5829-S AMH FII H2332.1

5829-S AMH FII H2332.1

SSB 5829 - H COMM AMD ADOPTED 4-15-93

By Committee on Financial Institutions & Insurance

Strike everything after the enacting clause and insert the following:

"Sec. 1. RCW 19.146.005 and 1987 c 391 s 1 are each amended to read as follows:

The legislature finds and declares that the brokering of residential real estate loans substantially affects the public interest. The practices of mortgage brokers have had significant impact on the citizens of the state and the banking and real estate industries. It is the intent of the legislature to establish a temporary state system of licensure in addition to rules of practice and conduct of mortgage brokers to promote honesty and fair dealing with citizens and to preserve public confidence in the lending and real estate community.

Sec. 2. RCW 19.146.010 and 1987 c 391 s 3 are each amended to read as follows:

Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Affiliate" means any person who directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with another person.

(2) "Computer loan origination systems" or "CLO system" means the real estate mortgage financing information system defined by rule of the director.

(3) "Department" means the department of licensing.

(4) "Director" means the director of licensing.

(5) "Loan originator" means a natural person employed, either directly or indirectly, by a licensed mortgage broker, or a natural person who represents a licensed mortgage broker, in the performance of any acts specified in subsection (7) of this section.

(6) "Lock-in agreement" means an agreement with a borrower made by a mortgage broker or loan originator, in which the mortgage broker agrees that, for a period of time, a specific interest rate or other financing terms will be the rate or terms at which it will make a loan available to that borrower.

(7) "Mortgage broker" means ((~~every~~)) any person who for compensation or gain, or in the expectation of compensation ((~~either directly or indirectly makes, negotiates, or offers to make or negotiate a residential mortgage loan~~)) or gain, directly or indirectly negotiates, places, assists in placement, finds, or offers to negotiate, place, assist in placement, or find residential mortgage loans for others.

((~~(3)~~)) (8) "Person" means a natural person, corporation, company, partnership, or association.

((~~(4)~~)) (9) "Residential mortgage loan" means any loan primarily for personal, family, or household use secured by a mortgage or deed of trust on residential real estate upon which is constructed or intended to be constructed a single family dwelling or multiple family dwelling of four or less units.

((~~(5)~~)) (10) "Third-party provider" means any person other than a mortgage broker or lender who provides goods or services to the mortgage broker in connection with the preparation of the borrower's loan and includes, but is not limited to, credit reporting agencies, title companies, appraisers, structural and pest inspectors, or escrow companies.

Sec. 3. RCW 19.146.020 and 1987 c 391 s 4 are each amended to read as follows:

(1) Except as provided under subsection (2) of this section, the following are exempt from all provisions of this chapter:

((~~(1)~~)) (a) Any person doing business under the laws of this state or the United States relating to commercial banks, bank holding companies, ((~~mutual~~)) savings banks, trust companies, savings and loan associations, credit unions, consumer ((~~finance companies, industrial~~)) loan companies, insurance companies, or real estate investment trusts as defined in 26 U.S.C. Sec. 856 and the affiliates, subsidiaries, and service corporations thereof;

((~~(2)~~)) (b) An attorney licensed to practice law in this state who is not principally engaged in the business of negotiating residential mortgage loans when such attorney renders services in the course of his or her practice as an attorney;

((~~(3)~~)) (c) Any person doing any act under order of any court;

((~~(4)~~)) (d) Any person making or acquiring a residential mortgage loan solely with his or her own funds for his or her own investment without intending to resell the residential mortgage loans;

((~~(5)~~)) (e) A real estate broker or salesperson licensed by the state who obtains financing for a real estate transaction involving a bona fide sale of real estate in the performance of his or her duties as a real estate broker and who receives only the customary real estate broker's or salesperson's commission in connection with the transaction;

((~~(6)~~)) (f) Any mortgage broker approved and subject to auditing by the federal national mortgage association, the government national mortgage association, or the federal home loan mortgage corporation;

((~~(7)~~)) (g) Any mortgage broker approved by the United States secretary of housing and urban development for participation in any mortgage insurance program under the National Housing Act, 12 U.S.C. Sec. 1701, as now or hereafter amended; ((~~and~~

~~(8)~~)) (h) The United States of America, the state of Washington, any other state, and any Washington city, county, or other political subdivision, and any agency, division, or corporate instrumentality of any of the entities in this subsection (1)(h); and

(i) A real estate broker who provides information only in connection with a CLO system, who may receive a fee for such information in an amount approved by the director and who conforms to all rules of the director with respect to the providing of such service.

(2) Those persons otherwise exempt under subsection (1) (f), (g), and (i) of this section must comply with section 4 of this act.

NEW SECTION. Sec. 4. It is unlawful for a loan originator, mortgage broker required to be licensed under this chapter, or mortgage broker otherwise exempted from this chapter under RCW 19.146.020(1) (f), (g), or (i) in connection with a residential mortgage loan to:

(1) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders;

(2) Engage in any conduct that operates as a fraud upon or unfair or deceptive practice toward any person;

(3) Obtain property by fraud or misrepresentation;

(4) Solicit or enter into a contract with a borrower that provides in substance that the mortgage broker may earn a fee or commission through the mortgage broker'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 from a person exempt from licensing under RCW 19.146.020(1) (f) or (g) or a lender with whom the mortgage broker maintains a written correspondent or loan brokerage agreement under RCW 19.146.040;

(6) Fail to make disclosures to loan applicants and noninstitutional investors as required by RCW 19.146.030 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;

(8) Make any false statement in connection with any reports filed by a licensee, or in connection with any examination of the licensee's business;

(9) Make any payment, directly or indirectly, to any fee appraiser third party of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property;

(10) Fail to include the words "licensed mortgage broker" in all advertising for the broker's services that are directed at the general public if the person is required to be licensed under this chapter;

(11) Fail to comply with the requirements of the truth-in-lending act, 15 U.S.C. Sec. 1601 and Regulation Z, 12 C.F.R. Sec. 226, as now or hereafter amended, in all advertising of residential mortgage loans.

NEW SECTION. Sec. 5. (1) A person may not engage in the business of a mortgage broker, except as an employee of a person licensed or exempt from licensing, 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 as a mortgage broker 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. This subsection does not apply to suits or actions for the collection or compensation for services performed prior to the effective date of this section.

NEW SECTION. Sec. 6. (1) Application for a mortgage broker license under this chapter shall be in writing and in the form prescribed by the director. Unless waived by the director, the application shall contain at least the following information:

(a) The name, address, date of birth, and social security number of the applicant, and any other names, dates of birth, or social security numbers previously used by the applicant;

(b) If the applicant is a partnership or association, the name, address, date of birth, and social security number of each general partner or principal of the association, and any other names, dates of birth, or social security numbers previously used by the members;

(c) If the applicant is a corporation, the name, address, date of birth, and social security number of each officer, director, registered agent, and each principal stockholder, and any other names, dates of birth, or social security numbers previously used by the officers, directors, registered agents, and principal stockholders;

(d) The street address, county, and municipality where the principal business office is to be located;

(e) Submission of a complete set of fingerprints taken by an authorized law enforcement officer; and

(f) Such other information regarding the applicant's background, financial responsibility, experience, character, and general fitness as the director may require by rule.

(2) At the time of filing an application for a license under this chapter, each applicant shall pay to the director the appropriate license fee in an amount determined by rule of the director in accordance with RCW 43.24.086 to be sufficient to cover, but not exceed, the department's costs in administering this chapter. The director shall deposit the moneys in the mortgage broker fund created under section 19 of this act.

(3)(a) Each applicant for a mortgage broker's license shall file and maintain a surety bond, in an amount of forty thousand dollars or such lower amount the director deems adequate to protect the public interest, executed by the applicant as obligor and by a surety company authorized to do a surety business in this state as surety. The bond shall run to the state of Washington as obligee, and shall run to the benefit of the state and any person or persons who suffer loss by reason of the applicant's violation of any provision of this chapter or rules adopted under this chapter. The bond shall be conditioned that the obligor as licensee will faithfully conform to and abide by this chapter and all rules adopted under this chapter, and shall reimburse all persons who suffer loss by reason of a violation of this chapter or rules adopted under this chapter. The bond shall be continuous and may be canceled by the surety upon the surety giving written notice to the director of its intent to cancel the bond. The cancellation shall be effective thirty days after the notice is received by the director. Whether or not the bond is renewed, continued, reinstated, reissued, or otherwise extended, replaced, or modified, including increases or decreases in the penal sum, it shall be considered one continuous obligation, and the surety upon the bond shall not be liable in an aggregate or cumulative amount exceeding the penal sum set forth on the face of the bond. In no event shall the penal sum, or any portion thereof, at two or more points in time be added together in determining the surety's liability. The bond shall not be liable for any penalties imposed on the licensee, including, but not limited to, any increased damages or attorneys' fees, or both, awarded under RCW 19.86.090. The applicant may obtain the bond directly from the surety or through a group bonding arrangement involving a professional organization comprised of mortgage brokers if the arrangement provides at least as much coverage as is required under this subsection.

(b) In lieu of a surety bond, the applicant may, upon approval by the director, file with the director a certificate of deposit, an irrevocable letter of credit, or such other instrument as approved by the director by rule, drawn in favor of the director for an amount equal to the required bond.

(c) In lieu of the surety bond or compliance with (b) of this subsection, an applicant may obtain insurance or coverage from an association comprised of mortgage brokers that is organized as a mutual corporation for the sole purpose of insuring or self-insuring claims that may arise from a violation of this chapter. An applicant may only substitute coverage under this subsection for the requirements of (a) or (b) of this subsection if the director, with the consent of the insurance commissioner, has authorized such association to organize a mutual corporation under such terms and conditions as may be imposed by the director to ensure that the corporation is operated in a financially responsible manner to pay any claims within the financial responsibility limits specified in (a) of this subsection.

NEW SECTION. Sec. 7. (1) The director shall issue and deliver a mortgage broker license to an applicant if, after investigation, the director makes the following findings:

(a) The applicant has paid the required license fees;

(b) The applicant has complied with section 6 of this act;

(c) The applicant has not had a license issued under this chapter or any similar state statute suspended or revoked within five years of the filing of the present application;

(d) The applicant has not been convicted of a felony within seven years of the filing of the present application;

(e) The applicant has at least two years of experience in the residential mortgage loan industry; and

(f) The applicant has demonstrated financial responsibility, character, and general fitness such as to command the confidence of the community and to warrant a belief that the business will be operated honestly, fairly, and efficiently within the purposes of this chapter.

(2) If the director does not find the conditions of subsection (1) of this section have been met, the director shall not issue the license. The director shall notify the applicant of the denial and return to the applicant the bond or approved alternative and any remaining portion of the license fee that exceeds the departments actual cost to investigate the license.

(3) The director may delay the effective date of section 5 of this act for an additional thirty days with respect to an applicant for a mortgage broker license for the purpose of processing the application when the applicant has filed a completed application by October 31, 1993.

(4) A license issued pursuant to this chapter is valid from the date of issuance.

(5) 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 arising from acts or omissions occurring before such surrender.

NEW SECTION. Sec. 8. (1) The director shall enforce all laws and rules relating to the licensing of mortgage brokers, grant or deny licenses to mortgage brokers, and hold hearings. The director may impose any one or more of the following sanctions: Suspend or revoke licenses, deny applications for licenses, or fine violators under this chapter. In addition, the director may issue an order directing a licensee or person subject to this chapter to cease and desist from conducting business in a manner that is injurious to the public or violates any provision of this chapter.

(2) The director may take those actions specified in subsection (1) of this section if the director finds any of the following:

(a) The licensee has failed to pay a fee due the state of Washington, to maintain in effect the bond or approved alternative required under this chapter, or to comply with any specific order or demand of the director lawfully made and directed to the licensee in accordance with this chapter; or

(b) The licensee or person subject to this chapter has violated any provision of this chapter or a rule adopted under this chapter; or

(c) The licensee made false statements on the application or omitted material information that, if known, would have allowed the director to deny the application for the original license.

(3) The director shall establish by rule standards for licensure of applicants licensed in other jurisdictions.

NEW SECTION. Sec. 9. In accordance with the administrative procedure act, chapter 34.05 RCW, the director may issue rules to govern the activities of licensed mortgage brokers consistent with this chapter.

NEW SECTION. Sec. 10. The proceedings for denying license applications, issuing cease and desist orders, and suspending or revoking licenses issued pursuant to this chapter and any appeal therefrom or review thereof shall be governed by the provisions of the administrative procedure act, chapter 34.05 RCW.

NEW SECTION. Sec. 11. For the purposes of investigating complaints arising under this chapter, the director may at any time, either personally or by a designee, examine the business, including but not limited to the books, accounts, records, and files used therein, of every licensee and of every person engaged in the business of mortgage brokering, whether such a person shall act or claim to act under or without the authority of this chapter. For that purpose the director and designated representatives shall have free access to the offices and places of business, books, accounts, papers, records, files, safes, and vaults of all such persons. The director or designated person may require the attendance of and examine under oath all persons whose testimony may be required about the loans or the business or subject matter of any such investigation.

Sec. 12. RCW 19.146.030 and 1987 c 391 s 5 are each amended to read as follows:

(1) Upon receipt of a loan application and before the receipt of any moneys from a borrower, a mortgage broker shall provide to each borrower a written notice indicating the number of the lenders with whom it maintains a written correspondent or loan brokerage agreement, unless exempt from licensing under this chapter, and make a full written disclosure to each borrower containing an itemization and explanation of all fees and costs that the borrower is required to pay in connection with obtaining a residential mortgage loan. A good faith estimate of a fee or cost shall be provided if the exact amount of the fee or cost is not determinable.

(2) The written disclosure shall contain the following information:

((~~(1)~~)) (a) The annual percentage rate, finance charge, amount financed, total amount of all payments, number of payments, amount of each payment, amount of points or prepaid interest and the conditions and terms under which any loan terms may change between the time of disclosure and closing of the loan; and if a variable rate, the circumstances under which the rate may increase, any limitation on the increase, the effect of an increase, and an example of the payment terms resulting from an increase. Disclosure in compliance with the requirements of the Truth-in-Lending Act, 15 U.S.C. Sec. 1601 and Regulation Z, 12 C.F.R. Sec. 226, as now or hereafter amended, shall be deemed to comply with the disclosure requirements of this subsection;

((~~(2)~~)) (b) The itemized costs of any credit report, appraisal, title report, title insurance policy, mortgage insurance, escrow fee, property tax, insurance, structural or pest inspection, and any other third-party provider's costs associated with the residential mortgage loan. Disclosure through good faith estimates of settlement services and special information booklets in compliance with the requirements of the Real Estate Settlement Procedures Act, 12 U.S.C. Sec. 2601, and Regulation X, 24 C.F.R. Sec. 3500, as now or hereafter amended, shall be deemed to comply with the disclosure requirements of this subsection;

((~~(3)~~)) (c) If applicable, the cost, terms, duration, and conditions of ((~~an agreement to lock-in or commit the mortgage broker or lender to a specific interest rate or other financing term for any period of time up to and including the time the loan is closed~~)) a lock-in agreement and whether a lock-in agreement has been entered;

((~~(4)~~)) (d) A statement that if the borrower is unable to obtain a loan for any reason, the mortgage broker must, within five days of a written request by the borrower, give copies of any appraisal, title report, or credit report paid for by the borrower to the borrower, and transmit the appraisal, title report, or credit report to any other mortgage broker or lender to whom the borrower directs the documents to be sent;

((~~(5)~~)) (e) The name of the lender and the nature of the business relationship between the lender providing the residential mortgage loan and the mortgage broker, if any: PROVIDED, That this disclosure may be made at any time up to the time the borrower accepts the lender's commitment; and

((~~(6)~~)) (f) A statement providing that moneys paid by the borrower to the mortgage broker for third-party provider services are held in a trust account and any moneys remaining after payment to third-party providers will be refunded.

A violation of the Truth-in-Lending Act, Regulation Z, the Real Estate Settlement Procedures Act, and Regulation X is a violation of this section for purposes of this chapter.

Sec. 13. RCW 19.146.070 and 1987 c 391 s 9 are each amended to read as follows:

(1) Except as otherwise permitted by this section, a mortgage broker shall not receive a fee, commission, or compensation of any kind in connection with the preparation, negotiation, and brokering of a residential mortgage loan unless a borrower actually obtains a loan from a lender on the terms and conditions agreed upon by the borrower and mortgage broker.

(2) A mortgage broker may:

(a) If the mortgage broker has obtained for the borrower a written commitment from a lender for a loan on the terms and conditions agreed upon by the borrower and the mortgage broker, and the borrower fails to close on the loan through no fault of the mortgage broker, charge a fee not to exceed three hundred dollars for services rendered, preparation of documents, or transfer of documents in the borrower's file which were prepared or paid for by the borrower if the fee is not otherwise prohibited by the Truth-in-Lending Act, 15 U.S.C. Sec. 1601, and Regulation Z, 12 C.F.R. Sec. 226, as now or hereafter amended; or

(b) Solicit or receive fees for third party provider goods or services in advance. Fees for any goods or services not provided must be refunded to the borrower and the mortgage broker may not charge more for the goods and services than the actual costs of the goods or services charged by the third party provider.

((~~(3) A mortgage broker may not:~~

(a) Solicit or enter into a contract with a borrower that provides in substance that the mortgage broker may earn a fee or commission through the mortgage broker's "best efforts" to obtain a loan even though no loan is actually obtained for the borrower; or

(b) 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.))

NEW SECTION. Sec. 14. (1) Any person injured by a violation of this chapter may bring an action against the surety bond or approved alternative of the licensed mortgage broker who committed the violation or who employed the loan originator committing the violation.

(2) A person who is damaged by the licensee's violation of this chapter, or rules adopted under this chapter, may bring suit upon the surety bond or approved alternative in the superior court of any county in which jurisdiction over the licensee may be obtained. Jurisdiction shall be exclusively in the superior court. Any such action must be brought not later than one year after the alleged violation of this chapter or rules adopted under this chapter. In the event valid claims against a bond or deposit exceed the amount of the bond or deposit, each claimant shall only be entitled to a pro rata amount, based on the amount of the claim as it is valid against the bond or deposit, without regard to the date of filing of any claim or action. A judgment arising from a violation of this chapter or rule adopted under this chapter shall be entered for actual damages and in no case be less than the amount paid by the borrower to the licensed mortgage broker plus reasonable attorneys' fees and costs. In no event shall the surety bond or approved alternative provide payment for any trebled or punitive damages.

(3) The remedies provided under this section are cumulative and nonexclusive and do not affect any other remedy available at law.

NEW SECTION. Sec. 15. A licensed mortgage broker is liable for any conduct violating this chapter by a loan originator or other licensed mortgage broker while employed by the broker. In addition, a branch office manager is liable for any conduct violating this chapter by a loan originator or other licensed mortgage broker employed at the branch office.

NEW SECTION. Sec. 16. No license issued under the provisions of this chapter shall authorize any person other than the person to whom it is issued to do any act by virtue thereof nor to operate in any other manner than under his or her own name except:

(1) A licensed mortgage broker may operate or advertise under a name other than the one under which the license is issued by obtaining the written consent of the director to do so; and

(2) A broker may establish one or more branch offices under a name or names different from that of the main office if the name or names are approved by the director, so long as each branch office is clearly identified as a branch or division of the main office. No broker may establish branch offices under more than three names. Both the name of the branch office and of the main office must clearly appear on the sign identifying the office, if any, and in any advertisement or on any letterhead of any stationery or any forms, or signs used by the mortgage firm on which either the name of the main or branch offices appears.

NEW SECTION. Sec. 17. Every licensed mortgage broker must have and maintain an office in this state accessible to the public which shall serve as his or her office for the transaction of business. Any office so established must comply with the zoning requirements of city or county ordinances and the broker's license must be prominently displayed therein. In addition, any branch office must comply with the zoning requirements of city or county ordinances.

NEW SECTION. Sec. 18. A licensed mortgage broker may apply to the director for authority to establish one or more branch offices under the same or different name as the main office upon the payment of a fee as prescribed by the director by rule. The director shall issue a duplicate license for each of the branch offices showing the location of the main office and the particular branch. Each duplicate license shall be prominently displayed in the office for which it is issued. Each branch office shall be required to have a branch manager who shall be a licensed mortgage broker authorized by the mortgage broker to perform the duties of a branch manager.

NEW SECTION. Sec. 19. All moneys collected under this chapter shall be deposited in the mortgage brokers' licensing account hereby created in the state treasury. Expenditures from the account, subject to appropriation, may be used solely for department costs in administering this chapter.

Sec. 20. RCW 19.146.110 and 1987 c 391 s 13 are each amended to read as follows:

Any person who violates any provision of ((~~RCW 19.146.005 through 19.146.040 or 19.146.060 through 19.146.100~~)) this chapter other than RCW 19.146.050 or any rule or order of the director shall be guilty of a misdemeanor punishable under chapter 9A.20 RCW. Any person who violates RCW 19.146.050 shall be guilty of a class C felony under chapter 9A.20 RCW.

NEW SECTION. Sec. 21. (1) There is established the mortgage brokerage commission consisting of five commission members who shall act in an advisory capacity to the director on mortgage brokerage issues.

(2) The director shall appoint the members of the commission, weighing the recommendations from professional organizations representing mortgage brokers. At least three of the commission members shall be mortgage brokers required to apply for a mortgage brokers license under this chapter and at least one shall be exempt from licensure under RCW 19.146.020(1) (f) or (g). No commission member shall be appointed who has had less than five years' experience in the business of residential mortgage lending. In addition, the attorney general, or a designee, and the director, or a designee, shall serve as ex officio, nonvoting members of the commission. Voting members of the commission shall serve for two-year terms with three of the initial commission members serving one-year terms. The department shall provide staff support to the commission.

(3) Members of the commission shall be reimbursed for their travel expenses incurred in carrying out the provisions of this chapter in accordance with RCW 43.03.050 and 43.03.060. All costs and expenses associated with the commission shall be paid from the mortgage brokers' licensing account created in section 19 of this act.

(4)(a) The commission shall advise the director on the characteristics and needs of the mortgage brokerage profession. In addition to its advisory capacity, the commission shall review all state and federal provisions governing mortgage brokers and shall prepare a report:

(i) Summarizing state and federal statutes and regulations governing mortgage brokers;

(ii) Identifying the type and magnitude of complaints arising with regard to the practices of mortgage brokers operating in this state;

(iii) Reviewing the detrimental and beneficial effects of state licensing, bonding, training, experience, and educational requirements for mortgage brokers;

(iv) Considering the appropriate location within state government to exercise regulatory authority and administer a licensing program; and

(v) Containing recommended legislation that adopts ongoing state licensing requirements for mortgage brokers.

(b) In preparing its report, the commission shall solicit comments from the mortgage broker industry, the department of licensing, the attorney general's office, other state regulators, and residential mortgage loan consumers. The committee shall submit its report to the labor and commerce committee of the senate and the financial institutions and insurance committee of the house of representatives by December 1, 1993.

NEW SECTION. Sec. 22. The director shall take steps and adopt rules necessary to implement the sections of this act by their effective dates.

NEW SECTION. Sec. 23. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 24. Sections 4 through 11, 14 through 19, and 21 of this act are each added to chapter 19.146 RCW.

NEW SECTION. Sec. 25. (1) If the powers, duties, and functions of the division of banking and the division of savings and loan are transferred into a new department, the powers, duties, and functions of the department relating to the administration of chapter 19.146 RCW shall be transferred to the new department. In such event, all references to the director or the department of licensing shall be construed to mean the new department or its director.

(2) In the event that the new department is created, all reports, documents, surveys, books, records, files, papers, or other written or electronically stored material in the possession of the department of licensing pertaining to the powers, functions, and duties transferred under subsection (1) of this section shall be delivered to the custody of the new department. All cabinets, furniture, office equipment, motor vehicles, and other tangible property employed by the department of licensing in carrying out the powers, functions, and duties transferred by subsection (1) of this section shall be made available to the new department if such property was purchased from funds deposited in the mortgage brokers' licensing account. All funds contained in the mortgage brokers' licensing account shall be transferred to the appropriate account of the new department for administration of chapter 19.146 RCW and shall be used solely for the costs of administering this chapter. In the event any dispute arises as to the transfer of any personnel, funds, books, documents, records, papers, files, equipment, or other tangible property used or held in the exercise of the powers and the performance of the duties and powers transferred under subsection (1) of this section, the director of financial management shall make a determination as to the proper allocation and certify the same to the state agencies concerned.

NEW SECTION. Sec. 26. (1) Sections 2 through 4, 9, 13, and 21 through 23 of this act are necessary for the immediate preservation of the public peace, health, or safety, or support of the state government and its existing public institutions, and shall take effect immediately.

(2) Sections 6 through 8, 10, 18, and 19 of this act shall take effect September 1, 1993.

(3) Sections 1, 5, 11, 12, 14 through 17, and 20 of this act shall take effect October 31, 1993. However, the effective date of section 5 of this act may be delayed thirty days upon an order of the director of licensing under section 7(3) of this act.

NEW SECTION. Sec. 27. This act shall expire October 31, 1994, except for section 21 of this act. However, if a licensing program for mortgage brokers is not extended past October 31, 1994, section 21 of this act also shall expire on October 31, 1994."