BILL REQ. #: H-3786.1
State of Washington | 62nd Legislature | 2012 Regular Session |
READ FIRST TIME 01/26/12.
AN ACT Relating to making technical corrections, modernizing statutes, and streamlining enforcement authorities of nondepository institutions regulated by the department of financial institutions; amending RCW 31.04.027, 31.04.065, 31.04.093, 31.04.145, 31.04.224, 31.45.010, 31.45.070, 31.45.105, 31.45.110, 19.146.200, and 19.144.020; reenacting and amending RCW 31.04.025; adding a new section to chapter 31.45 RCW; adding a new section to chapter 19.146 RCW; adding new sections to chapter 18.44 RCW; and adding new sections to chapter 19.230 RCW.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
Sec. 1 RCW 31.04.025 and 2011 c 191 s 1 and are each reenacted
and amended to read as follows:
(1) Each loan made to a resident of this state by a licensee, or
persons subject to this chapter, is subject to the authority and
restrictions of this chapter, unless such loan is made under the
authority of chapter 63.14 RCW.
(2) This chapter does not apply to the following:
(a) Any person doing business under, and as permitted by, any law
of this state or of the United States relating to banks, savings banks,
trust companies, savings and loan or building and loan associations, or
credit unions;
(b) Entities making loans under chapter 19.60 RCW (pawnbroking);
(c) Entities ((making loans)) conducting transactions under chapter
63.14 RCW (retail installment sales of goods and services), unless the
goods being sold in a retail installment sale consist of open loop
prepaid access (prepaid access as defined in 31 C.F.R. Part
1010.100(ww) and not closed loop prepaid access as defined in 31 C.F.R.
Part 1010.100(kkk));
(d) Entities making loans under chapter 31.45 RCW (check cashers
and sellers);
(e) Any person making a loan primarily for business, commercial, or
agricultural purposes unless the loan is secured by a lien on the
borrower's primary residence;
(f) Any person making loans made to government or government
agencies or instrumentalities or making loans to organizations as
defined in the federal truth in lending act;
(g) Entities making loans under chapter 43.185 RCW (housing trust
fund);
(h) Entities making loans under programs of the United States
department of agriculture, department of housing and urban development,
or other federal government program that provides funding or access to
funding for single-family housing developments or grants to low-income
individuals for the purchase or repair of single-family housing;
(i) Nonprofit housing organizations making loans, or loans made,
under housing programs that are funded in whole or in part by federal
or state programs if the primary purpose of the programs is to assist
low-income borrowers with purchasing or repairing housing or the
development of housing for low-income Washington state residents; and
(j) Entities making loans which are not residential mortgage loans
under a credit card plan; and
(k) Individuals employed by a licensed residential loan servicing
company, unless so required by federal law or regulation.
(3) The director may, at his or her discretion, waive applicability
of the consumer loan company licensing provisions of this chapter to
other persons, not including individuals subject to the S.A.F.E. act,
making or servicing loans when the director determines it necessary to
facilitate commerce and protect consumers. The director may adopt
rules interpreting this section.
Sec. 2 RCW 31.04.027 and 2011 c 191 s 2 are each amended to read
as follows:
It is a violation of this chapter for a licensee, its officers,
directors, employees, or independent contractors, or any other person
subject to this chapter to:
(1) Directly or indirectly employ any scheme, device, or artifice
to defraud or mislead any borrower, to defraud or mislead any lender,
or to defraud or mislead any person;
(2) Directly or indirectly engage in any unfair or deceptive
practice toward any person;
(3) Directly or indirectly obtain property by fraud or
misrepresentation;
(4) Solicit or enter into a contract with a borrower that provides
in substance that the consumer loan company may earn a fee or
commission through the consumer loan company's best efforts to obtain
a loan even though no loan is actually obtained for the borrower;
(5) Solicit, advertise, or enter into a contract for specific
interest rates, points, or other financing terms unless the terms are
actually available at the time of soliciting, advertising, or
contracting;
(6) Fail to make disclosures to loan applicants as required by RCW
31.04.102 and any other applicable state or federal law;
(7) Make, in any manner, any false or deceptive statement or
representation with regard to the rates, points, or other financing
terms or conditions for a residential mortgage loan or engage in bait
and switch advertising;
(8) Negligently make any false statement or knowingly and willfully
make any omission of material fact in connection with any reports filed
with the department by a licensee or in connection with any
investigation conducted by the department;
(9) Make any payment, directly or indirectly, to any appraiser of
a property, for the purposes of influencing the independent judgment of
the appraiser with respect to the value of the property;
(10) Accept from any borrower at or near the time a loan is made
and in advance of any default an execution of, or induce any borrower
to execute, any instrument of conveyance, not including a mortgage or
deed of trust, to the lender of any ownership interest in the
borrower's primary residence that is the security for the borrower's
loan;
(11) Obtain at the time of closing a release of future damages for
usury or other damages or penalties provided by law or a waiver of the
provisions of this chapter; ((or))
(12) Advertise any rate of interest without conspicuously
disclosing the annual percentage rate implied by that rate of interest
or otherwise fail to comply with any requirement of the truth in
lending act, 15 U.S.C. Sec. 1601 and regulation Z, 12 C.F.R. Sec. 226,
the real estate settlement procedures act, 12 U.S.C. Sec. 2601 and
regulation X, 24 C.F.R. Sec. 3500, or the equal credit opportunity act,
15 U.S.C. Sec. 1691 and regulation B, Sec. 202.9, 202.11, and 202.12,
or any other applicable state or federal statutes((, as now or
hereafter amended, in any advertising of residential mortgage loans or
any other consumer loan company activity)) or regulations; or
(13) Make loans from any unlicensed location.
Sec. 3 RCW 31.04.065 and 1991 c 208 s 7 are each amended to read
as follows:
The license shall state the address at which the business is to be
conducted and shall state fully the name of the licensee, and if the
licensee is a copartnership or association, the names of its members,
and if a corporation, the date and place of its incorporation. ((The
licensee shall conspicuously post the license in the place of business
of the licensee.)) The license is not transferable or assignable.
Sec. 4 RCW 31.04.093 and 2010 c 35 s 6 are each amended to read
as follows:
(1) The director shall enforce all laws and rules relating to the
licensing and regulation of licensees and persons subject to this
chapter.
(2) The director may deny applications for licenses for:
(a) Failure of the applicant to demonstrate within its application
for a license that it meets the requirements for licensing in RCW
31.04.045 and 31.04.055;
(b) Violation of an order issued by the director under this chapter
or another chapter administered by the director, including but not
limited to cease and desist orders and temporary cease and desist
orders;
(c) Revocation or suspension of a license to conduct lending or
residential mortgage loan servicing, or to provide settlement services
associated with lending or residential mortgage loan servicing, by this
state, another state, or by the federal government within five years of
the date of submittal of a complete application for a license; or
(d) Filing an incomplete application when that incomplete
application has been filed with the department for sixty or more days,
provided that the director has given notice to the licensee that the
application is incomplete, informed the applicant why the application
is incomplete, and allowed at least twenty days for the applicant to
complete the application.
(3) The director may suspend or revoke a license issued under this
chapter if the director finds that:
(a) The licensee has failed to pay any fee due the state of
Washington, has failed to maintain in effect the bond or permitted
substitute required under this chapter, or has failed to comply with
any specific order or demand of the director lawfully made and directed
to the licensee in accordance with this chapter;
(b) The licensee, either knowingly or without the exercise of due
care, has violated any provision of this chapter or any rule adopted
under this chapter; or
(c) A fact or condition exists that, if it had existed at the time
of the original application for the license, clearly would have allowed
the director to deny the application for the original license. The
director may revoke or suspend only the particular license with respect
to which grounds for revocation or suspension may occur or exist unless
the director finds that the grounds for revocation or suspension are of
general application to all offices or to more than one office operated
by the licensee, in which case, the director may revoke or suspend all
of the licenses issued to the licensee.
(4) The director may impose fines of up to one hundred dollars per
day upon the licensee, its employee or loan originator, or other person
subject to this chapter for:
(a) Any violation of this chapter; or
(b) Failure to comply with any order or subpoena issued by the
director under this chapter.
(5) The director may issue an order directing the licensee, its
employee or loan originator, or other person subject to this chapter
to:
(a) Cease and desist from conducting business in a manner that is
injurious to the public or violates any provision of this chapter;
(b) Take such affirmative action as is necessary to comply with
this chapter; or
(c) Make a refund or restitution to a borrower or other person who
is damaged as a result of a violation of this chapter.
(6) The director may issue an order removing from office or
prohibiting from participation in the affairs of any licensee, or both,
any officer, principal, employee or loan originator, or any person
subject to this chapter for:
(a) False statements or omission of material information from an
application for a license that, if known, would have allowed the
director to deny the original application for a license;
(b) Conviction of a gross misdemeanor involving dishonesty or
financial misconduct or a felony;
(c) Suspension or revocation of a license to engage in lending or
residential mortgage loan servicing, or perform a settlement service
related to lending or residential mortgage loan servicing, in this
state or another state;
(d) Failure to comply with any order or subpoena issued under this
chapter; ((or))
(e) A violation of RCW 31.04.027, 31.04.102, 31.04.155, or
31.04.221;
(7) Except to the extent prohibited by another statute, the
director may engage in informal settlement of complaints or enforcement
actions including, but not limited to, payment to the department for
purposes of financial literacy and education programs authorized under
RCW 43.320.150. If any person subject to this chapter makes a payment
to the department under this section, the person may not advertise such
payment.
(((7))) (8) Whenever the director determines that the public is
likely to be substantially injured by delay in issuing a cease and
desist order, the director may immediately issue a temporary cease and
desist order. The order may direct the licensee to discontinue any
violation of this chapter, to take such affirmative action as is
necessary to comply with this chapter, and may include a summary
suspension of the licensee's license and may order the licensee to
immediately cease the conduct of business under this chapter. The
order shall become effective at the time specified in the order. Every
temporary cease and desist order shall include a provision that a
hearing will be held upon request to determine whether the order will
become permanent. Such hearing shall be held within fourteen days of
receipt of a request for a hearing unless otherwise specified in
chapter 34.05 RCW.
(((8))) (9) A licensee may surrender a license by delivering to the
director written notice of surrender, but the surrender does not affect
the licensee's civil or criminal liability, if any, for acts committed
before the surrender, including any administrative action initiated by
the director to suspend or revoke a license, impose fines, compel the
payment of restitution to borrowers or other persons, or exercise any
other authority under this chapter.
(((9))) (10) The revocation, suspension, or surrender of a license
does not impair or affect the obligation of a preexisting lawful
contract between the licensee and a borrower.
(((10))) (11) Every license issued under this chapter remains in
force and effect until it has been surrendered, revoked, or suspended
in accordance with this chapter. However, the director may on his or
her own initiative reinstate suspended licenses or issue new licenses
to a licensee whose license or licenses have been revoked if the
director finds that the licensee meets all the requirements of this
chapter.
Sec. 5 RCW 31.04.145 and 2009 c 120 s 8 are each amended to read
as follows:
(1) For the purpose of discovering violations of this chapter or
securing information lawfully required under this chapter, the director
may at any time, either personally or by designees, investigate or
examine the loans and business and, wherever located, the books,
accounts, records, papers, documents, files, and other information used
in the business of every licensee and of every person who is engaged in
the business making or assisting in the making of loans at interest
rates authorized by this chapter, whether the person acts or claims to
act as principal or agent, or under or without the authority of this
chapter. ((For these purposes,)) The director or designated
representative((s)):
(a) Shall have free access to the offices and places of business,
books, accounts, papers, documents, other information, records, files,
safes, and vaults of all such persons((. The director or persons
designated by the director)) during normal business hours;
(b) May require the attendance of and examine under oath all
persons whose testimony may be required about the loans or the business
or the subject matter of any investigation, examination, or hearing and
may require such person to produce books, accounts, papers, records,
files, and any other information the director or designated persons
deem relevant to the inquiry((. The director));
(c) May require the production of original books, accounts, papers,
records, files, and other information; may require that such original
books, accounts, papers, records, files, and other information be
copied; or may make copies ((himself or herself or by designee)) of
such original books, accounts, papers, records, files, or other
information((. If a licensee or person does not attend and testify, or
does not produce the requested books, accounts, papers, records, files,
or other information, then the director or designated persons));
(d) May issue a subpoena or subpoena duces tecum requiring
attendance by any person identified in this section or compelling
production of ((the)) any books, accounts, papers, records, files, or
other documents or information identified in this section.
(2) The director shall make such periodic examinations of the
affairs, business, office, and records of each licensee as determined
by rule.
(3) Every licensee examined or investigated by the director or the
director's designee shall pay to the director the cost of the
examination or investigation of each licensed place of business as
determined by rule by the director.
(4) In order to carry out the purposes of this section, the
director may:
(a) Retain attorneys, accountants, or other professionals and
specialists as examiners, auditors, or investigators to conduct or
assist in the conduct of examinations or investigations;
(b) Enter into agreements or relationships with other government
officials or regulatory associations in order to improve efficiencies
and reduce regulatory burden by sharing resources, standardized or
uniform methods or procedures, and documents, records, information, or
evidence obtained under this section;
(c) Use, hire, contract, or employ public or privately available
analytical systems, methods, or software to examine or investigate the
licensee, individual, or person subject to chapter 120, Laws of 2009;
(d) Accept and rely on examination or investigation reports made by
other government officials, within or without this state;
(e) Accept audit reports made by an independent certified public
accountant for the licensee, individual, or person subject to chapter
120, Laws of 2009 in the course of that part of the examination
covering the same general subject matter as the audit and may
incorporate the audit report in the report of the examination, report
of investigation, or other writing of the director; or
(f) Assess the licensee, individual, or person subject to chapter
120, Laws of 2009 the cost of the services in (a) of this subsection.
Sec. 6 RCW 31.04.224 and 2009 c 120 s 11 are each amended to read
as follows:
The following are exempt from licensing as mortgage loan
originators under this chapter:
(1) Registered mortgage loan originators, or any individual
required to be registered;
(2) A licensed attorney who negotiates the terms of a residential
mortgage loan on behalf of a client as an ancillary matter to the
attorney's representation of the client, unless the attorney is
compensated by a lender, a mortgage broker, or other mortgage loan
originator or by any agent of a lender, mortgage broker, or other
mortgage loan originator; ((or))
(3) Any individual who offers or negotiates terms of a residential
mortgage loan with or on behalf of an immediate family member; or
(4) Any individual who offers or negotiates terms of a residential
mortgage loan secured by a dwelling that served as the individual's
residence.
Sec. 7 RCW 31.45.010 and 2009 c 510 s 2 are each amended to read
as follows:
Unless the context clearly requires otherwise, the definitions in
this section apply throughout this chapter.
(1) "Applicant" means a person that files an application for a
license under this chapter, including the applicant's sole proprietor,
owners, directors, officers, partners, members, and controlling
persons.
(2) "Borrower" means a natural person who receives a small loan.
(3) "Business day" means any day that the licensee is open for
business in at least one physical location.
(4) "Check" means the same as defined in RCW 62A.3-104(f) and, for
purposes of conducting the business of making small loans, includes
other electronic forms of payment, including stored value cards,
internet transfers, and automated clearing house transactions.
(5) "Check casher" means an individual, partnership, unincorporated
association, or corporation that, for compensation, engages, in whole
or in part, in the business of cashing checks, drafts, money orders, or
other commercial paper serving the same purpose.
(6) "Check seller" means an individual, partnership, unincorporated
association, or corporation that, for compensation, engages, in whole
or in part, in the business of or selling checks, drafts, money orders,
or other commercial paper serving the same purpose.
(7) "Collateral" means the same as defined in chapter 62A.9A RCW.
(8) "Controlling person" means a person owning or controlling ten
percent or more of the total outstanding shares of the applicant or
licensee, if the applicant or licensee is a corporation, and a member
who owns ten percent or more of a limited liability company or limited
liability partnership.
(9) "Default" means the borrower's failure to repay the small loan
in compliance with the terms contained in the small loan agreement or
note or failure to pay any installment plan payment on an installment
plan within ten days after the date upon which the installment was
scheduled to be paid.
(10) "Director" means the director of financial institutions.
(11) "Financial institution" means a commercial bank, savings bank,
savings and loan association, or credit union.
(12) "Installment plan" is a contract between a licensee and
borrower that provides that the loaned amount will be repaid in
substantially equal installments scheduled on or after a borrower's pay
dates and no less than fourteen days apart.
(13) "Licensee" means a check casher or seller licensed by the
director to engage in business in accordance with this chapter. ((For
purposes of the enforcement powers of this chapter, including the power
to issue cease and desist orders under RCW 31.45.110,)) "Licensee" also
means a check casher or seller, whether located within or outside of
this state, who fails to obtain the license or small loan endorsement
required by this chapter.
(14) "Loaned amount" means the outstanding principal balance and
any fees authorized under RCW 31.45.073 that have not been paid by the
borrower.
(15) "Origination date" means the date upon which the borrower and
the licensee initiate a small loan transaction.
(16) "Outstanding principal balance" of a small loan means any of
the principal amount that has not been paid by the borrower.
(17) "Paid" means that moment in time when the licensee deposits
the borrower's check or accepts cash for the full amount owing on a
valid small loan. If the borrower's check is returned by the
borrower's bank for ((insufficient funds)) any reason, the licensee
shall not consider the loan paid.
(18) "Person" means an individual, partnership, association,
limited liability company, limited liability partnership, trust,
corporation, and any other legal entity.
(19) "Principal" means the loan proceeds advanced for the benefit
of the borrower in a small loan, excluding any fee or interest charge.
(20) "Rescission" means annulling the loan contract and, with
respect to the small loan contract, returning the borrower and the
licensee to their financial condition prior to the origination date of
the loan.
(21) "Small loan" means a loan of up to the maximum amount and for
a period of time up to the maximum term specified in RCW 31.45.073.
(22) "Termination date" means the date upon which payment for the
small loan transaction is due or paid to the licensee, whichever occurs
first.
(23) "Total of payments" means the principal amount of the small
loan plus all fees or interest charged on the loan.
(24) "Trade secret" means the same as defined in RCW 19.108.010.
NEW SECTION. Sec. 8 A new section is added to chapter 31.45 RCW
to read as follows:
Applicants may be required to make application through a multistate
licensing system as prescribed by the director. Existing licensees may
be required to transition onto a multistate licensing system as
prescribed by the director.
Sec. 9 RCW 31.45.070 and 2003 c 86 s 7 are each amended to read
as follows:
(1) No licensee may engage in a loan business ((or)); the
negotiation of loans; or the discounting of notes, bills of exchange,
checks, or other evidences of debt ((on)) in the same premises where a
check cashing or selling business is conducted, unless the licensee:
(a) Is conducting the activities of pawnbroker as defined in RCW
19.60.010;
(b) Is a properly licensed consumer loan company under chapter
31.04 RCW;
(c) Is conducting other lending activity permitted in the state of
Washington; or
(d) Has a small loan endorsement issued under this chapter.
(2) Except as otherwise permitted in this chapter, no licensee may
at any time cash or advance any moneys on a postdated check or draft.
However, a licensee may cash a check payable on the first banking day
following the date of cashing if:
(a) The check is drawn by the United States, the state of
Washington, or any political subdivision of the state, or by any
department or agency of the state or its subdivisions; or
(b) The check is a payroll check drawn by an employer to the order
of its employee in payment for services performed by the employee.
(3) Except as otherwise permitted in this chapter, no licensee may
agree to hold a check or draft for later deposit. A licensee ((shall))
must deposit all checks and drafts cashed by the licensee as soon as
practicable.
(4) No licensee may issue or cause to be issued any check, draft,
or money order, or other commercial paper serving the same purpose,
that is drawn upon the trust account of a licensee without concurrently
receiving the full principal amount, in cash, or by check, draft, or
money order from a third party believed to be valid.
(5) ((No licensee may advertise, print, display, publish,
distribute, or broadcast or cause or permit to be advertised, printed,
displayed, published, distributed, or broadcast, any statement or
representation that is false, misleading, or deceptive, or that omits
material information, or that refers to the supervision of the licensee
by the state of Washington or any department or official of the state.)) Each licensee shall comply with all applicable state and
federal statutes ((
(6)governing currency transaction reporting)) relating
to the activities governed by this chapter.
Sec. 10 RCW 31.45.105 and 2007 c 81 s 1 are each amended to read
as follows:
(1) It is a violation of this chapter for any person subject to
this chapter to:
(a) Directly or indirectly employ any scheme, device, or artifice
to defraud or mislead any borrower, to defraud or mislead any lender,
or to defraud or mislead any person;
(b) Directly or indirectly engage in any unfair or deceptive
practice toward any person;
(c) Directly or indirectly obtain property by fraud or
misrepresentation; ((and))
(d) Make a small loan to any person physically located in
Washington through use of the internet, facsimile, telephone, kiosk, or
other means without first obtaining a small loan endorsement; and
(e) Sell in a retail installment transaction under chapter 63.14
RCW open loop prepaid access (prepaid access as defined in 31 C.F.R.
Part 1010.100(ww) and not closed loop prepaid access as defined in 31
C.F.R. Part 1010.100(kkk)).
(2) It is a violation of this chapter for any person subject to
this chapter to:
(a) Advertise, print, display, publish, distribute, or broadcast or
cause or permit to be advertised, printed, displayed, published,
distributed, or broadcast any statement or representation that is
false, misleading, or deceptive, or that omits material information;
(b) Fail to pay the annual assessment by the date and time as
specified in RCW 31.45.050;
(c) Fail to pay any other fee, assessment, or moneys due the
department.
(3) In addition to any other penalties, any transaction in
violation of subsection (1) of this section is uncollectible and
unenforceable.
Sec. 11 RCW 31.45.110 and 2003 c 86 s 17 are each amended to read
as follows:
(1) The director may issue and serve upon a licensee or applicant,
or any director, officer, sole proprietor, partner, or controlling
person of a licensee or applicant, a statement of charges if, in the
opinion of the director, any licensee or applicant, or any director,
officer, sole proprietor, partner, or controlling person of a licensee
or applicant:
(a) Is engaging or has engaged in an unsafe or unsound financial
practice in conducting ((the)) a business ((of a check seller))
governed by this chapter;
(b) Is violating or has violated this chapter, including violations
of:
(i) Any rules, orders, or subpoenas((, any rule adopted under
chapter 86, Laws of 2003, any order issued under chapter 86, Laws of
2003, any subpoena issued under chapter 86, Laws of 2003, or)) issued
by the director under any act;
(ii) Any condition imposed in writing by the director ((or the
director's designee)) in connection with the granting of any
application or other request by the licensee; or
(iii) Any written agreement made with the director;
(c) Is about to do the acts prohibited in (a) or (b) of this
subsection when the opinion that the threat exists is based upon
reasonable cause;
(d) Obtains a license by means of fraud, misrepresentation,
concealment, or through mistake or inadvertence of the director;
(e) Provides false statements or ((omissions of)) omits material
information on ((the)) an application ((that, if known, would have
allowed the director to deny the application for the original
license));
(f) Knowingly or negligently omits material information during or
in response to an examination or in connection with an investigation by
the director;
(g) Fails to pay a fee or assessment required by the director or
any multistate licensing system prescribed by the director, or fails to
maintain the required bond or deposit;
(((g))) (h) Commits a crime against the laws of ((the state of
Washington or any other state or government)) any jurisdiction
involving moral turpitude, financial misconduct, or dishonest dealings.
For the purposes of this section, a certified copy of the final holding
of any court, tribunal, agency, or administrative body of competent
jurisdiction is conclusive evidence in any hearing under this chapter;
(((h))) (i) Knowingly commits or is a party to any material fraud,
misrepresentation, concealment, conspiracy, collusion, trick, scheme,
or device whereby any other person relying upon the word,
representation, or conduct acts to his or her injury or damage;
(((i))) (j) Converts any money or its equivalent to his or her own
use or to the use of his or her principal or of any other person;
(((j))) (k) Fails((, upon demand by the director or the director's
designee,)) to disclose any information within his or her knowledge
((to,)) or fails to produce any document, book, or record in his or her
possession for inspection ((of,)) by the director ((or the director's
designee)) upon demand;
(((k))) (l) Commits any act of fraudulent or dishonest dealing((,
and)). For the purposes of this section, a certified copy of the final
holding of any court, tribunal, agency, or administrative body of
competent jurisdiction ((regarding that act)) is conclusive evidence in
any hearing under this chapter; ((or)) (m) Commits an act or engages in conduct that demonstrates
incompetence or untrustworthiness, or is a source of injury and loss to
the public;
(l)
(n) Violates any applicable state or federal law relating to the
activities governed by this chapter.
(2) The statement of charges ((shall)) must be issued under chapter
34.05 RCW. The director or the director's designee may impose the
following sanctions against any licensee or applicant, or any
directors, officers, sole proprietors, partners, controlling persons,
or employees of a licensee or applicant:
(a) Deny, revoke, suspend, or condition ((the)) a license or small
loan endorsement;
(b) Order the licensee or person to cease and desist from practices
((in violation of)) that violate this chapter or ((practices that))
constitute unsafe and unsound financial practices ((in the sale of
checks));
(c) Impose a fine not to exceed one hundred dollars per day for
each day's violation of this chapter;
(d) Order restitution or refunds to borrowers or other parties
((damaged by the licensee's)) for violations of this chapter or take
other affirmative action as necessary to comply with this chapter; and
(e) Remove from office or ban from participation in the affairs of
any licensee any director, officer, sole proprietor, partner,
controlling person, or employee of a licensee.
(3) The proceedings to impose the sanctions described in subsection
(2) of this section, including any hearing or appeal of the statement
of charges, are governed by chapter 34.05 RCW.
(4) Unless the licensee or person personally appears at the hearing
or is represented by a duly authorized representative, the licensee is
deemed to have consented to the statement of charges and the sanctions
imposed in the statement of charges.
(5) Except to the extent prohibited by another statute, the
director may engage in informal settlement of complaints or enforcement
actions including, but not limited to, payment to the department for
purposes of financial literacy and education programs authorized under
RCW 43.320.150.
Sec. 12 RCW 19.146.200 and 2006 c 19 s 9 are each amended to read
as follows:
(1) A person, unless specifically exempted from this chapter under
RCW 19.146.020, may not engage in the business of a mortgage broker or
loan originator without first obtaining and maintaining a license under
this chapter.
(2) A person may not bring a suit or action for the collection of
compensation in connection with a residential mortgage loan unless the
plaintiff alleges and proves that he or she was a duly licensed
mortgage broker, or exempt from the license requirement of this
chapter, at the time of offering to perform or performing any such an
act or service regulated by this chapter.
(3) ((A mortgage broker license must be prominently displayed in
the mortgage broker's place of business.)) Every licensed mortgage broker must at all times have a
designated broker responsible for all activities of the mortgage broker
in conducting the business of a mortgage broker. A designated broker,
principal, or owner who has supervisory authority over a mortgage
broker is responsible for a licensee's, employee's, or independent
contractor's violations of this chapter and its rules if:
(4)
(a) The designated broker, principal, or owner directs or instructs
the conduct or, with knowledge of the specific conduct, approves or
allows the conduct; or
(b) The designated broker, principal, or owner who has supervisory
authority over the licensed mortgage broker knows or by the exercise of
reasonable care and inquiry should have known of the conduct, at a time
when its consequences can be avoided or mitigated and fails to take
reasonable remedial action.
NEW SECTION. Sec. 13 A new section is added to chapter 19.146
RCW to read as follows:
Except to the extent prohibited by another statute, the director
may engage in informal settlement of complaints or enforcement actions
including, but not limited to, payment to the department for purposes
of financial literacy and education programs authorized under RCW
43.320.150. If any person subject to this chapter makes a payment to
the department under this section, the person may not advertise such
payment.
NEW SECTION. Sec. 14 A new section is added to chapter 18.44 RCW
to read as follows:
Except to the extent prohibited by another statute, the director
may engage in informal settlement of complaints or enforcement actions
including, but not limited to, payment to the department for purposes
of financial literacy and education programs authorized under RCW
43.320.150.
NEW SECTION. Sec. 15 A new section is added to chapter 18.44 RCW
to read as follows:
Applicants may be required to make application through a multistate
licensing system as prescribed by the director. Existing licensees may
be required to transition onto a multistate licensing system as
prescribed by the director.
NEW SECTION. Sec. 16 A new section is added to chapter 19.230
RCW to read as follows:
Except to the extent prohibited by another statute, the director
may engage in informal settlement of complaints or enforcement actions
including, but not limited to, payment to the department for purposes
of financial literacy and education programs authorized under RCW
43.320.150.
NEW SECTION. Sec. 17 A new section is added to chapter 19.230
RCW to read as follows:
Applicants may be required to make application through a multistate
licensing system as prescribed by the director. Existing licensees may
be required to transition onto a multistate licensing system as
prescribed by the director.
Sec. 18 RCW 19.144.020 and 2008 c 108 s 3 are each amended to
read as follows:
(1) In addition to any other requirements under federal or state
law, a residential mortgage loan may not be made unless a disclosure
summary of all material terms, as adopted by the department in
subsection (2) of this section, is placed on a separate sheet of paper
and has been provided by a financial institution to the borrower within
three business days following receipt of a loan application. If any
material terms of the residential mortgage loan change before closing,
a new disclosure summary must be provided to the borrower within three
days of any such change or at least three days before closing,
whichever is earlier.
(2) The department shall adopt, by rule, a disclosure summary form
with a content and format containing simple, plain-language terms that
are reasonably understandable to the average person without the aid of
third-party resources and shall include, but not be limited to, the
following items: Fees and discount points on the loan; interest rates
of the loan; broker fees; the broker's yield spread premium as a dollar
amount; whether the loan contains prepayment penalties; whether the
loan contains a balloon payment; whether the property taxes and
property insurance are escrowed; whether the loan payments will adjust
at the fully indexed rates; and whether there is a price added or
premium charged because the loan is based on reduced documentation.
(3) The director may, at his or her discretion, require by rule
other information relating to a residential mortgage loan to be
included in the disclosure summary if the director determines that it
is necessary to protect consumers. The director may adopt rules
creating a standard form of disclosure summary to be used as a guide by
financial institutions in fulfilling the requirements of this section.
(4) Disclosure in compliance with the real estate settlement
procedures act, 12 U.S.C. Sec. 2601, and Regulation X, 24 C.F.R. Sec.
3500, as it exists on the effective date of this section, shall be
deemed to comply with the disclosure requirements of this section. If
needed, the director may adopt rules to implement and incorporate other
changes in the disclosure summary as necessary due to federal law.