CERTIFICATION OF ENROLLMENT

SUBSTITUTE HOUSE BILL 2770

Chapter 108, Laws of 2008

60th Legislature
2008 Regular Session



MORTGAGE LENDING AND HOMEOWNERSHIP



EFFECTIVE DATE: 06/12/08

Passed by the House February 6, 2008
  Yeas 92   Nays 0

FRANK CHOPP
________________________________________    
Speaker of the House of Representatives


Passed by the Senate March 6, 2008
  Yeas 47   Nays 0


BRAD OWEN
________________________________________    
President of the Senate
 
CERTIFICATE

I, Barbara Baker, Chief Clerk of the House of Representatives of the State of Washington, do hereby certify that the attached is SUBSTITUTE HOUSE BILL 2770 as passed by the House of Representatives and the Senate on the dates hereon set forth.


BARBARA BAKER
________________________________________    
Chief Clerk
Approved March 21, 2008, 1:47 p.m.








CHRISTINE GREGOIRE
________________________________________    
Governor of the State of Washington
 
FILED
March 24, 2008







Secretary of State
State of Washington


_____________________________________________ 

SUBSTITUTE HOUSE BILL 2770
_____________________________________________

Passed Legislature - 2008 Regular Session
State of Washington60th Legislature2008 Regular Session

By House Insurance, Financial Services & Consumer Protection (originally sponsored by Representatives Kenney, Lantz, Upthegrove, Conway, Morrell, Schual-Berke, McIntire, Hudgins, Simpson, and Rolfes; by request of Governor Gregoire)

READ FIRST TIME 01/30/08.   



     AN ACT Relating to homeownership security, responsible mortgage lending, and improving protections for residential mortgage loan consumers; amending RCW 19.146.005 and 61.24.030; reenacting and amending RCW 9.94A.515 and 9A.82.010; adding new sections to chapter 19.146 RCW; adding a new section to chapter 30.04 RCW; adding a new section to chapter 31.04 RCW; adding a new section to chapter 31.12 RCW; adding a new section to chapter 32.04 RCW; adding a new section to chapter 33.04 RCW; adding a new chapter to Title 19 RCW; and prescribing penalties.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature finds that responsible mortgage lending and homeownership are important to the citizens of the state of Washington. The legislature declares that protecting our residents and our economy from the threat of widespread foreclosures and providing homeowners with access to residential mortgage loans on fair and equitable terms is in the public interest. The legislature further finds that this act is necessary to encourage responsible lending, protect borrowers, and preserve access to credit in the residential real estate lending market.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Adjustable rate mortgage" or "ARM" means a payment option ARM or a hybrid ARM (commonly known as a 2/28 or 3/27 loan).
     (2) "Application" means the same as in Regulation X, Real Estate Settlement Procedures, 24 C.F.R. Sec. 3500, as used in an application for a residential mortgage loan.
     (3) "Borrower" means any person who consults with or retains a person subject to this chapter in an effort to seek information about obtaining a residential mortgage loan, regardless of whether that person actually obtains such a loan.
     (4) "Department" means the department of financial institutions.
     (5) "Director" means the director of the department of financial institutions.
     (6) "Financial institution" means commercial banks and alien banks subject to regulation under Title 30 RCW, savings banks subject to regulation under Title 32 RCW, savings associations subject to regulation under Title 33 RCW, credit unions subject to regulation under chapter 31.12 RCW, consumer loan companies subject to regulation under chapter 31.04 RCW, and mortgage brokers and lenders subject to regulation under chapter 19.146 RCW.
     (7) "Fully indexed rate" means the index rate prevailing at the time a residential mortgage loan is made, plus the margin that will apply after the expiration of an introductory interest rate.
     (8) "Negative amortization" means an increase in the principal balance of a loan caused when the loan agreement allows the borrower to make payments less than the amount needed to pay all the interest that has accrued on the loan. The unpaid interest is added to the loan balance and becomes part of the principal.
     (9) "Person" means individuals, partnerships, associations, limited liability companies, limited liability partnerships, trusts, corporations, and all other legal entities.
     (10) "Residential mortgage loan" means an extension of credit secured by residential real property located in this state upon which is constructed or intended to be constructed, a single-family dwelling or multiple-family dwelling of four or less units. It does not include a reverse mortgage or a borrower credit transaction that is secured by rental property. It does not include a bridge loan. It does not include loans to individuals making or acquiring a residential mortgage loan solely with his or her own funds for his or her own investment. For purposes of this subsection, a "bridge loan" is any temporary loan, having a maturity of one year or less, for the purpose of acquisition or construction of a dwelling intended to become the borrower's principal dwelling.
     (11) "The interagency guidance on nontraditional mortgage product risks" means the guidance document issued in September 2006 by the office of the comptroller of the currency, the board of governors of the federal reserve system, the federal deposit insurance corporation, the office of thrift supervision, and the national credit union administration, and the guidance on nontraditional mortgage product risks released in November 2006 by the conference of state bank supervisors and the American association of residential mortgage regulators.
     (12) "The statement on subprime mortgage lending" means the guidance document issued in June 2007 by the office of the comptroller of the currency, the board of governors of the federal reserve system, the federal deposit insurance corporation, the office of thrift supervision, and the national credit union administration, and the statement on subprime mortgage lending released in July 2007 by the conference of state bank supervisors, the American association of residential mortgage regulators, and the national association of consumer credit administrators.

NEW SECTION.  Sec. 3   (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.

NEW SECTION.  Sec. 4   (1) The department shall apply the interagency guidance on nontraditional mortgage product risks and the statement on subprime mortgage lending to financial institutions.
     (2)(a) Financial institutions subject to this chapter shall adopt and adhere to internal policies and procedures that are reasonably intended to achieve the objectives set forth in the interagency guidance on nontraditional mortgage product risks and the statement on subprime mortgage lending.
     (b) The department shall adopt rules as required to implement this section.

NEW SECTION.  Sec. 5   A financial institution may not make or facilitate the origination of a residential mortgage loan that includes a prepayment penalty or fee that extends beyond sixty days prior to the initial reset period of an adjustable rate mortgage.

NEW SECTION.  Sec. 6   A financial institution may not make or facilitate a residential mortgage loan that includes any provisions that impose negative amortization and which are subject to the interagency guidance on nontraditional mortgage product risks and the statement on subprime mortgage lending.

NEW SECTION.  Sec. 7   A person licensed or subject to licensing, or otherwise subject to regulation pursuant to chapter 19.146 RCW, or a consumer loan company licensed or subject to licensing under chapter 31.04 RCW may not steer, counsel, or direct any borrower to accept a residential mortgage loan product with a risk grade less favorable than the risk grade that the borrower would qualify for based on the licensee or other regulated person's then current underwriting guidelines, prudently applied, considering the information available to the licensee or other regulated person, including the information provided by the borrower. A licensee or other regulated person has not violated this requirement if the risk grade determination applied to a borrower is reasonably based on the licensee or other regulated person's underwriting guidelines for the borrower's appropriate risk grade category and the borrower is offered choices of residential mortgage loan products within the borrower's appropriate risk grade category.

NEW SECTION.  Sec. 8   The department may adopt rules necessary to implement this chapter, including but not limited to the authority to identify which sections of this act apply to open-end credit plans.

NEW SECTION.  Sec. 9   It is unlawful for any person in connection with making, brokering, or obtaining a residential mortgage loan to directly or indirectly:
     (1)(a) Employ any scheme, device, or artifice to defraud or materially mislead any borrower during the lending process; (b) defraud or materially mislead any lender, defraud or materially mislead any person, or engage in any unfair or deceptive practice toward any person in the lending process; or (c) obtain property by fraud or material misrepresentation in the lending process;
     (2) Knowingly make any misstatement, misrepresentation, or omission during the mortgage lending process knowing that it may be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process;
     (3) Use or facilitate the use of any misstatement, misrepresentation, or omission, knowing the same to contain a misstatement, misrepresentation, or omission, during the mortgage lending process with the intention that it be relied on by a mortgage lender, borrower, or any other party to the mortgage lending process; or
     (4) Receive any proceeds or anything of value in connection with a residential mortgage closing that such person knew resulted from a violation of subsection (1), (2), or (3) of this section.

NEW SECTION.  Sec. 10   (1) Any person who knowingly violates section 9 of this act or who knowingly aids or abets in the violation of section 9 of this act is guilty of a class B felony punishable under RCW 9A.20.021(1)(b). Mortgage fraud is a serious level III offense per chapter 9.94A RCW.
     (2) Any person who knowingly alters, destroys, shreds, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the investigation and prosecution of this crime is guilty of a class B felony punishable under RCW 9A.20.021(1)(b).
     (3) No information may be returned more than (a) five years after the violation, or (b) three years after the actual discovery of the violation, whichever date of limitation is later.
     (4) Any person who violates this chapter is subject to civil forfeiture statutes.

NEW SECTION.  Sec. 11   (1)(a) It is unlawful for a person to use or invest proceeds, or any part of proceeds, knowing that the proceeds, or any part of the proceeds, were derived, directly or indirectly, from a pattern of mortgage fraud activity, in the acquisition of any title to, or any right, interest, or equity in, real property or in the establishment or operation of any enterprise.
     (b) A violation of this subsection is a class B felony.
     (2)(a) It is unlawful for a person to acquire or maintain, directly or indirectly, any interest in or control of any enterprise or real property knowing the interest or control was obtained through a pattern of mortgage fraud.
     (b) A violation of this subsection is a class B felony.
     (3)(a) It is unlawful for a person to knowingly conspire or attempt to violate subsection (1) or (2) of this section.
     (b) A violation of this subsection is a class C felony.

NEW SECTION.  Sec. 12   Any penalty imposed for violation of this chapter is in addition to, and not in lieu of, any civil or administrative penalty or sanction otherwise authorized by law.

NEW SECTION.  Sec. 13   The director or the director's designee may, at his or her discretion, take such actions as provided for in Titles 30, 32, and 33 RCW, and chapters 31.12, 31.04, and 19.146 RCW, to enforce, investigate, or examine persons covered by this chapter.

NEW SECTION.  Sec. 14   A new section is added to chapter 19.146 RCW to read as follows:
     The director or the director's designee may take such action as provided for in this chapter to enforce, investigate, or examine persons covered by chapter 19.--- RCW (sections 1 through 13 of this act).

NEW SECTION.  Sec. 15   A new section is added to chapter 30.04 RCW to read as follows:
     The director or the director's designee may take such action as provided for in this title to enforce, investigate, or examine persons covered by chapter 19.--- RCW (sections 1 through 13 of this act).

NEW SECTION.  Sec. 16   A new section is added to chapter 31.04 RCW to read as follows:
     The director or the director's designee may take such action as provided for in this chapter to enforce, investigate, or examine persons covered by chapter 19.--- RCW (sections 1 through 13 of this act).

NEW SECTION.  Sec. 17   A new section is added to chapter 31.12 RCW to read as follows:
     The director or the director's designee may take such action as provided for in this chapter to enforce, investigate, or examine persons covered by chapter 19.--- RCW (sections 1 through 13 of this act).

NEW SECTION.  Sec. 18   A new section is added to chapter 32.04 RCW to read as follows:
     The director or the director's designee may take such action as provided for in this title to enforce, investigate, or examine persons covered by chapter 19.--- RCW (sections 1 through 13 of this act).

NEW SECTION.  Sec. 19   A new section is added to chapter 33.04 RCW to read as follows:
     The director or the director's designee may take such action as provided for in this title to enforce, investigate, or examine persons covered by chapter 19.--- RCW (sections 1 through 13 of this act).

NEW SECTION.  Sec. 20   A new section is added to chapter 19.146 RCW to read as follows:
     The activities of a mortgage broker affect the public interest, and require that all actions of mortgage brokers, designated brokers, loan originators, and other persons subject to this chapter be actuated by good faith, abstain from deception, and practice honesty and equity in all matters related to their profession. The duty of preserving the integrity of the mortgage broker business rests upon the mortgage broker, designated broker, loan originator, and other persons subject to this chapter.

Sec. 21   RCW 19.146.005 and 2006 c 19 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, requiring that all actions in mortgage brokering be actuated by good faith, and that mortgage brokers, designated brokers, loan originators, and other persons subject to this chapter abstain from deception, and practice honesty and equity in all matters relating to their profession. The practices of mortgage brokers and loan originators 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 state system of licensure in addition to rules of practice and conduct of mortgage brokers and loan originators to promote honesty and fair dealing with citizens and to preserve public confidence in the lending and real estate community.

Sec.22   RCW 61.24.030 and 1998 c 295 s 4 are each amended to read as follows:
     It shall be requisite to a trustee's sale:
     (1) That the deed of trust contains a power of sale;
     (2) That the deed of trust contains a statement that the real property conveyed is not used principally for agricultural purposes; provided, if the statement is false on the date the deed of trust was granted or amended to include that statement, and false on the date of the trustee's sale, then the deed of trust must be foreclosed judicially. Real property is used for agricultural purposes if it is used in an operation that produces crops, livestock, or aquatic goods;
     (3) That a default has occurred in the obligation secured or a covenant of the grantor, which by the terms of the deed of trust makes operative the power to sell;
     (4) That no action commenced by the beneficiary of the deed of trust is now pending to seek satisfaction of an obligation secured by the deed of trust in any court by reason of the grantor's default on the obligation secured: PROVIDED, That (a) the seeking of the appointment of a receiver shall not constitute an action for purposes of this chapter; and (b) if a receiver is appointed, the grantor shall be entitled to any rents or profits derived from property subject to a homestead as defined in RCW 6.13.010. If the deed of trust was granted to secure a commercial loan, this subsection shall not apply to actions brought to enforce any other lien or security interest granted to secure the obligation secured by the deed of trust being foreclosed;
     (5) That the deed of trust has been recorded in each county in which the land or some part thereof is situated;
     (6) That prior to the date of the notice of trustee's sale and continuing thereafter through the date of the trustee's sale, the trustee must have a street address in this state where personal service of process may be made; and
     (7) That at least thirty days before notice of sale shall be recorded, transmitted or served, written notice of default shall be transmitted by the beneficiary or trustee to the borrower and grantor at their last known addresses by both first class and either registered or certified mail, return receipt requested, and the beneficiary or trustee shall cause to be posted in a conspicuous place on the premises, a copy of the notice, or personally served on the borrower and grantor. This notice shall contain the following information:
     (a) A description of the property which is then subject to the deed of trust;
     (b) Each county in which the deed of trust is recorded and the document number given to the deed of trust upon recording by each county auditor or recording officer;
     (c) That the beneficiary has declared the borrower or grantor to be in default, and a concise statement of the default alleged;
     (d) An itemized account of the amount or amounts in arrears if the default alleged is failure to make payments;
     (e) An itemized account of all other specific charges, costs, or fees that the borrower, grantor, or any guarantor is or may be obliged to pay to reinstate the deed of trust before the recording of the notice of sale;
     (f) The total of (d) and (e) of this subsection, designated clearly and conspicuously as the amount necessary to reinstate the note and deed of trust before the recording of the notice of sale;
     (g) That failure to cure the alleged default within thirty days of the date of mailing of the notice, or if personally served, within thirty days of the date of personal service thereof, may lead to recordation, transmittal, and publication of a notice of sale, and that the property described in (a) of this subsection may be sold at public auction at a date no less than one hundred twenty days in the future;
     (h) That the effect of the recordation, transmittal, and publication of a notice of sale will be to (i) increase the costs and fees and (ii) publicize the default and advertise the grantor's property for sale;
     (i) That the effect of the sale of the grantor's property by the trustee will be to deprive the grantor of all their interest in the property described in (a) of this subsection; ((and))
     (j) That the borrower, grantor, and any guarantor has recourse to the courts pursuant to RCW 61.24.130 to contest the alleged default on any proper ground; and
     (k) In the event the property secured by the deed of trust is owner-occupied residential property, a statement, prominently set out at the beginning of the notice, which shall state as follows:

     "You should take care to protect your interest in your home. This notice of default (your failure to pay) is the first step in a process that could result in you losing your home. You should carefully review your options. For example:
     Can you pay and stop the foreclosure process?
     Do you dispute the failure to pay?
     Can you sell your property to preserve your equity?
     Are you able to refinance this loan with a new loan from another lender with payments, terms, and fees that are more affordable?
     Do you qualify for any government or private homeowner assistance programs?
     Do you know if filing for bankruptcy is an option? What are the pros and cons of doing so?
     Do not ignore this notice; because if you do nothing, you could lose your home at a foreclosure sale. (No foreclosure sale can be held any sooner than ninety days after a notice of sale is issued and a notice of sale cannot be issued until thirty days after this notice.) Also, if you do nothing to pay what you owe, be careful of people who claim they can help you. There are many individuals and businesses that watch for the notices of sale in order to unfairly profit as a result of borrowers' distress.
     You may feel you need help understanding what to do. There are a number of professional resources available, including home loan counselors and attorneys, who may assist you. Many legal services are lower-cost or even free, depending on your ability to pay. If you desire legal help in understanding your options or handling this default, you may obtain a referral (at no charge) by contacting the county bar association in the county where your home is located. These legal referral services also provide information about lower-cost or free legal services for those who qualify
."

Sec. 23   RCW 9.94A.515 and 2007 c 368 s 14 and 2007 c 199 s 10 are each reenacted and amended to read as follows:

 TABLE 2
 CRIMES INCLUDED WITHIN EACH SERIOUSNESS LEVEL
XVIAggravated Murder 1 (RCW 10.95.020)
XVHomicide by abuse (RCW 9A.32.055)
 Malicious explosion 1 (RCW 70.74.280(1))
 Murder 1 (RCW 9A.32.030)
XIVMurder 2 (RCW 9A.32.050)
 Trafficking 1 (RCW 9A.40.100(1))
XIIIMalicious explosion 2 (RCW 70.74.280(2))
 Malicious placement of an explosive 1 (RCW 70.74.270(1))
XIIAssault 1 (RCW 9A.36.011)
 Assault of a Child 1 (RCW 9A.36.120)
 Malicious placement of an imitation device 1 (RCW 70.74.272(1)(a))
 Rape 1 (RCW 9A.44.040)
 Rape of a Child 1 (RCW 9A.44.073)
 Trafficking 2 (RCW 9A.40.100(2))
XIManslaughter 1 (RCW 9A.32.060)
 Rape 2 (RCW 9A.44.050)
 Rape of a Child 2 (RCW 9A.44.076)
XChild Molestation 1 (RCW 9A.44.083)
 Indecent Liberties (with forcible compulsion) (RCW 9A.44.100(1)(a))
 Kidnapping 1 (RCW 9A.40.020)
 Leading Organized Crime (RCW 9A.82.060(1)(a))
 Malicious explosion 3 (RCW 70.74.280(3))
 Sexually Violent Predator Escape (RCW 9A.76.115)
IXAbandonment of Dependent Person 1 (RCW 9A.42.060)
 Assault of a Child 2 (RCW 9A.36.130)
 Criminal Mistreatment 1 (RCW 9A.42.020)
 Explosive devices prohibited (RCW 70.74.180)
 Hit and Run--Death (RCW 46.52.020(4)(a))
 Homicide by Watercraft, by being under the influence of intoxicating liquor or any drug (RCW 79A.60.050)
 Inciting Criminal Profiteering (RCW 9A.82.060(1)(b))
 Malicious placement of an explosive 2 (RCW 70.74.270(2))
 Robbery 1 (RCW 9A.56.200)
 Sexual Exploitation (RCW 9.68A.040)
 Vehicular Homicide, by being under the influence of intoxicating liquor or any drug (RCW 46.61.520)
VIIIArson 1 (RCW 9A.48.020)
 Homicide by Watercraft, by the operation of any vessel in a reckless manner (RCW 79A.60.050)
 Manslaughter 2 (RCW 9A.32.070)
 Promoting Commercial Sexual Abuse of a Minor (RCW 9.68A.101)
 Promoting Prostitution 1 (RCW 9A.88.070)
 Theft of Ammonia (RCW 69.55.010)
 Vehicular Homicide, by the operation of any vehicle in a reckless manner (RCW 46.61.520)
VIIBurglary 1 (RCW 9A.52.020)
 Child Molestation 2 (RCW 9A.44.086)
 Civil Disorder Training (RCW 9A.48.120)
 Dealing in depictions of minor engaged in sexually explicit conduct (RCW 9.68A.050)
 Drive-by Shooting (RCW 9A.36.045)
 Homicide by Watercraft, by disregard for the safety of others (RCW 79A.60.050)
 Indecent Liberties (without forcible compulsion) (RCW 9A.44.100(1) (b) and (c))
 Introducing Contraband 1 (RCW 9A.76.140)
 Malicious placement of an explosive 3 (RCW 70.74.270(3))
 Negligently Causing Death By Use of a Signal Preemption Device (RCW 46.37.675)
 Sending, bringing into state depictions of minor engaged in sexually explicit conduct (RCW 9.68A.060)
 Unlawful Possession of a Firearm in the first degree (RCW 9.41.040(1))
 Use of a Machine Gun in Commission of a Felony (RCW 9.41.225)
 Vehicular Homicide, by disregard for the safety of others (RCW 46.61.520)
VIBail Jumping with Murder 1 (RCW 9A.76.170(3)(a))
 Bribery (RCW 9A.68.010)
 Incest 1 (RCW 9A.64.020(1))
 Intimidating a Judge (RCW 9A.72.160)
 Intimidating a Juror/Witness (RCW 9A.72.110, 9A.72.130)
 Malicious placement of an imitation device 2 (RCW 70.74.272(1)(b))
 Possession of Depictions of a Minor Engaged in Sexually Explicit Conduct (RCW 9.68A.070)
 Rape of a Child 3 (RCW 9A.44.079)
 Theft of a Firearm (RCW 9A.56.300)
 Unlawful Storage of Ammonia (RCW 69.55.020)
VAbandonment of Dependent Person 2 (RCW 9A.42.070)
 Advancing money or property for extortionate extension of credit (RCW 9A.82.030)
 Bail Jumping with class A Felony (RCW 9A.76.170(3)(b))
 Child Molestation 3 (RCW 9A.44.089)
 Criminal Mistreatment 2 (RCW 9A.42.030)
 Custodial Sexual Misconduct 1 (RCW 9A.44.160)
 Domestic Violence Court Order Violation (RCW 10.99.040, 10.99.050, 26.09.300, 26.10.220, 26.26.138, 26.50.110, 26.52.070, or 74.34.145)
 Driving While Under the Influence (RCW 46.61.502(6))
 Extortion 1 (RCW 9A.56.120)
 Extortionate Extension of Credit (RCW 9A.82.020)
 Extortionate Means to Collect Extensions of Credit (RCW 9A.82.040)
 Incest 2 (RCW 9A.64.020(2))
 Kidnapping 2 (RCW 9A.40.030)
 Perjury 1 (RCW 9A.72.020)
 Persistent prison misbehavior (RCW 9.94.070)
 Physical Control of a Vehicle While Under the Influence (RCW 46.61.504(6))
 Possession of a Stolen Firearm (RCW 9A.56.310)
 Rape 3 (RCW 9A.44.060)
 Rendering Criminal Assistance 1 (RCW 9A.76.070)
 Sexual Misconduct with a Minor 1 (RCW 9A.44.093)
 Sexually Violating Human Remains (RCW 9A.44.105)
 Stalking (RCW 9A.46.110)
 Taking Motor Vehicle Without Permission 1 (RCW 9A.56.070)
IVArson 2 (RCW 9A.48.030)
 Assault 2 (RCW 9A.36.021)
 Assault 3 (of a Peace Officer with a Projectile Stun Gun) (RCW 9A.36.031(1)(h))
 Assault by Watercraft (RCW 79A.60.060)
 Bribing a Witness/Bribe Received by Witness (RCW 9A.72.090, 9A.72.100)
 Cheating 1 (RCW 9.46.1961)
 Commercial Bribery (RCW 9A.68.060)
 Counterfeiting (RCW 9.16.035(4))
 Endangerment with a Controlled Substance (RCW 9A.42.100)
 Escape 1 (RCW 9A.76.110)
 Hit and Run -- Injury (RCW 46.52.020(4)(b))
 Hit and Run with Vessel -- Injury Accident (RCW 79A.60.200(3))
 Identity Theft 1 (RCW 9.35.020(2))
 Indecent Exposure to Person Under Age Fourteen (subsequent sex offense) (RCW 9A.88.010)
 Influencing Outcome of Sporting Event (RCW 9A.82.070)
 Malicious Harassment (RCW 9A.36.080)
 Residential Burglary (RCW 9A.52.025)
 Robbery 2 (RCW 9A.56.210)
 Theft of Livestock 1 (RCW 9A.56.080)
 Threats to Bomb (RCW 9.61.160)
 Trafficking in Stolen Property 1 (RCW 9A.82.050)
 Unlawful factoring of a credit card or payment card transaction (RCW 9A.56.290(4)(b))
 Unlawful transaction of health coverage as a health care service contractor (RCW 48.44.016(3))
 Unlawful transaction of health coverage as a health maintenance organization (RCW 48.46.033(3))
 Unlawful transaction of insurance business (RCW 48.15.023(3))
 Unlicensed practice as an insurance professional (RCW 48.17.063(3))
 Use of Proceeds of Criminal Profiteering (RCW 9A.82.080 (1) and (2))
 Vehicular Assault, by being under the influence of intoxicating liquor or any drug, or by the operation or driving of a vehicle in a reckless manner (RCW 46.61.522)
 Willful Failure to Return from Furlough (RCW 72.66.060)
IIIAnimal Cruelty 1 (Sexual Conduct or Contact) (RCW 16.52.205(3))
 Assault 3 (Except Assault 3 of a Peace Officer With a Projectile Stun Gun) (RCW 9A.36.031 except subsection (1)(h))
 Assault of a Child 3 (RCW 9A.36.140)
 Bail Jumping with class B or C Felony (RCW 9A.76.170(3)(c))
 Burglary 2 (RCW 9A.52.030)
 Commercial Sexual Abuse of a Minor (RCW 9.68A.100)
 Communication with a Minor for Immoral Purposes (RCW 9.68A.090)
 Criminal Gang Intimidation (RCW 9A.46.120)
 Custodial Assault (RCW 9A.36.100)
 Cyberstalking (subsequent conviction or threat of death) (RCW 9.61.260(3))
 Escape 2 (RCW 9A.76.120)
 Extortion 2 (RCW 9A.56.130)
 Harassment (RCW 9A.46.020)
 Intimidating a Public Servant (RCW 9A.76.180)
 Introducing Contraband 2 (RCW 9A.76.150)
 Malicious Injury to Railroad Property (RCW 81.60.070)
 Mortgage Fraud (section 9 of this act)
 Negligently Causing Substantial Bodily Harm By Use of a Signal Preemption Device (RCW 46.37.674)
 Organized Retail Theft 1 (RCW 9A.56.350(2))
 Perjury 2 (RCW 9A.72.030)
 Possession of Incendiary Device (RCW 9.40.120)
 Possession of Machine Gun or Short-Barreled Shotgun or Rifle (RCW 9.41.190)
 Promoting Prostitution 2 (RCW 9A.88.080)
 Retail Theft with Extenuating Circumstances 1 (RCW 9A.56.360(2))
 Securities Act violation (RCW 21.20.400)
 Tampering with a Witness (RCW 9A.72.120)
 Telephone Harassment (subsequent conviction or threat of death) (RCW 9.61.230(2))
 Theft of Livestock 2 (RCW 9A.56.083)
 Theft with the Intent to Resell 1 (RCW 9A.56.340(2))
 Trafficking in Stolen Property 2 (RCW 9A.82.055)
 Unlawful Imprisonment (RCW 9A.40.040)
 Unlawful possession of firearm in the second degree (RCW 9.41.040(2))
 Vehicular Assault, by the operation or driving of a vehicle with disregard for the safety of others (RCW 46.61.522)
 Willful Failure to Return from Work Release (RCW 72.65.070)
IIComputer Trespass 1 (RCW 9A.52.110)
 Counterfeiting (RCW 9.16.035(3))
 Escape from Community Custody (RCW 72.09.310)
 Failure to Register as a Sex Offender (second or subsequent offense) (RCW 9A.44.130(((10)))(11)(a))
 Health Care False Claims (RCW 48.80.030)
 Identity Theft 2 (RCW 9.35.020(3))
 Improperly Obtaining Financial Information (RCW 9.35.010)
 Malicious Mischief 1 (RCW 9A.48.070)
 Organized Retail Theft 2 (RCW 9A.56.350(3))
 Possession of Stolen Property 1 (RCW 9A.56.150)
 Possession of a Stolen Vehicle (RCW 9A.56.068)
 Retail Theft with Extenuating Circumstances 2 (RCW 9A.56.360(3))
 Theft 1 (RCW 9A.56.030)
 Theft of a Motor Vehicle (RCW 9A.56.065)
 Theft of Rental, Leased, or Lease-purchased Property (valued at one thousand five hundred dollars or more) (RCW 9A.56.096(5)(a))
 Theft with the Intent to Resell 2 (RCW 9A.56.340(3))
 Trafficking in Insurance Claims (RCW 48.30A.015)
 Unlawful factoring of a credit card or payment card transaction (RCW 9A.56.290(4)(a))
 Unlawful Practice of Law (RCW 2.48.180)
 Unlicensed Practice of a Profession or Business (RCW 18.130.190(7))
 Voyeurism (RCW 9A.44.115)
IAttempting to Elude a Pursuing Police Vehicle (RCW 46.61.024)
 False Verification for Welfare (RCW 74.08.055)
 Forgery (RCW 9A.60.020)
 Fraudulent Creation or Revocation of a Mental Health Advance Directive (RCW 9A.60.060)
 Malicious Mischief 2 (RCW 9A.48.080)
 Mineral Trespass (RCW 78.44.330)
 Possession of Stolen Property 2 (RCW 9A.56.160)
 Reckless Burning 1 (RCW 9A.48.040)
 Taking Motor Vehicle Without Permission 2 (RCW 9A.56.075)
 Theft 2 (RCW 9A.56.040)
 Theft of Rental, Leased, or Lease-purchased Property (valued at two hundred fifty dollars or more but less than one thousand five hundred dollars) (RCW 9A.56.096(5)(b))
 Transaction of insurance business beyond the scope of licensure (RCW 48.17.063(4))
 Unlawful Issuance of Checks or Drafts (RCW 9A.56.060)
 Unlawful Possession of Fictitious Identification (RCW 9A.56.320)
 Unlawful Possession of Instruments of Financial Fraud (RCW 9A.56.320)
 Unlawful Possession of Payment Instruments (RCW 9A.56.320)
 Unlawful Possession of a Personal Identification Device (RCW 9A.56.320)
 Unlawful Production of Payment Instruments (RCW 9A.56.320)
 Unlawful Trafficking in Food Stamps (RCW 9.91.142)
 Unlawful Use of Food Stamps (RCW 9.91.144)
 Vehicle Prowl 1 (RCW 9A.52.095)


Sec. 24   RCW 9A.82.010 and 2006 c 277 s 5 and 2006 c 193 s 2 are each reenacted and amended to read as follows:
     Unless the context requires the contrary, the definitions in this section apply throughout this chapter.
     (1)(a) "Beneficial interest" means:
     (i) The interest of a person as a beneficiary under a trust established under Title 11 RCW in which the trustee for the trust holds legal or record title to real property;
     (ii) The interest of a person as a beneficiary under any other trust arrangement under which a trustee holds legal or record title to real property for the benefit of the beneficiary; or
     (iii) The interest of a person under any other form of express fiduciary arrangement under which one person holds legal or record title to real property for the benefit of the other person.
     (b) "Beneficial interest" does not include the interest of a stockholder in a corporation or the interest of a partner in a general partnership or limited partnership.
     (c) A beneficial interest is considered to be located where the real property owned by the trustee is located.
     (2) "Control" means the possession of a sufficient interest to permit substantial direction over the affairs of an enterprise.
     (3) "Creditor" means a person making an extension of credit or a person claiming by, under, or through a person making an extension of credit.
     (4) "Criminal profiteering" means any act, including any anticipatory or completed offense, committed for financial gain, that is chargeable or indictable under the laws of the state in which the act occurred and, if the act occurred in a state other than this state, would be chargeable or indictable under the laws of this state had the act occurred in this state and punishable as a felony and by imprisonment for more than one year, regardless of whether the act is charged or indicted, as any of the following:
     (a) Murder, as defined in RCW 9A.32.030 and 9A.32.050;
     (b) Robbery, as defined in RCW 9A.56.200 and 9A.56.210;
     (c) Kidnapping, as defined in RCW 9A.40.020 and 9A.40.030;
     (d) Forgery, as defined in RCW 9A.60.020 and 9A.60.030;
     (e) Theft, as defined in RCW 9A.56.030, 9A.56.040, 9A.56.060, 9A.56.080, and 9A.56.083;
     (f) Unlawful sale of subscription television services, as defined in RCW 9A.56.230;
     (g) Theft of telecommunication services or unlawful manufacture of a telecommunication device, as defined in RCW 9A.56.262 and 9A.56.264;
     (h) Child selling or child buying, as defined in RCW 9A.64.030;
     (i) Bribery, as defined in RCW 9A.68.010, 9A.68.020, 9A.68.040, and 9A.68.050;
     (j) Gambling, as defined in RCW 9.46.220 and 9.46.215 and 9.46.217;
     (k) Extortion, as defined in RCW 9A.56.120 and 9A.56.130;
     (l) Unlawful production of payment instruments, unlawful possession of payment instruments, unlawful possession of a personal identification device, unlawful possession of fictitious identification, or unlawful possession of instruments of financial fraud, as defined in RCW 9A.56.320;
     (m) Extortionate extension of credit, as defined in RCW 9A.82.020;
     (n) Advancing money for use in an extortionate extension of credit, as defined in RCW 9A.82.030;
     (o) Collection of an extortionate extension of credit, as defined in RCW 9A.82.040;
     (p) Collection of an unlawful debt, as defined in RCW 9A.82.045;
     (q) Delivery or manufacture of controlled substances or possession with intent to deliver or manufacture controlled substances under chapter 69.50 RCW;
     (r) Trafficking in stolen property, as defined in RCW 9A.82.050;
     (s) Leading organized crime, as defined in RCW 9A.82.060;
     (t) Money laundering, as defined in RCW 9A.83.020;
     (u) Obstructing criminal investigations or prosecutions in violation of RCW 9A.72.090, 9A.72.100, 9A.72.110, 9A.72.120, 9A.72.130, 9A.76.070, or 9A.76.180;
     (v) Fraud in the purchase or sale of securities, as defined in RCW 21.20.010;
     (w) Promoting pornography, as defined in RCW 9.68.140;
     (x) Sexual exploitation of children, as defined in RCW 9.68A.040, 9.68A.050, and 9.68A.060;
     (y) Promoting prostitution, as defined in RCW 9A.88.070 and 9A.88.080;
     (z) Arson, as defined in RCW 9A.48.020 and 9A.48.030;
     (aa) Assault, as defined in RCW 9A.36.011 and 9A.36.021;
     (bb) Assault of a child, as defined in RCW 9A.36.120 and 9A.36.130;
     (cc) A pattern of equity skimming, as defined in RCW 61.34.020;
     (dd) Commercial telephone solicitation in violation of RCW 19.158.040(1);
     (ee) Trafficking in insurance claims, as defined in RCW 48.30A.015;
     (ff) Unlawful practice of law, as defined in RCW 2.48.180;
     (gg) Commercial bribery, as defined in RCW 9A.68.060;
     (hh) Health care false claims, as defined in RCW 48.80.030;
     (ii) Unlicensed practice of a profession or business, as defined in RCW 18.130.190(7);
     (jj) Improperly obtaining financial information, as defined in RCW 9.35.010;
     (kk) Identity theft, as defined in RCW 9.35.020;
     (ll) Unlawful shipment of cigarettes in violation of RCW 70.155.105(6) (a) or (b);
     (mm) Unlawful shipment of cigarettes in violation of RCW 82.24.110(2);
     (nn) Unauthorized sale or procurement of telephone records in violation of RCW 9.26A.140;
     (oo) Theft with the intent to resell, as defined in RCW 9A.56.340; ((or))
     (pp) Organized retail theft, as defined in RCW 9A.56.350; or
     (qq) Mortgage fraud, as defined in section 9 of this act
.
     (5) "Dealer in property" means a person who buys and sells property as a business.
     (6) "Debtor" means a person to whom an extension of credit is made or a person who guarantees the repayment of an extension of credit or in any manner undertakes to indemnify the creditor against loss resulting from the failure of a person to whom an extension is made to repay the same.
     (7) "Documentary material" means any book, paper, document, writing, drawing, graph, chart, photograph, phonograph record, magnetic tape, computer printout, other data compilation from which information can be obtained or from which information can be translated into usable form, or other tangible item.
     (8) "Enterprise" includes any individual, sole proprietorship, partnership, corporation, business trust, or other profit or nonprofit legal entity, and includes any union, association, or group of individuals associated in fact although not a legal entity, and both illicit and licit enterprises and governmental and nongovernmental entities.
     (9) "Extortionate extension of credit" means an extension of credit with respect to which it is the understanding of the creditor and the debtor at the time the extension is made that delay in making repayment or failure to make repayment could result in the use of violence or other criminal means to cause harm to the person, reputation, or property of any person.
     (10) "Extortionate means" means the use, or an express or implicit threat of use, of violence or other criminal means to cause harm to the person, reputation, or property of any person.
     (11) "Financial institution" means any bank, trust company, savings and loan association, savings bank, mutual savings bank, credit union, or loan company under the jurisdiction of the state or an agency of the United States.
     (12) "Pattern of criminal profiteering activity" means engaging in at least three acts of criminal profiteering, one of which occurred after July 1, 1985, and the last of which occurred within five years, excluding any period of imprisonment, after the commission of the earliest act of criminal profiteering. In order to constitute a pattern, the three acts must have the same or similar intent, results, accomplices, principals, victims, or methods of commission, or be otherwise interrelated by distinguishing characteristics including a nexus to the same enterprise, and must not be isolated events. However, in any civil proceedings brought pursuant to RCW 9A.82.100 by any person other than the attorney general or county prosecuting attorney in which one or more acts of fraud in the purchase or sale of securities are asserted as acts of criminal profiteering activity, it is a condition to civil liability under RCW 9A.82.100 that the defendant has been convicted in a criminal proceeding of fraud in the purchase or sale of securities under RCW 21.20.400 or under the laws of another state or of the United States requiring the same elements of proof, but such conviction need not relate to any act or acts asserted as acts of criminal profiteering activity in such civil action under RCW 9A.82.100.
     (13) "Real property" means any real property or interest in real property, including but not limited to a land sale contract, lease, or mortgage of real property.
     (14) "Records" means any book, paper, writing, record, computer program, or other material.
     (15) "Repayment of an extension of credit" means the repayment, satisfaction, or discharge in whole or in part of a debt or claim, acknowledged or disputed, valid or invalid, resulting from or in connection with that extension of credit.
     (16) "Stolen property" means property that has been obtained by theft, robbery, or extortion.
     (17) "To collect an extension of credit" means to induce in any way a person to make repayment thereof.
     (18) "To extend credit" means to make or renew a loan or to enter into an agreement, tacit or express, whereby the repayment or satisfaction of a debt or claim, whether acknowledged or disputed, valid or invalid, and however arising, may or shall be deferred.
     (19) "Traffic" means to sell, transfer, distribute, dispense, or otherwise dispose of stolen property to another person, or to buy, receive, possess, or obtain control of stolen property, with intent to sell, transfer, distribute, dispense, or otherwise dispose of the property to another person.
     (20)(a) "Trustee" means:
     (i) A person acting as a trustee under a trust established under Title 11 RCW in which the trustee holds legal or record title to real property;
     (ii) A person who holds legal or record title to real property in which another person has a beneficial interest; or
     (iii) A successor trustee to a person who is a trustee under (a)(i) or (ii) of this subsection.
     (b) "Trustee" does not mean a person appointed or acting as:
     (i) A personal representative under Title 11 RCW;
     (ii) A trustee of any testamentary trust;
     (iii) A trustee of any indenture of trust under which a bond is issued; or
     (iv) A trustee under a deed of trust.
     (21) "Unlawful debt" means any money or other thing of value constituting principal or interest of a debt that is legally unenforceable in the state in full or in part because the debt was incurred or contracted:
     (a) In violation of any one of the following:
     (i) Chapter 67.16 RCW relating to horse racing;
     (ii) Chapter 9.46 RCW relating to gambling;
     (b) In a gambling activity in violation of federal law; or
     (c) In connection with the business of lending money or a thing of value at a rate that is at least twice the permitted rate under the applicable state or federal law relating to usury.

NEW SECTION.  Sec. 25   Sections 1 through 13 of this act constitute a new chapter in Title 19 RCW.


         Passed by the House February 6, 2008.
         Passed by the Senate March 6, 2008.
         Approved by the Governor March 21, 2008.
         Filed in Office of Secretary of State March 24, 2008.