PROPOSED RULES
FINANCIAL INSTITUTIONS
Original Notice.
Preproposal statement of inquiry was filed as WSR 02-06-015.
Title of Rule: WAC 208-660-125 Requirements for advertising materials.
Purpose: To prohibit unfair and deceptive advertising and solicitation practices by mortgage brokers and mortgage lenders to residents of Washington state.
Statutory Authority for Adoption: RCW 31.04.165.
Statute Being Implemented: Chapter 208-660 WAC.
Summary: The proposed rule:
1. Clarifies the name under which a licensee can advertise.
2. Requires certain disclosures when a borrower's information is used in a solicitation or advertisement.
3. Provides clarification of unfair and deceptive solicitation and advertising practices.
Reasons Supporting Proposal: The proposed amendments are in response to an increasing number of deceptive loan solicitations from mortgage lenders and mortgage brokers advertising loan products to residents of Washington state.
Name of Agency Personnel Responsible for Drafting: Nicole Scott/Mark Thomson, General Administration Building, Room #300, 902-8811/8787; Implementation and Enforcement: Mark Thomson, General Administration Building, Room #300, 902-8787.
Name of Proponent: Department of Financial Institutions, governmental.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: Explanation: The propose rule:
1. Clarifies the name under which a licensee can advertise.
2. Requires certain disclosures when a borrower's information is used in a solicitation or advertisement.
3. Provides clarification of unfair and deceptive solicitation and advertising practices.
Purpose: To prohibit unfair and deceptive advertising and solicitation practices by mortgage brokers and mortgage lenders to residents of Washington state.
Anticipated effects:
1. Provide guidance to licensees and the department regarding the standards for solicitations and advertisements.
2. Protect residents of Washington state against unfair and deceptive advertising and solicitation practices.
Proposal Changes the Following Existing Rules: The proposed rule:
1. Amends WAC section by clarifying the name under which a licensee can advertise.
2. Amends WAC section by requiring certain disclosures when a borrower's information is used in a solicitation or advertisement.
3. Amends WAC section by providing clarification of unfair and deceptive solicitation and advertising practices.
4. Amends WAC section by changing the length of time a licensee must maintain a copy of all advertising records from two years to twenty-five months in accordance with RCW.
No small business economic impact statement has been prepared under chapter 19.85 RCW. The proposed amendment will not have significant economic impact on the affected small businesses licensed under the statute.
RCW 34.05.328 does not apply to this rule adoption. The Department of Financial Institutions is not a listed agency under RCW 34.05.328.
Hearing Location: Department of Information Services, DIS participating sites: Lacey, Seattle, Spokane, Tri-Cities and Vancouver, on August 14, 2002, at 11:00 - 11:30 a.m.
Assistance for Persons with Disabilities: Contact Mark Thomson by August 9, 2002, TDD (360) 664-8126.
Submit Written Comments to: Mark Thomson, Director of Consumer Services, P.O. Box 41200, Olympia, WA 98504-1200, fax (360) 704-6925, by August 7, 2002.
Date of Intended Adoption: August 14, 2002.
May 22, 2002
Mark Thomson
Acting Director
OTS-5680.1
AMENDATORY SECTION(Amending WSR 96-04-028, filed 2/1/96,
effective 4/1/96)
WAC 208-660-125
Recordkeeping and other requirements for
advertising materials.
(1) Each mortgage broker shall maintain
as a part of its books and records one copy of each item of all
advertising material which mentions rates or fees. However, an
advertising flyer is exempt from this subsection if:
(a) The flyer is prepared by mortgage brokers for specific use by real estate professionals to provide information to consumers and to offer comparisons of the financing options available to consumers;
(b) The flyer complies with all advertising requirements of the Mortgage Broker Practices Act, including without limit, the requirements of the Truth in Lending Act;
(c) The flyer provides full disclosure of rates, fees, and terms, including the annual percentage rate of any loan used for illustrative purposes; and
(d) The flyer contains the following disclosure:
"This document is not intended as an offer to extend credit nor a commitment to lend. The loan interest rates, fees, and terms presented herein are for illustrative purposes only and may not be currently available. This document has been prepared to assist real estate professionals in illustrating some of the financing options available to consumers."
(2) Each mortgage broker is responsible for the accuracy and reliability of its advertising material and its compliance with the Mortgage Broker Practices Act.
(3) A licensee shall advertise only under the name or names on its license.
(4) When an advertisement includes information about a consumer's current loan that did not come from information obtained by the licensee when soliciting or making a residential loan or assisting a person in obtaining or applying to obtain a residential mortgage loan, the licensee shall provide to the consumer the name of the source from which this information was obtained.
(5) It is an unfair and deceptive act or practice and a violation of RCW 19.146.0201 for a licensee to solicit using advertising that includes:
(a) An envelope or stationary that contains an official-looking emblem, such as an eagle or a crest, or that is otherwise designed to resemble an official government mailing, such as a mailing from the Internal Revenue Service or the U.S. Department of the Treasury;
(b) An envelope or stationary containing warnings or notices citing codes or form numbers made to appear like government codes or form numbers that are not required to be shown on the mailing by the U.S. Postal Service;
(c) Any suggestion or representation that the licensee is, or is affiliated with, a state or federal agency, municipality, bank, savings bank, trust company, savings and loan association, building and loan association, credit union, or other entity that it does not actually represent;
(d) Any suggestion or representation that the solicitation is from an entity other than the licensee;
(e) Any suggestion or representation that the information about a consumer's current loan was provided by any source other than the source disclosed pursuant to subsection (4) of this section.
[96-04-028, recodified as § 208-660-125, filed 2/1/96, effective 4/1/96. Statutory Authority: RCW 19.146.225. 95-13-091, § 50-60-125, filed 6/21/95, effective 7/22/95.]