WSR 03-21-175

PROPOSED RULES

DEPARTMENT OF

FINANCIAL INSTITUTIONS

[ Filed October 22, 2003, 11:57 a.m. ]

Original Notice.

Preproposal statement of inquiry was filed as WSR 03-043 [03-17-043].

Title of Rule: Distribution and use of funds from the mortgage lending fraud prosecution fund.

Purpose: To establish procedures to guide prosecutorial agencies in making application for grants from the mortgage lending fraud prosecution fund, as directed by the legislature, and to guide the Department of Financial Institutions in processing the applications.

Statutory Authority for Adoption: RCW 36.22.181 and 43.320.040.

Summary: The director of the Department of Financial Institutions is authorized to disburse funds directly from the mortgage fraud lending account for prosecutorial functions listed. Methods for disbursing the funds are provided. Procedure for approval or denial of applications for funds is established.

Reasons Supporting Proposal: The rule is necessary to implement the statute. The rule gives adequate guidance and notice to prosecutors and the disbursing agency.

Name of Agency Personnel Responsible for Drafting: David Cheal, 150 Israel Road, Olympia, WA 98504-1200, (360) 902-0512; Implementation: Chuck Cross, 150 Israel Road, Olympia, WA 98504-1200, (360) 902-8733; and Enforcement: Kwadwo Boateng, 150 Israel Road, Olympia, WA 98504-1200, (360) 902-8725.

Name of Proponent: Washington Association of Prosecuting Attorneys; Office of the Attorney General.

Rule is not necessitated by federal law, federal or state court decision.

Explanation of Rule, its Purpose, and Anticipated Effects: The rule establishes methods and procedures for making grant applications for funds from the mortgage lending fraud prosecution fund. Direction is given to the Department of Financial Institutions in processing grant applications and disbursing funds. A list of prosecutorial activities is provided that may be the subject of a grant application.

Proposal does not change existing rules.

No small business economic impact statement has been prepared under chapter 19.85 RCW. The rule involves transactions between governmental agencies. The rule does not affect small businesses.

RCW 34.05.328 does not apply to this rule adoption. Rules adopted by the Department of Financial Institutions are not subject to RCW 34.05.328, except as voluntarily made applicable.

Hearing Location: Department of Financial Institutions, 150 Israel Road, Olympia, WA 98504-1200, on December 3, 2003, at 7:00 p.m.

Assistance for Persons with Disabilities: Contact David Cheal by December 1, 2003, TDD (360) 664-8126 or (360) 902-0512.

Submit Written Comments to: David Cheal, Department of Financial Institutions, 150 Israel Road, Olympia, WA 998501 [98504], by December 3, 2003.

Date of Intended Adoption: December 10, 2003.

October 22, 2003

Chuck Cross

Assistant Director

Consumer Services

Chapter 208-700 WAC

PROCESSING APPLICATIONS FOR GRANTS FROM THE MORTGAGE LENDING FRAUD PROSECUTION ACCOUNT

DEFINITIONS



[NEW SECTION]WAC 208-700-010   Definitions.   The definitions in this section apply throughout the chapter unless the context clearly requires otherwise.

(1) "Department" means the Department of Financial Institutions.

(2) "Director" means the Director of the Department.

(3) "Mortgage lending fraud prosecution account" or "account" means the account established under RCW 36.22.181, RCW 40.320.140, and RCW 43.320.1401 (chapter 289, Laws of 2003).

(4) "Mortgage lending process" means the process through which a person seeks or obtains a residential mortgage loan including, but not limited to, solicitation, application or origination, negotiation of terms, third party provider services, underwriting, signing and closing, and funding of the loan.

(5) "Person" means a natural person, corporation, company, limited liability corporation, partnership, or association.

(6) "Prosecutorial agency" means the office of the Washington Attorney General, the office of the United States Attorney, or the office of any county prosecutor in the State of Washington.

(7) "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 fewer units.

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

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Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.

[NEW SECTION]WAC 208-700-020   Authorization for use of funds.   The Director is authorized to disburse funds held under this chapter to cover the expenses of any prosecutorial agency for the purposes of prosecuting fraudulent activities in the mortgage lending process. Such prosecution expenses may include, but are not limited to:

(1) Investigation.

(2) Discovery.

(3) Trial preparation and trial.

(4) Witness expenses.

(5) Sentencing.

(6) Appeal.

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Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.

[NEW SECTION]WAC 208-700-030   Application and approval for disbursement of funds.   (1) At the Director's discretion, the Department may establish any of the following means for application, approval and disbursement of funds:

a. A written agreement or memorandum of understanding with a prosecutorial agency covering expenses for a set period of time or the expenses for a particular prosecution. Each agreement or memorandum of understanding shall identify the effective period, the expenses to be covered, the dollar limit, the manner and form of billing expenses and the process for disbursement of the funds, and shall be singed by an authorized representative of the prosecutorial agency, and the Director or the Director's designee.

b. A written application submitted to the Department for payment of prosecution expenses. Such written application shall be in a form acceptable to the Director and shall include at a minimum the following information:

i. The prosecutorial agency applicant name, address and contact information.

ii. The case name and description including the details of persons and crimes under consideration.

iii. The court and county where the charges are or may be filed.

iv. The expenses or range of expenses to be reimbursed.

c. An invoice and voucher submitted after the prosecutorial expenses have been incurred, which shall include all the information required under "b", above.

(2) The Department will approve or deny the application in a written letter. The letter of approval shall contain the terms of payment including the maximum amount to be reimbursed, the billing process to be followed by the prosecutorial agency, reporting requirements to the Department and the procedures by which the Department shall disburse the funds.

(3) A completed invoice or voucher in a form acceptable to the Director shall be submitted for all prosecution expenses for which payment or reimbursement from the account is sought.

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Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.

[NEW SECTION]WAC 208-700-040   Disbursement limitation   The Director is not required to disburse any funds unless the mortgage lending fraud prosecution account contains sufficient funds to cover planned disbursements under an agreement, memorandum of understanding or approved application. At no time shall the Director or the Department be required to make disbursements from the Department's own operating funds.

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Reviser's note: The bracketed material preceding the section above was supplied by the code reviser's office.

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