Original Notice.

     Preproposal statement of inquiry was filed as WSR 12-21-119.

     Title of Rule and Other Identifying Information: Amending the rules (chapter 208-620 WAC) that implement the Consumer Loan Act (CLA) (chapter 31.04 RCW) to increase the number of required prelicensing education hours specific to Washington law for mortgage loan originator (MLO) applicants.

     Hearing Location(s): Department of Financial Institutions, 150 Israel Road S.W., Room 319, Tumwater, WA 98501, on January 24, 2013, at 1-3 p.m.

     Date of Intended Adoption: February 20, 2013.

     Submit Written Comments to: Sara Rietcheck, P.O. Box 41200, 150 Israel Road S.W., Olympia, WA 98504-1200, e-mail sara.rietcheck@dfi.wa.gov, by January 24, 2013.

     Assistance for Persons with Disabilities: Contact Sara Rietcheck by January 17, 2013, TTY (360) 664-8126 or (360) 902-8786.

     Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose of the proposed rules is to increase the number of required prelicensing education hours specific to Washington law in order to ensure that Washington MLO applicants are properly educated about Washington law prior to licensing. In the spring of 2013, a uniform state test section will be added to the national SAFE test and if a state adopts the uniform state test, the state's separate test may be eliminated. Washington expects to adopt the use of the uniform state test along with a large majority of other states and the Washington specific component test will be phased out. The elimination of the separate Washington component test will cause a decrease in the number of test questions specific to Washington law.

     Reasons Supporting Proposal: Because there will be fewer test questions specific to Washington law, mortgage loan originators must use prelicensing education as a tool to gain knowledge of Washington law prior to licensure.

     This rule making is proposed under OFM Guideline 3.d.

     Statutory Authority for Adoption: Chapter 43.320 RCW, RCW 31.04.165.

     Statute Being Implemented: Chapter 31.04 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, Olympia, WA, (360) 902-8800; Implementation and Enforcement: Deborah Bortner, 150 Israel Road, Olympia, WA, (360) 902-8800.

     No small business economic impact statement has been prepared under chapter 19.85 RCW. The rule amendments will not impose more than minor costs on the businesses impacted by the proposed rules.

     A cost-benefit analysis is not required under RCW 34.05.328. Not applicable to the proposed rules.

December 18, 2012

Deborah Bortner, Director

Division of Consumer Services

     (1) You must complete at least twenty two hours of prelicensing education approved by the NMLSR. The prelicensing education must include:

     (a) Three hours of federal law and regulations;

     (b) Three hours of ethics, which includes instruction on fraud, consumer protection, and fair lending issues;

     (c) Two hours of training related to lending standards for the nontraditional mortgage product marketplace; and

     (d) At least ((two)) four hours of training specifically related to Washington law.

     (2) You will receive credit for having completed the prelicensing education for every state once you have successfully completed the prelicensing education requirements approved by the nationwide mortgage licensing system and registry for any state.

     (3) Must I take continuing education in the year I complete the prelicencing education? No. You will not have a continuing education requirement in the year in which you complete the core twenty hours of prelicensing education.

[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-720, filed 12/1/09, effective 1/1/10.]

     (1) You must take and pass the NMLS sponsored loan originator test. The test has two parts; one on federal law and regulation, and one on ((Washington specific)) uniform state law and regulation. You must receive a score of seventy-five percent or higher to pass the test.

     (2) Where may I find information about the loan originator test? The NMLS web site will publish the names and contact information of approved testing providers.

     (3) How much does the loan originator test cost? Testing costs are set by the test provider and the NMLS and may be modified from time to time. The NMLS web site will publish the current testing fee with the testing provider contact information.

     (4) How do I register to take the loan originator test? Register through the NMLS web site.

     (5) What topics may be covered in the loan originator test? At a minimum, the test topics will include ethics, federal and state law and regulation pertaining to mortgage origination, federal and state law and regulation on fraud, consumer protection, nontraditional mortgage products, and fair lending.

     (6) After passing the loan originator test, will I have to take it again? If you fail to maintain a valid license for a period of five years or longer you must retake the test, not taking into account any time during which you were a registered mortgage loan originator.

     (7) How soon after failing the loan originator test may I take it again? After taking and failing the test you must wait thirty days before taking it again. After failing three consecutive times, you must then wait at least six months before taking the test again.

[Statutory Authority: RCW 43.320.040 and 31.04.165. 12-18-047, § 208-620-725, filed 8/29/12, effective 11/1/12. Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-725, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-725, filed 12/1/09, effective 1/1/10.]

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