the business of a loan originator without an active loan originator license must fall under one of the following categories of exemption from loan originator licensing:

     (a) Persons conducting residential mortgage loan business exclusively for any exempt person under RCW 19.146.020 (1)(a)(i); or

     (b) The exclusive agents conducting residential mortgage loan business for any exempt person under RCW 19.146.020 (1)(a)(ii); or

     (c) The bona fide employees conducting residential mortgage loan business exclusively for any exempt person under RCW 19.146.020 (1)(b), (e), (g) or (h); or

     (d) Those persons exempt under RCW 19.146.020 (1)(c) or (d).

     (4) What will happen if my loan originator license application is incomplete? The department will reject and return the entire application package to you with a notice identifying the incomplete, missing, or inaccurate information. You must follow the department's directions to correct the problems. You may then resubmit the application package.

     (5) How do I withdraw my application for a loan originator license? Provide the department with a written request to withdraw your application in a form prescribed by the director.

     (6) When will the department consider my loan originator license application to be abandoned? If you do not respond within ten business days to the department's second request for information, your loan originator license application is considered abandoned. Failure to provide the requested information will not affect new applications filed after the abandonment. You may reapply by submitting a new application package.

     (7) What happens if the department denies my application for a loan originator license, and what are my rights if the license is denied? (a) The department will notify you if your application is denied. You will receive a refund of any unused portion of the application fee.

     (b) If your license application lists any mortgage brokers, the department will also notify the mortgage brokers of the license denial.

     (c) Under the Administrative Procedure Act, chapter 34.05 RCW, you have the right to request an administrative hearing on the denial brief adjudicative proceeding. To request a hearing, notify the department, in writing, within twenty days from the date of the director's notice to you notifying you your license application has been denied.

     (i) Brief Adjudicative Proceeding Adopted. The director adopts RCW 34.05.482 through 34.05.494 to administer brief adjudicative proceedings under WAC 208-660-350.

     (ii) Presiding Officer. Brief adjudicative proceedings are conducted by a presiding officer designated by the director. The presiding officer must have department expertise in the subject matter, but must not have personally participated in the department's licensing application denial, or work in the department's division of consumer services, or such other division within the department delegated by the director to oversee implementation of the act and these rules.

     (iii) Preliminary Records. The preliminary record for the brief adjudicative proceeding consists of the application and all associated documents including all documents relied upon by the department to deny the application and all correspondence between the applicant and the department regarding the application.

     (iv) Notice of Hearing. The department will set the date, time, and place of the hearing, giving at least seven business days notice to the applicant.

     (v) Written Documents. The applicant or their representatives may present written documentation. The presiding officer must designate the date for submission of written documents.

     (vi) Oral Argument. The presiding officer may exercise discretion in allowing oral argument.

     (vii) Witnesses. Witnesses will not be allowed to testify.

     (viii) Agency Expertise Considered. The presiding officer may rely upon agency expertise in addition to the written record as a basis for a decision.

     (ix) Initial Order. The presiding officer must make a written initial order within ten business days of the final date for submission of materials, or oral argument, if any. The initial order will become final twenty-one days after service on the applicant unless the applicant requests an administrative review or the department decides to review the matter.

     (8) How will the department provide me with my loan originator license? The department may use any of the following methods to provide you with your loan originator license:

     (a) A printed paper license sent to you by regular mail.

     (b) A license sent to you electronically that you may print.

     (c) A license verification available on the department's web site and accessible for viewing by the public.

     (9) May I transfer, sell, trade, assign, loan, share, or give my loan originator license to someone else? No. A loan originator license authorizes only the individual named on the license to conduct the business at the location listed on the license.

     (10) How do I change information on my loan originator license? You must file a license amendment application with the department, in a form prescribed by the department within thirty days of the change occurring.

     (11) If I am employed by a bank or other exempt entity may I apply for and receive a loan originator license? Yes, you may apply for a license at any time. However, if you are not working for a licensed mortgage broker, your license will be considered inactive.

     (12) What is an inactive loan originator's license? If an individual holds a loan originator license but is not working with a licensed mortgage broker, they hold an inactive license. A person holding an inactive license may not hold themselves out as a licensed loan originator.

     (13) When my loan originator's license is inactive, am I subject to the director's enforcement authority? Yes. Your license is granted under specific authority of the director and under certain situations you may be subject to the director's authority even if you are not doing any activity covered by the act.

     (14) When my loan originator license is inactive, must I continue to pay annual fees, and complete continuing education for that year? Yes. You must comply with all the annual licensing requirements or you will be unable to renew your inactive loan originator license.

     (15) May I originate loans from a web site when my license is inactive? You may not originate loans, or engage in any activity that requires a license under the act, while your license is inactive, except as allowed in subsection (3) of this section.

     (16) How do I activate my loan originator license? When the department receives a notice, in a form prescribed by the department, from a licensed mortgage broker establishing a working relationship with you, your loan originator license will become active. The department will notify you and all mortgage brokers you are working with of the new working relationship established by the licensed mortgage broker.

     (17) When may the department issue interim loan originator licenses? To prevent an undue delay, the director may issue interim loan originator licenses with a fixed expiration date. The license applicant must have substantially met the initial licensing requirements, as determined by the director, to receive an interim license.

     For purposes of this section, undue delay includes the adjustment of license expiration or renewal dates to coincide with the implementation of systems designed to assist in uniformity and provide data repositories of licensing information.

     One example of having substantially met the initial licensing requirements is: Submitting a complete application, paying all application fees, and the department having received and reviewed the results of the applicant's background check.

     (18) When does my loan originator license expire? The loan originator license expires annually. The expiration date is shown on the license. If the license is an interim license, it may expire in less than one year.

     (19) How do I renew my loan originator license?

     (a) Before the license expiration date you must:

     (i) Pay the annual assessment fee; and

     (ii) Meet the continuing education requirement.

     (b) The renewed license is valid until it expires, or is surrendered, suspended or revoked.

     (20) If I let my loan originator license expire, must I apply to get a new license? If you complete all the requirements for renewal within forty-five days of the expiration date you may renew an existing license. However, if you renew your license during this forty-five day period, in addition to paying the annual assessment on your license, you must pay an additional fifty percent of your annual assessment. See subsection (19) of this section for the license renewal requirements.

     During this forty-five day period, your license is expired and you must not conduct any business under the act that requires a license.

     Any renewal requirements received by the department must be evidenced by either a United States Postal Service postmark or department "date received" stamp within the forty-five days. If you fail to comply with the renewal request requirements within forty-five days, you must apply for a new license.

     (21) May I still originate loans if my loan originator license has expired? No. Once your license has expired you may no longer conduct the business of a loan originator as defined in the act and these rules.

     (22) What happens to the loan applications I originated before my loan originator license expired? Existing loan applications must be processed by the licensed mortgage broker or another licensed loan originator working for the mortgage broker.

     (23) May I surrender my loan originator's license? Yes. You may surrender your license before the license expires by notifying the department, in a form prescribed by the department.

     Surrender of your loan originator license does not change your civil or criminal liability, or your liability for any administrative actions arising from acts or omission occurring before the license surrender.

     (24) Must I display my loan originator license where I work as a loan originator? No. Neither you nor the mortgage broker company is required to display your loan originator license. However, evidence that you are licensed as a loan originator must be made available to anyone who requests it.

     (25) If I operate as a loan originator on the internet, must I display my license number on my web site? Yes. You must display your license number, and the license number and name as it appears on the license of the licensed mortgage broker you represent, on the web site.

     (26) Must I include my loan originator license number on any documents? You must include your license number immediately following your name on solicitations, including business cards, advertisements, and residential mortgage loan applications.

     (27) When must I disclose my loan originator license number? In the following situations you must disclose your loan originator license number and the name and license number of the mortgage broker you are associated with:

     (a) When asked by any party to a loan transaction, including third party providers;

     (b) When asked by any person you have solicited for business, even if the solicitation is not directly related to a mortgage transaction;

     (c) When asked by any person who contacts you about a residential mortgage loan;

     (d) When taking a residential mortgage loan application.

[Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-350, filed 11/21/06, effective 1/1/07.]

     Reviser's note: The typographical 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.

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