Subject of Possible Rule Making: New rules governing the collection of real estate contracts and other evidence of debt by escrow agents, and amendments to the escrow rules governing trust accounting, the responsibilities of the designated escrow officer, and the purpose of the $10,000 surety bond required when the fidelity bond has a deductible.

     Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 18.44.400 and 18.44.410.

     Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: Many escrow agents, particularly in eastern Washington, provide escrow services for the collection of real estate contracts and other evidence of debt. The existing rules provide little guidance to licensees or the agency regarding the standards for conducting such business. The proposed rules will provide definitions and standards for escrow instructions, trust accounting, recordkeeping, and the rights of the parties to obtain information about their account.

     Trust accounting amendments will clarify the meaning of the statute and allow escrow agents to transfer their fees out of the trust account with a single check each month. This will allow escrow agents to manage these transfers more efficiently and at a lower cost.

     A rule on supervision by the designated escrow officer will clarify the responsibility of the designated escrow officer to physically supervise the office for which they are responsible. The rule will provide guidance to escrow agents in employing designated escrow officers.

     A rule clarifying that the purpose of the surety bond required when the fidelity bond has a deductible is to cover the deductible on the fidelity bond. The rule will protect consumers whose claims against an escrow agent for violations of the statute or rules are not covered as a result of the deductible on the fidelity bond.

     Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: None.

     Process for Developing New Rule: The department is developing the proposed rule through public meetings with a task force of the escrow commission and will discuss the proposed rule in public meetings of the escrow commission prior to hearing.

     Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication by attending meetings of the task force working on rule development or by attending escrow commission meetings. Contact Mark Thomson, Director of Consumer Services, at (360) 902-8787, or mthomson@dfi.wa.gov, or Jeanette Terry at (360) 902-8786 or jterry@dfi.wa.gov.

August 16, 2001

Mark Thomson

Director of

Consumer Services

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