PERMANENT RULES
FINANCIAL INSTITUTIONS
(Consumer Services Division)
Effective Date of Rule: Thirty-one days after filing.
Purpose: Amending the rules in chapter 208-660 WAC to implement the Mortgage Broker Practices Act, chapter 19.146 RCW, as amended by the applicable Laws of 2009, to amend the rules for consistency with the federal SAFE act, and to generally amend the rules for clarity and consistency.
Citation of Existing Rules Affected by this Order: Amending, see the accompanying chapter 208-660 WAC.
Statutory Authority for Adoption: RCW 43.320.040.
Other Authority: RCW 19.146.223, chapter 528, Laws of 2009.
Adopted under notice filed as WSR 09-19-130 on September 22, 2009.
Changes Other than Editing from Proposed to Adopted Version: 1. WAC 208-660-006, the definition of annual loan volume is amended to (i) clarify the volume is origination volume; (ii) remove the references to the mortgage broker annual report and call reports as these are not necessary elements of the definition. Change (i) was made as a result of comments received during rule making.
2. WAC 208-660-006, the definition of license number is added as guidance to the industry in using the NMLS unique identifier. Several references to "unique identifier number" are changed to "license number" consistent with the new definition.
3. WAC 208-660-006, the definition of loan modification is added to guide the industry in providing these services under their license.
4. WAC 208-660-006, the definition of material litigation is added as a result of comments received during rule making and provides additional guidance to industry.
5. WAC 208-660-007 (1)(b), the reference to a call report is stricken due to that functionality not being available in the NMLS (and therefore not required under the SAFE act) until 2011.
6. WAC 208-660-155(13), the prohibition on certain loan originator compensation models is further clarified.
7. WAC 208-660-163 (15)(a)(i), the reference to a call report is stricken due to that functionality not being available in the NMLS (and therefore not required under the SAFE act) until 2011.
8. WAC 208-660-175 (1)(c) and (e). The bonding tiers are adjusted based on comments received during rule making.
9. WAC 208-660-180(6), the reference to another WAC is changed due to a change in numbering of the reporting section.
10. WAC 208-660-260(4), the location of an informational web site to [is] changed.
11. WAC 208-660-270(2), this section is amended for clarity of a requirement and consistency with the SAFE act.
12. WAC 208-660-270(5), this section is amended to conform to the SAFE act.
13. WAC 208-660-300(8), the last sentence is stricken as it causes confusion and inconsistency with another section.
14. WAC 208-660-350 (2)(b)(1)[(i)], the last clause is stricken for consistency with the SAFE act.
15. WAC 208-660-350(27), this language is added as a placeholder for a future requirement.
16. WAC 208-660-355(3), the language is amended to be consistent with the SAFE act.
17. WAC 208-660-370(9), this language is added for consistency with other education requirements.
18. WAC 208-660-400 (1)(c), the reference to a call report is stricken due to that functionality not being available in the NMLS (and therefore not required under the SAFE act) until 2011.
19. WAC 208-660-400 (4)(a), the language is amended to clarify the licensee's responsibility.
20. WAC 208-660-400 (5) and (6), this language is added as a placeholder for a future requirement.
21. WAC 208-660-430(5), the language is amended to be consistent with federal law.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 1, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 1, Amended 17, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 1, Amended 14, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 2, Amended 25, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Date Adopted: December 1, 2009.
Deborah Bortner, Director
Division of Consumer Services
OTS-2494.6
AMENDATORY SECTION(Amending WSR 06-23-137, filed 11/21/06,
effective 1/1/07)
WAC 208-660-005
Purpose, scope and coverage.
(1) What
is the purpose of the Mortgage Broker Practices Act? The
purpose of the Mortgage Broker Practices Act is to establish a
state system of licensure and rules of practice and conduct
for 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.
(2) What is the purpose of the Mortgage Broker Practices Act rules? The purpose of these rules is to administer and interpret the Mortgage Broker Practices Act in order to govern the activities of licensed mortgage brokers, loan originators, and other persons subject to the act.
(3) What is the scope and coverage of the Mortgage Broker Practices Act and these rules? There are four criteria to determine the scope and coverage of the Mortgage Broker Practices Act and these rules. All of the criteria must be met in order for a person or entity to fall under the scope and coverage of the act and these rules. The criteria are:
(a) The persons or entities conducting business;
(b) The type of transactions performed when conducting the business;
(c) The identification of residential real estate; and
(d) The location of the mortgage broker, loan originator, potential borrower, and residential real estate.
(4) What persons or entities are covered? The Mortgage
Broker Practices Act and these rules apply to all persons or
entities defined as mortgage brokers or loan originators under
RCW 19.146.010(((12), or loan originators under RCW 19.146.010(10))). However, certain mortgage brokers and loan
originators may be exempt from all or part of the act under
RCW 19.146.020 as discussed in WAC 208-660-008.
(5) What types of transactions are covered? The Mortgage
Broker Practices Act and these rules cover the ((making or))
assisting ((in obtaining of)) to obtain any "residential
mortgage loan" defined in RCW 19.146.010(((15))) and WAC 208-660-006. ((The terms "making" and "assisting" are defined
under "mortgage broker" in WAC 208-660-006.)) Violations of
RCW 19.146.0201, however, are not limited to residential
mortgage loan transactions.
(6) What is residential real estate? Residential real estate is real property upon which is constructed or intended to be constructed, a single family dwelling, or multiple family dwelling of four or less units. See examples in WAC 208-660-006, "residential real estate."
(7) Does the location of the mortgage broker, loan originator, potential borrower, and residential real estate affect whether the transaction is covered under the Mortgage Broker Practices Act? If the mortgage broker, loan originator, potential borrower, or residential real estate is located in Washington, the transaction is covered by the Mortgage Broker Practices Act and these rules. However, the director may choose to defer to other jurisdictions where doing so would, in the director's sole discretion, achieve the purposes of the Mortgage Broker Practices Act.
(8) What are some examples of transactions falling under the scope and coverage of the Mortgage Broker Practices Act and these rules?
(a) A loan originator employed with Mortgage Broker, Inc.
with a physical office in Redmond, Washington takes a loan
application from a Kirkland, Washington resident for the
purchase of a home located in Bellevue, Washington. Mortgage
Broker, Inc. is not exempt from the Mortgage Broker Practices
Act under RCW 19.146.020 (((1)(a)(i))). The home located in
Bellevue meets the definition of residential real estate and
the purchaser intends to reside in the home.
(b) A loan originator with a physical office in Spokane,
Washington takes a loan application from a Yakima, Washington
resident for the purchase of a home located in Oregon. The
mortgage broker is not exempt from the Mortgage Broker
Practices Act under RCW 19.146.020 (((1)(a)(ii))). The home
located in Oregon meets the definition of residential real
estate and the purchaser intends to reside in the home.
(c) A loan originator with a physical office in Reno,
Nevada working for a Nevada mortgage broker takes a loan
application from a Nevada resident for the purchase of a home
located in Olympia, Washington. The mortgage broker is not
exempt from the Mortgage Broker Practices Act under RCW 19.146.020 (((1)(a)(ii))). The home located in Washington
meets the definition of residential real estate and the
purchaser intends to reside in the home.
[Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-005, filed 11/21/06, effective 1/1/07.]
"Act" means the Mortgage Broker Practices Act, chapter 19.146 RCW.
"Advertising material" means any form of sales or promotional materials used in connection with the mortgage broker business. Advertising material includes, but is not limited to, newspapers, magazines, leaflets, flyers, direct mail, indoor or outdoor signs or displays, point-of-sale literature or educational materials, other printed materials; radio, television, public address system, or other audio broadcasts; or internet pages.
"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.
"Annual loan origination volume" means the aggregate of the principal loan amounts brokered by the licensee.
"Application" means the submission of a borrower's
financial information in anticipation of a credit decision
relating to a residential mortgage loan, which ((shall))
includes the borrower's name, monthly income, Social Security
number to obtain a credit report, the property address, an
estimate of the value of the property, and the mortgage loan
amount sought((, and any other information deemed necessary by
the loan originator)). An application may be in writing or
electronically submitted, including a written record of an
oral application. If the submission does not state or
identify a specific property, the submission is an application
for a prequalification and not an application for a
residential mortgage loan under this part. The subsequent
addition of an identified property to the submission converts
the submission to an application for a residential mortgage
loan.
"Appraisal" means the act or process of developing an opinion of value, the act pertaining to an appraisal-related function, or any verbal or written opinion of value offered by an appraiser. The opinion of value by the appraiser includes any communication that is offered as a single point, a value range, a possible value range, exclusion of a value, or a minimum value.
"Borrower" means any person who consults with or retains a mortgage broker or loan originator in an effort to obtain or seek advice or information on obtaining or applying to obtain a residential mortgage loan for himself, herself, or persons including himself or herself, regardless of whether the person actually obtains such a loan.
"Branch office" means a fixed physical location such as an office, separate from the principal place of business of the licensee, where the licensee holds itself out as a mortgage broker.
"Branch office license" means a branch office license issued by the director allowing the licensee to conduct a mortgage broker business at the location indicated on the license.
"Business day" means Monday through Friday excluding federally recognized bank holidays.
"Certificate of passing an approved examination" means a certificate signed by the testing administrator verifying that the individual performed with a satisfactory score or higher.
"Certificate of satisfactory completion of an approved continuing education course" means a certificate signed by the course provider verifying that the individual has attended an approved continuing education course.
"Compensation or gain" means remuneration, benefits, or an increase in something having monetary value, including, but not limited to, moneys, things, discounts, salaries, commissions, fees, duplicate payments of a charge, stock, dividends, distributions of partnership profits, franchise royalties, credits representing moneys that may be paid at a future date, the opportunity to participate in a money-making program, retained or increased earnings, increased equity in a parent or subsidiary entity, special or unusual bank or financing terms, services of all types at special or free rates, sales or rentals at special prices or rates, lease or rental payments based in whole or in part on the amount of business referred, trips and payments of another person's expenses, or reduction in credit against an existing obligation. "Compensation or gain" is not evaluated solely on a loan by loan basis.
For example, a realtor advertising that buyers using their services will receive free loan origination assistance is doing so in the anticipation of "compensation or gain" through increased real estate business.
"Computer loan information systems" or "CLI system" means a real estate mortgage financing information system that facilitates the provision of information to consumers by a mortgage broker, loan originator, lender, real estate agent, or other person regarding interest rates and other loan terms available from different lenders.
For purposes of this definition, the CLI system includes computer hardware or software, an internet-based system, or any combination of these, which provides information to consumers about residential mortgage interest rates and other loan terms which are available from another person.
"Computer loan information system provider" or "CLI provider" is any person who provides a computer loan information service, either directly, or as an owner-operator of a CLI system, or both.
"Consumer Protection Act" means chapter 19.86 RCW.
"Control" including the terms "controls," "is controlled by," or "is under common control" means the power, directly or indirectly, to direct or cause the direction of the management or policies of a person, whether through ownership of the business, by contract, or otherwise. A person is presumed to control another person if such person is:
• A general partner, officer, director, or employer of another person;
• Directly or indirectly or acting in concert with others, or through one or more subsidiaries, owns, holds with power to vote, or holds proxies representing, more than twenty percent of the voting interests of another person; or
• Has similar status or function in the business as a person in this definition.
"Convicted of a crime," irrespective of the pronouncement or suspension of sentence, means a person:
• Has been convicted of the crime in any jurisdiction;
• Has been convicted of a crime which, if committed within this state would constitute a crime under the laws of this state;
• Has plead guilty or no contest or nolo contendere or stipulated to facts that are sufficient to justify a finding of guilt to such a charge before a court or federal magistrate; or
• Has been found guilty of a crime by the decision or judgment of a state or federal judge or magistrate, or by the verdict of a jury.
"Department" means the department of financial institutions.
"Depository institution" has the same meaning as in section 3 of the Federal Deposit Insurance Act on the effective date of this section, and includes credit unions.
"Designated broker" means a natural person designated as the person responsible for activities of the licensed mortgage broker in conducting the business of a mortgage broker under this chapter and who meets the experience and examination requirements set forth in RCW 19.146.210 (1)(e).
"Director" means the director of financial institutions.
"Discount points" or "points" mean a fee paid by a
borrower to a lender to reduce the interest rate of a
residential mortgage loan. Pursuant to Regulation X, discount
points are to be reflected on ((line 802 of)) the good faith
estimate and settlement statement as a ((percentage of the
loan)) dollar amount.
"Division of consumer services" means the division of consumer services within the department of financial institutions, or such other division within the department delegated by the director to oversee implementation of the act and these rules.
"Employee" means an individual who has an employment relationship with a mortgage broker, and the individual is treated as an employee by the mortgage broker for purposes of compliance with federal income tax laws.
"Examination" or "compliance examination" means the examination performed by the division of consumer services, or such other division within the department delegated by the director to oversee implementation of the act and these rules to determine whether the licensee is in compliance with applicable laws and regulations.
"Federal banking agencies" means the Board of Governors of the Federal Reserve System, Comptroller of the Currency, Director of the Office of Thrift Supervision, National Credit Union Administration, and Federal Deposit Insurance Corporation.
Federal statutes and regulations used in these rules are:
• "Alternative Mortgage Transaction Parity Act" means the Alternative Mortgage Transaction Parity Act (AMTPA), 12 U.S.C. Sec. 3801 et seq.
• "Equal Credit Opportunity Act" means the Equal Credit Opportunity Act (ECOA), 15 U.S.C. Sec. 1691 et seq., Regulation B, 12 CFR Part 202.
• "Fair Credit Reporting Act" means the Fair Credit Reporting Act (FCRA), 15 U.S.C. Sec. 1681 et seq.
• "Federal Trade Commission Act" means the Federal Trade Commission Act, 15 U.S.C. Sec. 45(a).
• "Gramm-Leach-Bliley Act (GLBA)" means the Financial Modernization Act of 1999, 15 U.S.C. Sec. 6801-6809, and the GLBA-mandated Federal Trade Commission (FTC) privacy rules, at 16 CFR Parts 313-314.
• "Home Equity Loan Consumer Protection Act" means the Home Equity Loan Consumer Protection Act, 15 U.S.C. Sec. 1637 and 1647.
• "Home Mortgage Disclosure Act" means the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. Sec. 2801-2810, Regulation C, 12 CFR Part 203.
• "Home Ownership and Equity Protection Act" means the Home Ownership and Equity Protection Act (HOEPA), 15 U.S.C. Sec. 1639.
• "Homeowners Protection Act" means the Homeowners Protection Act of 1998 (HPA), 12 U.S.C. Sec. 4901 et seq.
• "Real Estate Settlement Procedures Act" means the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. Sec. 2601 et seq., Regulation X, 24 CFR Part 3500 et seq.
"S.A.F.E." means the Secure and Fair Enforcement for
Mortgage Licensing Act of 2008, Title V of the Housing and
Economic Recovery Act of 2008 ((("HERA"), Public Law No.))
(HERA), P.L. 110-289, effective July 30, 2008.
• "Telemarketing and Consumer Fraud and Abuse Prevention Act" means the Telemarketing and Consumer Fraud and Abuse Prevention Act, 15 U.S.C. Sec. 6101-6108, Telephone Sales Rule, 16 CFR Part 310.
• "Truth in Lending Act" means the Truth in Lending Act (TILA), 15 U.S.C. Sec. 1601 et seq., Regulation Z, 12 CFR Part 226 et seq.
"Federally insured financial institution" means a savings bank, savings and loan association, or credit union, whether state or federally chartered, or a federally insured bank, authorized to conduct business in this state.
"Financial misconduct," for the purposes of the act, means a criminal conviction for any of the following:
• Any conduct prohibited by the act;
• Any conduct prohibited by statutes governing mortgage brokers in other states, or the United States, if such conduct would constitute a violation of the act;
• Any conduct prohibited by statutes governing other segments of the financial services industry, including but not limited to the Consumer Protection Act, statutes governing the conduct of securities broker dealers, financial advisers, escrow officers, title insurance companies, limited practice officers, trust companies, and other licensed or chartered financial service providers; or
• Any conduct commonly known as white collar crime, including, but not limited to, embezzlement, identity theft, mail or wire fraud, insider trading, money laundering, check fraud, or similar crimes.
"Independent contractor" means any person that expressly or impliedly contracts to perform mortgage brokering services for another and that with respect to its manner or means of performing the services is not subject to the other's right of control, and that is not treated as an employee by the other for purposes of compliance with federal income tax laws.
The following factors may be considered to determine if a person is an independent contractor:
Is the person instructed about when, where and how to work?
Is the person guaranteed a regular wage?
Is the person reimbursed for business expenses?
Does the person maintain a separate business?
Is the person exposed to potential profits and losses?
Is the person provided employee benefits such as insurance, a pension plan, or vacation or sick pay?
"License number" means the NMLSR unique identifier displayed as prescribed by the director.
"Licensee" means:
• A mortgage broker licensed by the director; or
• The principal(s) or designated broker of a mortgage broker; or
• A loan originator licensed by the director; or
• Any person subject to licensing under RCW 19.146.200; or
• Any person acting as a mortgage broker or loan originator subject to any provisions of the act.
(("License application fee" means immediately available
funds paid to the department for each mortgage broker, loan
originator, or mortgage broker branch office license
application.
"Loan application" means the same as "application," in this section.)) "Loan modification" means a change in one or more residential mortgage loan terms or conditions and includes forbearances, repayment plans, a change in interest rates, loan term (length), loan type (fixed or adjustable), the capitalization of arrearages, and principal reductions. "Loan modification" does not include services that result in refinancing a residential mortgage loan.
"Loan originator" means a natural person who for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain:
• Takes a residential mortgage loan application for a mortgage broker; or
• Offers or negotiates terms of a mortgage loan((, for
direct or indirect compensation or gain, or in the expectation
of direct or indirect compensation or gain)).
"Loan originator" also includes a person who holds themselves out to the public as able to perform any of these activities. "Loan originator" does not mean persons performing purely administrative or clerical tasks for a mortgage broker. For the purposes of this subsection, "administrative or clerical tasks" means the receipt, collection, and distribution of information common for the processing of a loan in the mortgage industry and communication with a borrower to obtain information necessary for the processing of a loan. A person who holds himself or herself out to the public as able to obtain a loan is not performing administrative or clerical tasks.
"Loan originator" does not include a person or entity that only performs real estate brokerage activities and is licensed or registered in accordance with applicable state law, unless the person or entity is compensated by a lender, a mortgage broker, or other mortgage loan originator or by any agent of such a lender, mortgage broker, or other mortgage loan originator. For purposes of this chapter, the term "real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including:
(a) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property;
(b) Bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property;
(c) Negotiating, on behalf of any party, any portion of a contract relating to the sale, purchase, lease, rental, or exchange of real property, other than in connection with providing financing with respect to any such transaction;
(d) Engaging in any activity for which a person engaged in the activity is required to be registered or licensed as a real estate agent or real estate broker under any applicable law; and
(e) Offering to engage in any activity, or act in any capacity, described in (a) through (d) of this subsection.
"Loan originator" does not include a person or entity solely involved in extensions of credit relating to timeshare plans, as that term is defined in section 101(53D) of Title 11, United States Code.
For purposes of further defining "loan originator," "taking a residential mortgage loan application" includes soliciting, accepting, or offering to accept an application for a residential mortgage loan or assisting a borrower or offering to assist a borrower in the preparation of a residential mortgage loan application.
For purposes of this definition, a person "holds themselves out" by advertising or otherwise informing the public that the person engages in any of the activities of a mortgage broker or loan originator, including the use of business cards, stationery, brochures, rate lists or other promotional items.
"Loan originator licensee" means a natural person who is licensed as a loan originator or is subject to licensing under RCW 19.146.200 or who is acting as a loan originator subject to any provisions of the act.
"Loan processor" means ((a natural person)) an individual
who performs clerical or support duties as an employee at the
direction of and subject to the supervision and instruction of
a person licensed, or exempt ((mortgage broker)) from
licensing, under chapter 19.146 RCW. The job responsibilities
may include the receipt, collection and distribution of
information common for the processing of a loan. The loan
processor may also communicate with a borrower to obtain the
information necessary for the processing of a loan, provided
that such communication does not include offering or
negotiating loan rates or terms, or counseling borrowers about
loan rates or terms.
"Lock-in agreement" means an agreement with a borrower made by a mortgage broker or loan originator, in which the mortgage broker or loan originator 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.
"Material litigation" means any litigation that would be relevant to the director's ruling on an application for a license including, but not limited to, criminal or civil action involving dishonesty or financial misconduct.
"Mortgage broker" means any person who for compensation or gain, or in the expectation of compensation or gain (a) assists a person in obtaining or applying to obtain a residential mortgage loan or (b) holds himself or herself out as being able to assist a person in obtaining or applying to obtain a residential mortgage loan. A mortgage broker either prepares a residential mortgage loan for funding by another entity or table-funds the residential mortgage loan. See the definition of "table funding." (These are the two activities allowed under the MBPA.)
For purposes of this definition, a person "assists a person in obtaining or applying to obtain a residential mortgage loan" by, among other things, counseling on loan terms (rates, fees, other costs), preparing loan packages, or collecting enough information on behalf of the consumer to anticipate a credit decision under Regulation X, 24 CFR Part 3500, Section 3500 (2)(b).
For purposes of this definition, a person "holds himself or herself out" by advertising or otherwise informing the public that they engage in any of the activities of a mortgage broker or loan originator, including the use of business cards, stationery, brochures, rate sheets, or other promotional items.
"Mortgage broker licensee" means a person that is licensed as a mortgage broker or is subject to licensing under RCW 19.146.200 or is acting as a mortgage broker subject to any provisions of the act.
"Mortgage Broker Practices Act" means chapter 19.146 RCW.
"Mortgage loan originator" means the same as "loan originator."
"Nationwide Mortgage Licensing System and Registry (NMLSR)" means a mortgage licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of mortgage loan originators.
"Out-of-state applicant or licensee" means a person subject to licensing that maintains an office outside of this state.
"Person" means a natural person, corporation, company, limited liability corporation, partnership, or association.
"Prepaid escrowed costs of ownership," as used in RCW 19.146.030(4), means any amounts prepaid by the borrower for the payment of taxes, property insurance, interim interest, and similar items in regard to the property used as security for the loan.
"Principal" means any person who controls, directly or indirectly through one or more intermediaries, or alone or in concert with others, a ten percent or greater interest in a partnership, company, association, or corporation, and the owner of a sole proprietorship.
"Registered agent" means a person located in Washington appointed to accept service of process for a licensee.
"Registered mortgage loan originator" means any individual who meets the definition of mortgage loan originator and is an employee of:
(a) A depository institution, a subsidiary that is owned and controlled by a depository institution and regulated by a federal banking agency, or an institution regulated by the farm credit administration; and
(b) Is registered with, and maintains a unique identifier through, the nationwide mortgage licensing system and registry.
"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.
For purposes of this definition, a loan "primarily for personal, family, or household use" includes loan applications for a finance or refinance of a primary residence for any purpose, loan applications on second homes, and loan applications on nonowner occupied residential real estate provided the licensee has knowledge that proceeds of the loan are intended to be used primarily for personal, family or household use.
"Residential real estate" is real property upon which is constructed or intended to be constructed, a single family dwelling or multiple family dwelling of four or less units.
• Residential real estate includes, but is not limited to:
– A single family home;
– A duplex;
– A triplex;
– A fourplex;
– A single condominium in a condominium complex;
– A single unit within a cooperative;
– A manufactured home when the home and real property together will secure the residential mortgage loan; or
– A fractile, fee simple interest in any of the above.
• Residential real estate does not include:
– An apartment building or dwelling of five or more units;
– A single piece of real estate with five or more single family dwellings unless each dwelling is capable of being financed independently of the other dwellings; or
– Any dwelling on leased or rented land or space, such as dwellings in a manufactured home park unless the mortgage broker treats such property as residential real estate.
"S.A.F.E. Act" means the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, or Title V of the Housing and Economic Recovery Act of 2008 (HERA), P.L. 110-289, effective July 30, 2008.
"Table-funding" means a settlement at which a mortgage loan is funded by a contemporaneous advance of loan funds and an assignment of the loan to the person advancing the funds. The mortgage broker originates the loan and closes the loan in its own name with funds provided contemporaneously by a lender to whom the closed loan is assigned.
"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.
A lender is considered a third party only when the lender provides lock-in arrangements to the mortgage broker in connection with the preparation of a borrower's loan.
"Underwriting" means a lender's detailed credit analysis preceding the offering or making of a loan. The analysis may be based on information furnished by the borrower (employment history, salary, financial statements), the borrower's credit history from a credit report, the lender's evaluation of the borrower's credit needs and ability to pay, and an assessment of the collateral for the loan. While mortgage brokers may have access to various automated underwriting systems to facilitate an evaluation of the borrower's qualifications, the mortgage broker who qualifies or approves a borrower in this manner is not the underwriter of the loan and cannot charge a fee for underwriting the loan. Third-party charges the mortgage broker incurs in using or accessing an automated system to qualify or approve a borrower may, like other third-party expenses, be passed on to the borrower.
"Unique identifier" means a number or other identifier assigned by protocols established by the nationwide mortgage licensing system and registry.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-006, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-11-103, § 208-660-006, filed 5/20/08, effective 6/20/08; 08-05-126, § 208-660-006, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-006, filed 11/21/06, effective 1/1/07.]
(a) Whether the applicant or licensee has paid all fees due to the director or the NMLSR.
(b) Whether the mortgage broker licensee has filed their mortgage broker annual report.
(c) Whether the mortgage broker licensee has filed and maintained the required surety bond or had its surety bond canceled or revoked for cause.
(d) Whether the mortgage broker licensee has maintained a designated broker in compliance with the act and these rules.
(e) Whether the applicant, licensee, or other person subject to the act has had any license, or any authorization or ability to do business under any similar statute of this or any other state, suspended, revoked, or restricted within the prior five years.
(f) Whether the applicant, licensee, or other person subject to the act has been convicted of, or pled guilty or nolo contendere to, in a domestic, foreign, or military court to:
(i) A gross misdemeanor involving dishonesty or financial
misconduct((, or)) within the prior seven years;
(ii) A felony((,)) within the prior seven years; or
(iii) A felony that involved an act of fraud, dishonesty, breach of trust, or money laundering at any time preceding the date of application.
(g) Whether the licensee or other person subject to the act, is, or has been subject to a cease and desist order or an injunction issued pursuant to the act, or the Consumer Protection Act, or has been found through an administrative, civil, or criminal proceeding to have violated the provisions of the act or rules, or the Consumer Protection Act, chapter 19.86 RCW.
(h) Whether the director has filed a statement of charges, or there is an outstanding order by the director to cease and desist against the licensee or other person subject to the act.
(i) Whether there is documented evidence of serious or significant complaints filed against the licensee, or other person subject to the act, and the licensee or other person subject to the act has been notified of the complaints and been given the opportunity to respond.
(j) Whether the licensee has allowed the licensed mortgage broker business to deteriorate into a condition that would result in denial of a new application for a license.
(k) Whether the licensee, or other person subject to the act has failed to comply with an order, directive, subpoena, or requirement of the director or director's designee, or with an assurance of discontinuance entered into with the director or director's designee.
(l) Whether the licensee or other person subject to the act has interfered with an investigation or disciplinary proceeding by willful misrepresentation of facts before the director or director's designee, or by the use of threats or harassment against a client, witness, employee of the licensee, or representative of the director for the purpose of preventing them from discovering evidence for, or providing evidence in, any disciplinary proceeding or other legal action.
(2) Under what circumstances may the department conduct a good standing review of an applicant, mortgage broker licensee, designated broker, or exempt mortgage broker? The department may conduct a good standing review when:
(a) Processing an application for a new mortgage broker branch office license.
(b) Processing an application for appointment of a different designated broker (both the licensed mortgage broker, including those individuals to whom the license was granted, and the proposed designated broker must meet good standing).
(c) Processing a request for recognition as an exempt
mortgage broker under RCW 19.146.020(((4))).
(3) When will an applicant, licensee, or other person subject to the act receive notice from the department of their failure to meet a determination of good standing? If the department conducts a good standing review, the department will notify the applicant, licensee, or other person subject to the act that they have failed to meet the department's good standing requirement within ten business days of the department's receipt of any application or request that requires a determination of good standing. See subsection (2) of this section. For purposes of the notice required by this section, a statement of charges filed and served on the licensee is sufficient notice of a lack of good standing.
(4) What recourse does an applicant, licensee, or other person subject to the act have when the department has determined that they are not in good standing? The applicant, licensee, or other person subject to the act may request a brief adjudicative proceeding under the Administrative Procedure Act, chapter 34.05 RCW, to challenge the department's determination. See WAC 208-660-009.
(((5) What department determinations may be challenged
through a brief adjudicative proceeding? Subsection (1)(a)
through (l) of this section may be challenged through a brief
adjudicative process.
(6) What specific sections of the Administrative Procedure Act are adopted by the director to administer brief adjudicative proceedings? The director adopts RCW 34.05.482 through 34.05.494 to administer brief adjudicative proceedings requested by an applicant or licensee, or conducted at the director's discretion.
(7) Who conducts the brief adjudicative proceeding? Brief adjudicative proceedings are conducted by a presiding officer designated by the director. The presiding officer must have department expertise in the subject matter, but must not have personally participated in the department's determination of good standing, or work in the department's division of consumer services, or such other division within the department delegated by the director to oversee implementation of the act and these rules.
(8) When and how will the presiding officer issue a decision? Within ten business days of the final date for submission of materials, or oral argument, if any, the presiding officer must make a written initial order.))
[Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-007, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-007, filed 11/21/06, effective 1/1/07.]
(2) Who is exempt from licensing as a mortgage loan originator?
(a) Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual; or
(b) Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual's residence.
(3) If I am licensed as an insurance agent under RCW 48.17.060, must I have a separate license to act as a loan originator or mortgage broker? Yes. You will need a separate license as a loan originator or mortgage broker if you are a licensed insurance agent and you do any of the following:
(a) Take a residential mortgage loan application for a mortgage broker;
(b) Offer or negotiate terms of a mortgage loan for direct or indirect compensation or gain, or in the expectation of direct or indirect compensation or gain;
(c) Assist a person in obtaining or applying to obtain a residential mortgage loan, for compensation or gain; or
(d) Hold yourself out as being able to perform any of the above services.
(((2))) (4) Are insurance companies exempt from the
Mortgage Broker Practices Act? Yes. Insurance companies
authorized to transact the business of insurance in this state
by the Washington state office of the insurance commissioner
are exempt from the Mortgage Broker Practices Act.
(((3) If I make residential mortgage loans under the
Consumer Loan Act, chapter 31.04 RCW, am I exempt from the
Mortgage Broker Practices Act? If you are licensed under the
Consumer Loan Act, only residential mortgage loans are exempt
from the Mortgage Broker Practices Act. Complying with the
Consumer Loan Act includes abiding by the requirements and
restrictions of that act and counting all loans originated and
made under that act for purposes of your annual assessment.
(4) If I make residential mortgage loans under the Consumer Loan Act, chapter 31.04 RCW, are my loan originators exempt from the Mortgage Broker Practices Act? Your loan originator employees are also exempt from the Mortgage Broker Practices Act for their loan originator activities on residential mortgage loans.
Your independent contractor loan originators are not exempt from the Mortgage Broker Practices Act for their residential mortgage loan originator activities.))
(5) As an attorney, must I have a mortgage broker or loan originator license to assist a person in obtaining or applying to obtain a residential mortgage loan in the course of my practice?
(a) If you are an attorney licensed in Washington and if the mortgage broker activities are incidental to your professional duties as an attorney, you are exempt from the Mortgage Broker Practices Act under RCW 19.146.020 (1)(c).
(b) Whether an exemption is available to you depends on the facts and circumstances of your particular situation. For example, if you hold yourself out publicly as being able to perform the services of a mortgage broker or loan originator, or if your fee structure for those services is different from the customary fee structure for your professional legal services, the department will consider you to be principally engaged in the mortgage broker business and you will need a mortgage broker or loan originator license before performing those services. A "customary" fee structure for the professional legal service does not include the receipt of compensation or gain associated with assisting a borrower in obtaining a residential mortgage loan on the property.
(6) As a licensed real estate broker or salesperson, must
I have a mortgage broker or loan originator license when I
assist the purchaser in obtaining financing for a residential
mortgage loan involving a bona fide sale of real estate? You
are exempt from the act under RCW 19.146.020 (1)(((f))) (e) if
you only receive the customary real estate commission in
connection with the transaction. A "customary" real estate
commission does not include receipt of compensation or gain
associated with the financing of the property. A "customary"
real estate commission only includes the agreed upon
commission designated in the listing or purchase and sale
agreement for the bona fide sale of the subject property.
(((7) Under what circumstances will the director approve
an exemption under RCW 19.146.020(4) for the exclusive agents
working as loan originators of an affiliate of a bank that is
wholly owned by the bank holding company that owns that bank?
(a) The director will provide a written exemption from loan originator licensing for the exclusive agents of an affiliate of a bank that is wholly owned by the bank holding company that owns the bank if the director finds that the affiliate is licensed and is in "good standing" with the department and the affiliate has procedures in place, as evidenced by a written "plan of business," to reasonably assure the department that:
(i) The exclusive agents of the affiliate of a bank operate exclusively as loan originators for the affiliate and not for other mortgage brokers;
(ii) The affiliate of the bank requires continuing education for the exclusive agents that meets the same or similar requirements approved by the director for licensed loan originators;
(iii) The affiliate of the bank will notify the department if the affiliate terminates an exclusive agent because the exclusive agent:
(A) Has had any license, or any authorization to do business under any similar statute of this or any other state, suspended, revoked, or restricted within the prior five years; or
(B) Has been convicted of a felony, or a gross misdemeanor involving dishonesty or financial misconduct, within the prior seven years; or
(C) Has been subject to a cease and desist order or an injunction issued pursuant to the act, or the Consumer Protection Act, or has been found through an administrative, civil, or criminal proceeding to have violated the provisions of the act or rules, or the Consumer Protection Act, chapter 19.86 RCW.
(b) To qualify for this exemption, the affiliate must make a written request to the department and submit a "plan of business" with the request. After receipt of this request, the department will notify the affiliate in writing within ten business days whether the affiliate's exclusive agents qualify for the exemption, or if the department will conduct additional review of the affiliate and the "plan of business." The affiliates must receive the department's notice of qualification for exemption before the affiliate's exclusive agents take any action that would subject them to licensing under the act.
(c) The exemption granted by the director remains valid as long as the affiliate complies in all material respects with its "plan of business" and the affiliate remains in good standing with the department.
(8) What are the responsibilities of a mortgage broker that is exempt from the licensing provisions of the act? The owners of companies exempt from licensing under RCW 19.146.020 (1)(e), (g), or (4), are responsible for:
(a) Complying with RCW 19.146.0201 through 19.146.080, and 19.146.235;
(b) Ensuring compliance with the act by all persons representing the exempt mortgage broker; and
(c) Notifying the director of any change affecting the mortgage broker's exempt status under the act.
(9))) (7) Are ((the)) independent contractor loan
originators ((of a mortgage broker)) exempt from licensing
((under RCW 19.146.020 (1)(b), (c), (e), and (g) themselves
exempt))? No. ((After January 1, 2007,)) An independent
contractor working as a loan originator ((for a mortgage
broker exempt under RCW 19.146.020 (1)(b), (c), (e), and (g)))
must hold a loan originator license.
(((10))) (8) What other persons or entities are exempt
from the Mortgage Broker Practices Act?
(a) Any person doing any act under order of any court except for a person subject to an injunction to comply with any provision of the act or any order of the director issued under the act.
(b) 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)) these entities in
this subsection (b).
(c) Registered mortgage loan originators, or any individual required to be registered, employed by entities exempt from the act.
(d) A manufactured or modular home retailer employee who performs purely administrative or clerical tasks and who receives only the customary salary or commission from the employer in connection with the transaction.
(((11))) (9) When is a CLI provider exempt from the
licensing requirements of the act? A CLI provider is exempt
from the licensing requirements of the act:
(a) When the CLI provider meets the general statutory
requirements under RCW 19.146.020 (1)(a), (c), (d), (((e),
(g),)) or (((h))) (f); or
(b) When a real estate broker or salesperson licensed in Washington, acting as a CLI provider and a real estate agent, obtains financing for a real estate transaction involving a bona fide sale of real estate and does not receive either:
(i) A separate fee for the CLI service; or
(ii) A sales commission greater than that which would be otherwise customary in connection with the sales transaction; or
(c) When a person, acting as a CLI provider:
(i) Provides only information regarding rates, terms, and lenders;
(ii) Complies with all requirements of subsection (12) of this section;
(iii) Does not represent or imply to a borrower that they are able to obtain a residential mortgage loan from a mortgage broker or lender;
(iv) Does not accept a loan application, assist in the completion of a loan application, or submit a loan application to a mortgage broker or lender on behalf of a borrower;
(v) Does not accept any deposit for third-party provider services or any loan fees from a borrower in connection with a loan, regardless of when the fees are paid;
(vi) Does not negotiate interest rates or terms of a loan with a mortgage broker or lender on behalf of a borrower; and
(vii) Does not provide to the borrower a good faith estimate or other disclosure(s) required of mortgage brokers or lender(s) by state or federal law.
(d) If the CLI provider is not exempt under (a), (b), or (c) of this subsection, the CLI provider is not required to have a mortgage broker license if the CLI provider does not receive any fee or other compensation or gain, directly or indirectly, for performing or facilitating the CLI service.
(((12))) (10) When is a CLI provider required to have a
mortgage broker license?
(a) If a CLI provider, who is not otherwise exempt from the licensing requirements of the act, performs any act that would otherwise require that they be licensed, including accepting a loan application, or submitting a loan application to a mortgage broker or lender, the CLI provider must obtain a mortgage broker or a loan originator license.
(b) Example - License required: A CLI provider uses an internet-based CLI system in which an abbreviated application is available for online completion by borrower. Once the borrower presses "submit," the information collected in the abbreviated application is forwarded to lender. The information contains the borrower's name, Social Security number, contact information, purpose of the loan sought (e.g., purchase, refinance, home equity, second mortgage), size of loan requested, annual salary, and a self-declaration of total unsecured debt. The electronic entries made by the borrower are then used by lender to electronically populate "form fields" and to initiate lender's loan application. A loan originator for the lender then follows up with borrower to complete the loan application. On or after closing, CLI provider receives a CLI service fee.
(c) Example - License not required: A CLI provider uses an internet-based CLI system in which various interactive informational tools are present, including an online "prequalification" tool. Based upon borrower's self-declared data input, borrower receives an indication of borrower's "maximum affordable loan amount," based upon standard norms of debt-to-income ratio and loan-to-value ratio, and also subject to verification of information, availability and suitability of loan products, and independent underwriting by any lender. The borrower indicates a desire for follow-up from one or more lenders by inputting personal contact information and pressing "submit." A number of lenders receive only the personal identity information of borrower and not any financial information. However, the CLI system has been programmed (and may be continuously reprogrammed) to route personal contact information to certain lenders based upon borrower's "prequalification" data input and the lending criteria of each of the lenders for whom CLI provider has a relationship. None of borrower's self-declared financial information is actually submitted to any of the lenders whose criteria match borrower's profile. Loan originators from lender A and lender B initiate contact with borrower based solely on borrower's contact information. Lender A and lender B, through their assigned loan originators, contact borrower with the object of beginning and hopefully completing a loan application. In this example, CLI provider has not taken a loan application.
(((13))) (11) Must the CLI provider provide any
disclosures?
(a) Yes. If a borrower using or accessing the CLI services pays for the CLI service, either directly or indirectly, the CLI provider must give the following disclosure:
(i) The amount of the fee the CLI provider charges the borrower for the service;
(ii) That the use of the CLI system is not required to obtain a residential mortgage loan; and
(iii) That the full range of loans available may not be listed on the CLI system, and different terms and conditions, including lower rates, may be available from others not listed on the system.
(b) Each CLI provider must give the borrower a copy of the disclosure form when the first CLI service is provided to the borrower. The form must be signed and dated by the borrower and a copy maintained as part of the CLI provider's books and records for at least two years.
(((14))) (12) Are CLI system providers subject to
enforcement under the act? Yes. CLI system providers are
responsible for any violations of the act and will be subject
to any applicable fines or penalties.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-008, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-11-103, § 208-660-008, filed 5/20/08, effective 6/20/08; 08-05-126, § 208-660-008, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-008, filed 11/21/06, effective 1/1/07.]
(2) May I originate a Washington residential mortgage loan using the license of an already licensed or exempt Washington mortgage broker and then split the proceeds with that mortgage broker? No. Mortgage broker licenses may only be used by the person named on the license. Mortgage broker licenses may not be transferred, sold, traded, assigned, loaned, shared, or given to any other person. Two individually licensed mortgage brokers may originate a loan. Each licensee is itemized in the disclosures and is paid their proportionate share of fees in relation to the work provided at the loan closing. Federal laws may prohibit this cobrokering.
(3) As a licensed mortgage broker, am I responsible for the actions of my employees and independent contractors? Yes. You are responsible for any conduct violating the act or these rules by any person you employ, or engage as an independent contractor, to work in the business covered by your license.
(4) Who at the licensed mortgage broker company is responsible for the licensee's compliance with the act and these rules? The designated broker, principals, and owners with supervisory authority are responsible for the licensee's compliance with the act and these rules.
(5) What is the nature of my relationship with the borrower? You have a fiduciary relationship with the borrower. See RCW 19.146.095.
(6) ((Under what circumstances may a mortgage broker
charge the borrower a fee, commission, or other compensation
for services rendered by the mortgage broker in obtaining a
loan for the borrower? The mortgage broker)) May I charge
upfront broker fees when assisting the borrower in applying
for a loan? No. You may only charge the borrower a fee,
commission, or other compensation for the preparation,
negotiation, and brokering of a residential mortgage loan when
the loan is closed on the terms and conditions agreed upon by
you and the borrower ((and the mortgage broker)).
(7) ((Under what circumstances may a mortgage broker
charge the borrower a fee, commission, or other type of
compensation for services rendered)) May I charge fees when
the loan does not close ((at all)), or does not close on the
terms and conditions agreed upon by me and the borrower ((and
the mortgage broker))? ((A mortgage broker)) You may charge a
fee, and may bring a suit for collection of the fee, not to
exceed three hundred dollars, for services rendered, for the
preparation of documents, or for the transfer of documents in
the borrower's file which were prepared for, or paid for by,
the borrower if:
(a) ((The mortgage broker has)) You have obtained a
written commitment from a lender on the same terms and
conditions agreed upon by you and the borrower ((and the
mortgage broker)); and
(b) The borrower fails to close on a loan through no
fault of ((the mortgage broker)) yours; and
(c) The fee is not otherwise prohibited by the Truth in Lending Act.
(8) As a mortgage broker, may I solicit or accept fees from a borrower in advance to pay third-party providers? Yes. However, prior to accepting the funds, you must provide the borrower in writing a notice identifying the specific third-party provider goods and services the funds are to be used for. Additionally, you must not charge the borrower more for the third-party provider goods and services than the actual costs of the goods and services charged by the provider. Once you have the funds you must then:
(a) Deposit the funds in a trust account pursuant to the act and these rules (see WAC 208-660-410 on Trust accounting);
(b) Refund any fees collected for goods or services not provided.
(9) What is a "written commitment from a lender on the same terms and conditions agreed upon by the borrower and mortgage broker"? The written commitment is a written agreement or contract between the mortgage broker and lender containing mutually acceptable loan provisions and terms. The lender must be one with whom the mortgage broker maintains a written correspondent or loan brokerage agreement as required by RCW 19.146.040(3). The mutually acceptable loan provisions and terms must be the same terms and conditions set forth in the most recent good faith estimate signed by both the borrower and the mortgage broker.
(10) ((What action must a mortgage broker take to
activate a loan originator license? To activate a loan
originator license, the licensed mortgage broker)) How do I
sponsor a loan originator? You must file a sponsorship
request through the NMLSR.
(11) What action must a mortgage broker take to terminate a working relationship with a loan originator? The licensed mortgage broker must process the termination through the NMLSR.
(12) When must I update my record in the NMLSR after I terminate employment with a loan originator? You must process the termination through the NMLSR within five business days of the termination.
(13) Are there any loan originator compensation models I am prohibited from using? Yes. You are prohibited from using a compensation model for loan originators based on a loan's interest rate or other terms. You are not prohibited from basing compensation on the principal balance of a loan.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-155, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-155, filed 11/21/06, effective 1/1/07.]
(a) Appoint a designated broker. You must appoint a designated broker who meets the requirements of WAC 208-660-250.
(b) Submit an application. You must complete an on-line
application ((in a form prescribed by the director)) through
the NMLSR.
(c) Pay the application and license fees. You will have to pay application fees to cover the costs of processing the application. You must also pay a separate annual license fee. See WAC 208-660-550, Department fees and costs.
(d) Prove your identity. You must provide information about the identity of owners, principals, officers, and the designated broker, including fingerprints.
(e) Provide a surety bond. Mortgage brokers must have a
surety bond ((of twenty to sixty thousand dollars depending on
the average number of loan originators representing)) based
upon the annual loan origination volume of the mortgage
broker. See WAC 208-660-175 (1)(e).
(2) What information will the department consider when deciding whether to approve a mortgage broker license application? The department considers the financial responsibility, character, and general fitness of the applicant, principals, and the designated broker.
(3) Why does the department consider financial responsibility, character, and general fitness before issuing a mortgage broker license? One of the purposes of the act is to ensure that mortgage brokers and loan originators deal honestly and fairly with the public. Applicants, principals, and designated brokers who have demonstrated their financial responsibility, character, and general fitness to operate their businesses honestly, fairly, and efficiently are more likely to deal honestly and fairly with the public.
(4) What specific information will the department consider to determine if the mortgage broker business will be operated honestly, fairly, and in compliance with applicable law?
(a) Whether the applicant, licensee, or other person
subject to the act has had any license, or any authorization
to do business under any similar statute of this or any other
state, suspended, ((revoked,)) or restricted within the prior
five years.
(b) Whether the applicant((, licensee or other person
subject to the act has been convicted of a gross misdemeanor
involving dishonesty or financial misconduct, or a felony,
within the prior seven years)) has ever had a license revoked
under this chapter or any similar state statute, including a
license for insurance, securities, consumer lending, or
escrow.
(c) Whether the applicant, licensee, or other person subject to the act has been convicted of, or pled guilty or nolo contendere to, in a domestic, foreign, or military court to:
(i) A gross misdemeanor involving dishonesty or financial misconduct within the prior seven years;
(ii) A felony within the prior seven years; or
(iii) A felony that involved an act of fraud, dishonesty, breach of trust, or money laundering at any time preceding the date of application.
(d) Whether the licensee or other person subject to the act is, or has been, subject to a cease and desist order or an injunction issued pursuant to the act, or the Consumer Protection Act, or has been found through an administrative, civil, or criminal proceeding to have violated the provisions of the act or rules, or the Consumer Protection Act, chapter 19.86 RCW.
(((d))) (e) Whether the director has filed a statement of
charges, or there is an outstanding order by the director to
cease and desist against the licensee or other person subject
to the act.
(((e))) (f) Whether there is documented evidence of
serious or significant complaints filed against the licensee,
or other person subject to the act, and the licensee or other
person subject to the act has been notified of the complaints
and been given the opportunity to respond.
(((f))) (g) Whether the licensee has allowed the licensed
mortgage broker business to deteriorate into a condition that
would result in denial of a new application for a license.
(((g))) (h) Whether the licensee or other person subject
to the act has failed to comply with an order, directive,
subpoena, or requirement of the director or director's
designee, or with an assurance of discontinuance entered into
with the director or director's designee.
(((h))) (i) Whether the licensee or other person subject
to the act has interfered with an investigation, or
disciplinary proceeding by willful misrepresentation of facts
before the director or director's designee, or by the use of
threats or harassment against a client, witness, employee of
the licensee, or representative of the director for the
purpose of preventing them from discovering evidence for, or
providing evidence in, any disciplinary proceeding or other
legal action.
(5) What will happen if my mortgage broker license
application is incomplete? ((The department will reject and
return the entire application package to you with a notice
identifying the incomplete, missing, or inaccurate
information. You must follow the department's directions to
correct the problems. You can then resubmit the application
package.)) If your application is incomplete your file will be
marked "pending-deficient" in the NMLSR. The department will
either identify each deficiency or respond that there are
multiple deficiencies and ask you to contact the department.
You are responsible for reviewing your record and responding
to each issue.
(6) How do I withdraw my application for a mortgage
broker license? ((Send the department a written request, in a
form prescribed by the department, to withdraw your mortgage
broker license application.)) You may request to withdraw the
application through the NMLSR.
(7) When will the department consider my mortgage broker
license application ((package)) abandoned? ((If you do not
respond to the department within ten business days from the
date of the department's second request for information, your
application is considered abandoned. You may reapply by
submitting a new application per subsection (1) of this
section.)) If you do not respond as directed by the
department's request for information and within fifteen
business days, your license application is considered
abandoned and you forfeit all fees paid. Failure to provide
the requested information will not affect new applications
filed after the abandonment. You may reapply by submitting a
new application package and new application fee.
(8) What are my rights if the director denies my application for a mortgage broker license? You have the right to request an administrative hearing pursuant to the Administrative Procedure Act, chapter 34.05 RCW. To request a hearing, you must notify the department within twenty days from the date of the director's notice to you that your license application has been denied, that you wish to have a hearing. See also WAC 208-660-009.
Upon denial of your mortgage broker license application,
and provided the department finds no unlicensed activity, the
department will return your surety bond, and refund any
remaining portion of the license fee that exceeds the
department's actual cost to investigate the license ((fee and
any unused portion of the application fee)).
(9) What Washington law protects my rights when my application for a mortgage broker license is denied, or my mortgage broker license is suspended or revoked? The Administrative Procedure Act, chapter 34.05 RCW, governs the proceedings for license application denials, cease and desist orders, license suspension or revocation, the imposition of civil penalties or other remedies ordered by the department, and any appeals or reviews of those actions. See also WAC 208-660-009.
(10) May I advertise my business while I am waiting for my mortgage broker license application to be processed? No. It is a violation of the act for nonlicensed, nonexempt mortgage brokers or loan originators to hold themselves out as mortgage brokers or loan originators in Washington.
(11) May I originate Washington residential mortgage loans while waiting for my mortgage broker license application to be processed? No. You may not originate loans prior to receiving your mortgage broker license.
(12) How do I change information on my mortgage broker
license? You must file a license amendment application
through the NMLSR. ((You must file the amendment application
within thirty days of the change occurring.)) See also WAC 208-660-400.
(13) When does a mortgage broker license expire? The mortgage broker license expires annually. The expiration date is shown on the license. If the license is an interim license, it may expire in less than one year.
(14) When may the department issue interim mortgage broker licenses? To prevent an undue delay, the director may issue interim mortgage broker licenses, including branch office licenses, with a fixed expiration date. The license applicant must have substantially met the initial licensing requirements, as determined by the director, to receive an interim license.
((For purposes of this section, undue delay includes the
adjustment of license expiration or renewal dates to coincide
with the implementation of systems designed to assist in
licensing uniformity and provide data repositories of
licensing information.))
One example of having substantially met the initial licensing requirements is: Submitting a complete application, paying all application fees, and the department having received and reviewed the result of the applicant's background check.
(15) ((May the department issue replacement licenses with
an expiration date? Yes. In order to create and maintain a
licensing system with expiration or renewal dates that are
uniform, the department may issue new licenses with expiration
dates to existing license holders. The new licenses will
expire annually.
(16))) How do I renew my mortgage broker license?
(a) Before the license expiration date you must:
(i) File the mortgage broker annual report((,)) and any
other required notices, with the director. See WAC 208-660-400((, Reporting requirements)).
(ii) Complete a renewal request through the NMLSR.
(iii) Show evidence that your designated broker completed the required annual continuing education.
(((iii) Verify the surety bond is adequate for the
average number of loan originators, including all locations.))
(iv) Pay the annual license assessment fee.
(b) The renewed license is valid for the term listed on the license or until surrendered, suspended, or revoked.
(((17))) (16) If I let my mortgage broker license expire
must I apply to get a new license? If you complete all the
requirements for renewal ((within forty-five days of the
expiration date)) on or before February 28th each year, you
may renew an expired license. However, if you renew your
license ((during this forty-five day period)) after the
expiration, in addition to paying the annual assessment on
your license, you must pay an additional fifty percent of your
annual assessment. See subsection (((16))) (15) of this
section for the license renewal requirements.
During this ((forty-five day)) two-month period, your
license is expired and you must not conduct any business under
the act that requires a license until your license has been
renewed.
((Any renewal requirements received by the department
must be evidenced by either a United States Postal Service
postmark or a department "date received" stamp within the
forty-five days.)) If you fail to comply with the renewal
request requirements ((within forty-five days)) by March 1st
of each year, you must apply for a new license.
(((18))) (17) May I still conduct my mortgage broker
business if my mortgage broker license has expired? No. If
your mortgage broker license expires, you must not conduct any
business under the act that requires a license until you renew
your license.
(((19))) (18) What should I do if I wish to close my
mortgage broker business? You may surrender the mortgage
broker license by ((notifying the department, in a form
prescribed by the department, of your intention to stop doing
mortgage loan business in Washington)) submitting a surrender
request through the NMLSR and submitting a completed
departmental closure form. Surrendering your license does not
change your civil or criminal liability, or your liability for
any administrative actions arising from any acts or omissions
occurring before you surrender your license. Contact the
Washington department of revenue to find out how to handle any
unclaimed funds in your trust account.
(((20))) (19) May I transfer, sell, trade, assign, loan,
share, or give my mortgage broker license to another person or
company? No. A mortgage broker license authorizes only the
person named on the license to conduct the business at the
location listed on the license. See also WAC 208-660-155(2).
(((21))) (20) Must I display my mortgage broker license?
Yes. Your mortgage broker license must be prominently
displayed at the licensed location.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-163, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-163, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-163, filed 11/21/06, effective 1/1/07.]
(a) Mortgage brokers must at all times have a valid surety bond on file with the director. The surety bond must be provided on a form prescribed by the department.
(b) The surety bond amount must be ((between twenty
thousand dollars and sixty thousand dollars depending on the
annual average number of loan originators representing the
mortgage broker)) based upon the annual loan origination
volume of the licensee in the state of Washington.
(c) When the mortgage broker initially applies for a
license, the dollar amount of the surety bond must be
((sufficient to cover the number of licensed loan originators
you intend to employ in your first year of business)) a
minimum of twenty thousand dollars. Thereafter, by March 31st
of each year, you must determine your required bond amount
based on loan origination volume and provide DFI with proof of
having an adequate bond.
(d) The surety bond must list the ((full name and any
trade or doing-business-as names used by the)) mortgage
broker's full name, unified business identifier (UBI), and
NMLSR unique identifier. ((The surety bond must list the
licensee's main physical address including street number,
street name and direction, suite number, city, county, and
state.))
(e) The surety bond must be signed by a principal of the mortgage broker as well as an authorized representative of the insurance company listed as surety. The power-of-attorney must identify the signing representative as authorized by the insurance company. The insurance company must include their surety bond number and seal on the surety bond form.
The following chart shows the surety bond amount required
for the annual ((average number of loan originators)) loan
origination volume of the licensee in the state of Washington:
| (( |
|
| Loan Volume in Millions | Bond Amount | ||
| $40+ | $60,000 | ||
| $20 to $40 | $40,000 | ||
| $0 to $20 | $20,000 | ||
(((4))) (3) What do I do with the surety bond once I
receive it from my insurance company? You must sign the
original surety bond((. Then)) and include the surety bond
and the attached power-of-attorney with your license
application package.
(((5))) (4) What happens to my mortgage broker license if
my surety bond is canceled? Failure to maintain a surety bond
is a violation of the act and may result in an enforcement
action against you.
(((6))) (5) May I change surety bond companies? Yes. You may change your insurance provider at any time. Your
current insurance company will issue a cancellation notice for
your existing surety bond. The cancellation notice may be
effective no less than thirty days following the director's
receipt of the cancellation notice.
Prior to the cancellation date of the existing surety bond, you must have on file with the department a replacement surety bond. The replacement surety bond must be in effect on or before the cancellation date of the prior surety bond.
(((7))) (6) Why must I carry a surety bond to have a
mortgage broker license? The surety bond protects the state
and any persons who suffer loss by reason of violations of any
provision of the act or these rules by ((the licensee, its))
you or your employees((,)) or independent contractors.
(((8))) (7) Who may make a claim against a licensed
mortgage broker's surety bond? The director, or any person,
including a third-party provider, who has been injured by a
violation of the act, may make a claim against a bond.
(((9))) (8) How may I make a claim against a licensed
mortgage broker's surety bond? The department can provide you
with the name of a licensed mortgage broker's surety bond
provider. Contact the surety bond company and follow its
required procedures to make your claim.
(((10) How may I make a claim against a certificate of
deposit, an irrevocable letter of credit, or other instrument
that the director has permitted to be filed instead of a
surety bond? File your claim against a certificate of
deposit, an irrevocable letter of credit, or other instrument
directly with the department, in a form prescribed by the
department. After January 1, 2007, the department will only
accept surety bonds; any claims arising over violations
occurring after January 1, 2007, will be against a bond.
(11))) (9) How long does the bond claim procedure take? The time to complete a bond claim may vary among bonding companies. If the claimant is not a borrower, final judgment will not be entered prior to one hundred eighty days after the claim is filed.
(((12))) (10) When must I file a bond claim? A bond
claim must be filed within one year of the date of the act
that causes the claim.
[Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-175, filed 11/21/06, effective 1/1/07.]
(2) If a recovery fund is created, how will it be funded? All licensees will pay a fee at application and renewal, in addition to all license application fees, through the NMLSR, to fund the recovery fund.
(3) How much will the recovery fund fees be?
(a) Two hundred fifty dollars for the main office location;
(b) One hundred fifty dollars for each branch office; and
(c) One hundred dollars for each mortgage loan originator.
(4) Will the fund have a cap or maximum? After the fund has been in existence for three years, and periodically thereafter, the director may determine the maximum fund amount needed based upon claims made.
(5) What happens to any interest that accrues on the mortgage recovery fund balance? All interest that accrues in the fund will be added to the balance of the fund.
(6) Can the department use any of the recovery fund money? Yes. On an annual basis the department may apply up to fifty thousand dollars to fund the department's expenses in administering the mortgage recovery fund.
(7) What is the procedure for recovery from the fund?
(a) A claimant must obtain a money judgment from a superior court that includes findings of violations of this act against a mortgage broker or mortgage loan originator.
(b) The final money judgment must be obtained after January 1, 2010, after execution has been returned unsatisfied and the judgment has been recorded.
(c) The person in (a) of this subsection must file a verified claim with the court in which the judgment was entered, and on twenty days' written notice to the director and to the judgment debtor, may apply to the court for an order directing payment from the mortgage recovery fund of any unpaid amount on such judgment.
(d) After giving notice and the opportunity for a hearing to the person seeking recovery, to the judgment debtor and to the department, the court may enter an order requiring the director to pay from the mortgage recovery fund the amount the court finds payable on the claim, pursuant to and in accordance with the limitations contained in this section, if the court is satisfied as to the proof of all matters required to be shown under subsection (a) of this section, and that the person seeking recovery from the mortgage recovery fund has satisfied all requirements of this section.
(e) If the court finds that the aggregate amount of claims against a mortgage broker or mortgage loan originator exceeds the limits set forth in WAC 208-660-175, the court must reduce proportionately the amount the court finds payable on the claim.
(f) When the director receives notice that a hearing is scheduled under this section, the director may enter an appearance, file a response, appear at the hearing or take any other appropriate action as he or she deems necessary to protect the mortgage recovery fund from spurious or unjust claims and to ensure compliance with the requirements for recovery under this section.
(g) The department must provide the court with information concerning the mortgage recovery fund necessary to enable the court to carry out its duties under this section.
(8) What must a person show at the hearing on the recovery fund claim? The person seeking recovery from the mortgage recovery fund must show:
(a) That the judgment has not been discharged in bankruptcy and is based on facts allowing recovery under the act;
(b) That the person is not a spouse of the judgment debtor, or the personal representative of the spouse;
(c) That the person is not a mortgage broker or mortgage loan originator as defined by this chapter who is seeking to recover any compensation regarding the mortgage loan transaction which is the subject of the money judgment upon which a claim against the mortgage recovery fund is based; and
(d) That, based on the best available information, the judgment debtor lacks sufficient nonexempt assets in this or any state to satisfy the judgment.
(9) What may recovery funds obtained be used for?
(a) Any recovery on the money judgment received by the judgment creditor before payment from the mortgage recovery fund must be applied by the judgment creditor to reduce the judgment creditor's actual damages which were awarded in the judgment.
(b) A recovery from the fund will not include punitive damages awarded by a court.
(10) What is the statute of limitations for a claim from the recovery fund? A verified claim against the recovery fund must be filed within one year of the date of termination of all court proceedings concerning the judgment, including appeals.
(11) What types of claims will the fund award money on?
(a) The fund will be used to reimburse persons awarded actual damages resulting from acts constituting violations of the act by a mortgage broker or mortgage loan originator who was licensed, or required to be licensed, under this chapter at the time that the act was committed.
(b) Payments from the mortgage recovery fund may not be made to:
(i) Any licensee whose acts were found by a court to be violations of this chapter and a basis of the court's award of a money judgment to a person injured by such violations;
(ii) Any person who acquires a mortgage loan where acts associated with the origination of such loan are found by a court to be violations of this chapter and a basis for a judgment obtained by a person injured by such violations; or
(iii) The spouse, the personal representative of the spouse of the judgment debtor or the personal representative of the judgment debtor.
(12) Will the department revoke my license if a claim is made against the recovery fund based on my actions?
(a) The director may revoke a license issued under this chapter if the director is required by court order under this section to make a payment from the mortgage recovery fund based on a money judgment that includes findings of violations of this chapter by such licensee.
(b) A person whose license has been revoked under this subsection is not eligible to be considered for the issuance of a new license under this chapter until the person has repaid in full, plus interest at the current legal rate, the amount paid from the mortgage recovery fund resulting from that person's violation of this chapter.
(c) This section does not limit the authority of the director to take disciplinary action against a licensee under this chapter for a violation of this chapter or of rules promulgated or orders issued pursuant to this chapter. The repayment in full to the mortgage recovery fund of all obligations of a licensee under this chapter does not nullify or modify the effect of any other disciplinary proceeding brought under this chapter.
[]
(2) How many designated brokers may a mortgage broker
have? ((The mortgage broker must have a qualified designated
broker at all times.)) The mortgage broker may appoint only
one individual to be the designated broker at any given time. The designated broker need not be a principal of the licensee.
It is a prudent business practice to have more than one qualified individual working for the licensee who could be appointed as the designated broker.
(3) If my designated broker leaves, may I continue to operate my mortgage broker business? Yes. You may continue to operate your mortgage broker business. However, you must notify the department within five business days of the loss of or change of your designated broker. You must then replace the designated broker within thirty days of the loss or change of the designated broker. If you need more than thirty days to replace the designated broker, you must seek approval from the department. Failure to replace your designated broker, or receive approval from the director for an extension, may result in an enforcement action against you.
(4) What must I do to replace my designated broker? You
must apply((, in a form prescribed by the department,))
through the NMLSR for approval of the new designated broker. The new designated broker must meet the requirements of WAC 208-660-250(1). You and the new designated broker ((and the
licensee including those individuals to whom the license was
granted,)) must meet the good standing requirements of WAC 208-660-007.
(5) What must I do if I sell all or part of my mortgage broker company? See WAC 208-660-400(13).
(6) After my mortgage broker license is approved, may I
change my business structure? Yes. ((You must follow the
notification requirements of WAC 208-660-400(12).)) See WAC 208-660-400 (7)(a)(iv).
(7) May a licensed mortgage broker share an office with a licensed real estate broker? Yes. A licensed mortgage broker may share an office with a licensed real estate broker. The mortgage broker location must be licensed as a main or branch mortgage broker office.
(8) If a licensed mortgage broker shares an office with a licensed real estate broker, what must the mortgage broker do to notify the public that the office is shared? The licensed mortgage broker must clearly identify the mortgage broker business as separate from the real estate business to the public on any signage, advertising, or other material identifying the businesses.
(9) May I add a trade name (or "DBA") to my mortgage broker license? Yes. You may add a trade or "DBA" name to the mortgage broker license if you first apply to the department, in a form prescribed by the department, and receive department approval. When the department has approved the trade name, you must conduct business under that trade name in at least one of the two following ways:
(a) Use your license name together with the trade name; or
(b) Use your mortgage broker license number together with the trade name.
(10) May the department deny an application for a proposed DBA name because it is similar to an existing licensee name? Yes. The director may deny an application for a proposed DBA name if the proposed DBA name is similar to a currently existing licensee name.
(11) May I conduct my mortgage broker business from more than one location? Yes. You may establish one or more branch offices under your license. See WAC 208-660-195 for information on licensing branch offices.
[Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-180, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-180, filed 11/21/06, effective 1/1/07.]
(2) If my branch offices are under separate ownership, does that limit my liability for their activities? No. Licensed mortgage brokers are responsible for the activity and violations at their branch offices regardless of the structure or label given the branch offices. Licensure of a branch office creates a direct line of responsibility from the main office to the branch.
(3) If my branch offices are under separate ownership, what level of supervision must I maintain? Because branch offices, regardless of their business structure, are not independent from your license and surety bond, you are responsible for the conduct of anyone conducting business under your license. You must have a written supervisory plan. The details of the plan, and how you implement the plan for your branch offices, must take into account the number of branch offices, their location, and the number of individuals working at the branch offices. You must maintain your written supervisory plan as part of your business books and records.
(4) How do I apply for a mortgage broker branch office
license? As the licensed mortgage broker, you must apply for
a branch office license through the NMLSR and receive ((a
branch office license)) approval from the department before
operating from any location other than your licensed location.
You must be in good standing((, and may need to increase the
amount of the surety bond)). You will have to pay application
and annual assessment fees for the branch office(s). See WAC 208-660-550, Department fees and costs.
(5) What does the department consider when reviewing an application for a branch office license? The department considers:
(a) Whether the mortgage broker is in good standing. See WAC 208-660-007.
(b) ((Whether the amount of the mortgage broker's surety
bond is sufficient to cover the loan originators that will be
working from the branch office.
(c))) Whether the physical address listed in the application can be verified as a branch office location.
(6) Must I display my branch office license? Yes. Your mortgage broker branch office license must be prominently displayed in the branch office.
(7) If I am an internet company, how do I display my license? You must display your license information, as it appears on your license, including any or all business names, and the license number, on your web site. The information must also include a list of the states in which you are licensed.
(8) How do I change information on my mortgage broker
branch office license? You must file a license amendment
through the NMLSR ((within thirty days of)) at least ten days
prior to the change occurring.
(9) Does my branch office license expire? The license expires annually. The expiration date is shown on the license. If the license is an interim license, it may expire in less than one year.
(10) How do I renew my mortgage broker branch office license?
(a) Before the expiration date, the licensed mortgage
broker must((:
(i) Verify the surety bond is adequate for the licensee's average number of loan originators.
(ii))) submit ((a)) an on-line renewal and pay the branch
office annual assessment fee through the NMLSR.
(b) The renewed mortgage broker branch office license is valid for the term listed on the license or until surrendered, suspended, or revoked.
(11) If my mortgage broker branch office license expires,
must I apply for a new license? If you complete all the
requirements for renewal ((within forty-five days of the
expiration date)) by February 28th, each year, you may renew
an existing license. However, if you renew your license
during this ((forty-five day)) two-month period, in addition
to paying the annual assessment on your branch office license,
you must pay an additional fifty percent of your annual
assessment for that branch. See subsection (10) of this
section for the license renewal requirements.
During this ((forty-five day)) two-month period, your
license is expired and you must not conduct any business under
the act that requires a license until your license has been
renewed.
((Any renewal requirements received by the department
must be evidenced by either a postmark or "date received"
stamp within the forty-five days.)) If you fail to comply
with the renewal request requirements ((within forty-five
days)) by February 28th, each year, you must apply for a new
license.
(12) If my mortgage broker branch office license has expired, may I still conduct my mortgage broker business from that location? No. Once the mortgage broker branch office license has expired, you must not conduct any business under the act that requires a license until you renew your license.
(13) If my mortgage broker main office license expires, may I still conduct my mortgage broker business from a branch office? No. Once the mortgage broker main office license expires, you must not conduct any business under the act that requires a license from any location until you renew the main office license.
(14) May I add a trade name (or "DBA") to my mortgage broker branch office license? Yes. You may add a trade name, or "DBA" name, to the mortgage broker branch office license if you first apply to the department, in a form prescribed by the director, and receive department approval. The branch office trade name must at all times be identified as connected with the mortgage broker's license name as it appears on the mortgage broker license. When the department has approved the trade name, you must conduct business under that trade name in at least one of the two following ways:
(a) Use your license name together with the branch office trade name; or
(b) Use the branch office trade name and mortgage broker branch office license number together.
(c) See WAC 208-660-180(10).
(15) How must I identify my mortgage broker branch office(s)? The branch office must be prominently identified as a branch or division of the licensed mortgage broker so as not to appear to be an independent enterprise.
(16) Does my branch office have to be a physical location? Yes. The physical location may be at a commercial or residential address but does not have to be in Washington. See WAC 208-660-420, Out-of-state mortgage brokers and loan originators.
(17) Must I have a branch manager? No. Although you may
appoint one, the act does not require a branch manager. ((The
licensee)) You and the designated broker are responsible for
the business conducted at all locations.
(18) If I appoint a branch manager, must he or she be licensed? If the branch manager performs any of the functions of a mortgage broker or loan originator, he or she must be licensed. If they do not perform those functions, they must not be paid a commission or salary based upon the number of transactions closed.
(19) Must I have a designated broker at each branch? No.
((The licensed mortgage broker)) You may have only one
designated broker who is responsible for the mortgage broker
business at all locations.
(20) If I want to move my licensed company under the sponsorship of another mortgage broker, what must be completed before the licensed loan originators can start transacting business under the sponsorship of the other mortgage broker? The loan originators may begin doing business when the other mortgage broker has filed for approval of a new branch office with the NMLSR, has sponsored each of the licensed loan originators through the NMLSR and you have filed the trust account paperwork with the department, you may transact business under the new mortgage broker for up to thirty days without a new license.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-195, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-195, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-195, filed 11/21/06, effective 1/1/07.]
(a) Be eighteen years or older.
(b) Have a high school diploma, an equivalent to a high school diploma, or two years experience in the industry in addition to the experience required in (e) of this subsection. The experience must meet the criteria in (e) of this subsection.
(c) You must pass the Washington designated broker test. See WAC 208-660-260, Designated brokers -- Testing. If you will originate loans, you must also take and pass the loan originator national and Washington specific tests and apply for and receive a loan originator license.
(d) You must be appointed to the designated broker position by the licensed mortgage broker through an application and approval process with the department and the NMLSR.
(e) You must have a minimum of two years experience lending or originating residential mortgage loans.
(i) The work experience must be in one or more of the following, within the last five years:
(A) As a mortgage broker or designated broker of a mortgage broker for a minimum of two years; or
(B) As a mortgage banker, responsible individual, or manager of a mortgage banking business; or
(C) As a loan originator with responsibility primarily for originating loans secured by a lien on residential real estate; or
(D) As a branch manager of a lender with responsibility primarily for loans secured by a lien on residential real estate; or
(E) As a manager or supervisor of mortgage loan originators; or
(F) As a mortgage processor, underwriter, or quality control professional; or
(G) As a regulator, examiner, investigator, compliance expert, or auditor, whose primary function is the review of mortgage companies and their compliance processes, and the department determines your background is sufficient.
(ii) The work experience must be evidenced by a detailed work history and:
(A) W-2 Federal Income Tax Reporting Forms in the designated broker appointee's name; or
(B) 1099 Federal Income Tax Reporting Forms in the designated broker appointee's name; or
(C) Corporate tax returns signed by the designated broker appointee or corporate officer for a licensed or exempt residential mortgage company; or
(f) In addition to supplying the application information,
both you and the licensed mortgage broker must be in good
standing with the department((.)); or
(g) ((Financial background.
(i))) Demonstrate financial responsibility, character and general fitness.
(2) How do I demonstrate financial responsibility? The department will review your credit history to determine if you have outstanding judgments (except judgments involving medical expenses); current outstanding tax liens or other government liens and filings; foreclosures within the last three years; or a pattern of seriously delinquent accounts within the past three years.
Specifically, you are not eligible to become a designated broker if you have one hundred thousand dollars or more of tax liens against you at the time of appointment by a licensed mortgage broker.
(((ii) You may not be eligible to become a designated
broker if your financial background during the two years prior
to the appointment application shows a history of unpaid
debts.
(2))) (3) May I work as the designated broker for more than one company? Yes. You may be the designated broker for more than one licensee.
(((3))) (4) As the designated broker, must ((the
designated broker)) I hold a loan originator's license? Yes.
((A designated broker approved by the department will be given
a loan originator license if they do not already have one. If
the designated broker already has a loan originator license,
that license will be added to the licensed mortgage broker's
list of loan originators.
(4))) If you perform any of the functions of a loan originator, you must apply for and receive a loan originator license.
(5) May I work as the designated broker for one licensee
and a licensed loan originator for another licensee? Yes. If
you want to originate loans for a mortgage broker different
from the mortgage broker for whom you are the designated
broker, you must ((apply to the department for an additional
loan originator license)) amend your license information
through the NMLSR to reflect the new relationship and the
second company must sponsor you. Federal law may prohibit a
mortgagee from hiring employees who work for more than one
mortgage broker or who have multiple employers.
(((5))) (6) May a designated broker hire employees or
independent contractors apart from the employees or
independent contractors working for the mortgage broker
licensee? No. Only the mortgage broker licensee can have
employees or independent contractors. This prohibition
against a designated broker having employees or independent
contractors includes clerical or administrative personnel
whose work is related to the mortgage broker licensee's
activities, and loan processors.
(((6))) (7) As a designated broker, what reporting
requirements must I comply with? See WAC 208-660-400,
Reporting requirements.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-250, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-250, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-250, filed 11/21/06, effective 1/1/07.]
(2) If I am currently a designated broker, will I have to
take the test again? You will only have to ((take the
designated broker test again)) retake tests if you stop
working ((as a designated broker)) in the industry for five
years or longer.
(3) If I am currently a designated broker that originates
loans((.)), will I have to take the loan originator test and
obtain a loan originator license? ((No. The department will
provide you with a loan originator license automatically
because you are a designated broker. Your loan originator
license will renew in conjunction with the renewal of the
mortgage broker main office you work with. If you stop acting
as a designated broker, your loan originator license will
become inactive. See WAC 208-660-350(12). You can reactivate
the license by becoming affiliated with the same or another
licensed mortgage broker as a loan originator. If you do not
renew your license as provided in WAC 208-660-350(19), the
license will expire.)) Yes. You must take and pass the
national and state NMLSR tests and obtain the necessary
prelicensing education prior to acting as a loan originator.
(4) Where can I get information about the designated
broker test? ((The department will publish the names and
contact information of approved testing providers on the
department web site.)) Go to the department's web site for
information about the designated broker test:
http://www.dfi.wa.gov/cs/mb_testing.htm.
(5) What topics may be covered in the designated broker test? See WAC 208-660-600(3).
(6) How soon after failing the designated broker test may I take it again? After failing the test three consecutive times you must wait at least fourteen days before taking the test again.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-260, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-260, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-260, filed 11/21/06, effective 1/1/07.]
(2) As a designated broker, how many ((clock)) hours of
continuing education must I have?
(a) The continuing education requirement for designated
brokers ((will be in the form of approved courses)) is nine
hours. ((While the individual clock hours may vary, you must
complete three courses, of no less than three hours each,
annually.))
(b) You ((may)) will receive one credit ((for one
course)) hour by attending ((three)) one or more mortgage
broker commission meeting(s).
(3) As a designated broker, may I take the same approved course multiple times to meet my annual continuing education requirement? No. You may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.
(4) If I teach ((an approved)) a continuing education
course approved by the NMLSR, may I use my course as credit
toward my annual continuing education requirement? Yes. As
an instructor of ((an)) a NMLSR approved continuing education
course, you may receive credit for your annually required
designated broker continuing education courses from the
course(s) you teach. You will receive credit at the rate of
one course taught equaling two continuing education course
credits.
(5) ((How do I receive credit toward my continuing
education requirement when I teach an approved continuing
education course? When you renew your license and seek to get
credit for continuing education, submit your approved
continuing education course material for the course(s) you
taught during the year. The department will credit you with
completing two continuing education courses for each one
approved course you teach.
(6))) Is ethics a required continuing education
((course)) topic for designated brokers? Yes. You must take
((an)) two hours of ethics ((continuing education course in
your first)) each year ((of acting)) you act as a designated
broker. ((However, if you teach an approved continuing
education course on ethics during your first year working as a
designated broker, teaching that course will satisfy your
ethics continuing education requirement.
(7) As a designated broker, if I take a continuing education course approved for multiple jurisdictions, will the department accept it as part of my continuing education requirement? If any state has continuing education requirements or standards at least as stringent as Washington's, that state's notification of satisfactory completion of continuing education may be approved by the department as meeting the continuing education requirements under the act and these rules.
(8))) The ethics course must include the topics of fraud, consumer protection, and fair lending. You must not take the same course in the same or successive years.
(6) If I accumulate more than the required designated broker continuing education course credits during a year, may I carry-over the excess credit to the next year? No. Continuing education credits only apply to the year in which they are taken.
(((9))) (7) How do I provide the department with proof of
the continuing education courses I have completed?
(a) For S.A.F.E. required courses, the course provider will report your continuing education to the NMLSR and DFI will have access to that information.
(b) For Washington specific courses, you must provide the department with proof of your satisfactory completion of the course, in a form prescribed by the department.
(((10))) (8) If I fail to complete the required
continuing education, what happens to my license? When your
license expires, the department will not renew it and you
cannot continue conducting any business under the act. See
WAC 208-660-350(20) to renew your license within ((forty-five
days of it expiring.
(11) If the department reissues my license and the new expiration date does not coincide with the prior annual assessment period, will the department still give me credit for the continuing education courses I have taken in preparation for meeting the old annual assessment date? Yes. The department will give you credit for the continuing education courses you have taken. You will not lose any credits due to the department's license expiration date adjustment)) two months after expiration.
[Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-270, filed 11/21/06, effective 1/1/07.]
(2) How do I obtain approval to work for more than one
mortgage broker? Using the NMLSR, the company will submit a
sponsorship request. The department will notify you ((when
the relationship is approved. The department will notify
you)) and others associated with your license upon approval of
your request. The NMLSR will charge a fee for the additional
relationship. See also WAC 208-660-550.
(3) If I work as a loan originator for more than one mortgage broker, may I take an application from a borrower without identifying one specific mortgage broker? No. You may take an application for only one mortgage broker at a time in any one transaction. Prior to presenting yourself to a specific borrower as licensed to originate mortgage loans, you must state who you represent. You must clearly identify the mortgage broker by name and address on the application, on all disclosures, authorization forms, and other material provided to the borrower. There must be no confusion by the borrower as to which mortgage broker you are representing at any given time.
(4) May I work from any location when I am a licensed loan originator? No. You can only work from a licensed location. The licensed location can be the main company office, or any licensed branch.
(5) May a loan originator transfer loan files to a mortgage broker other than the mortgage broker the loan originator is associated with? No. Only the borrower may submit a written request to the licensed mortgage broker to transmit the borrower's selected information to another mortgage broker or lender. The licensed mortgage broker must transmit the information within five business days after receiving the borrower's written request.
(6) Who owns loan files? Loan files are the property of
the mortgage broker named on the loan application and the
mortgage broker must keep the original files and documents. ((The licensed mortgage broker must transmit the information
within five business days after receiving the borrower's
written request.
(6))) (7) May I act as a loan originator and a real estate agent in the same transaction or for the same borrower in different transactions? Yes, you may be both the loan originator and real estate broker or salesperson in the same transaction, or for the same borrower in different transactions. When either of these occur, you must provide to the borrower the following written disclosure:
(((8))) (9) May a loan originator charge the borrower a
fee, commission, or other compensation for preparing,
negotiating, or brokering a loan for the borrower? No. A
loan originator may not charge the borrower a fee, commission,
or compensation of any kind in connection with the
preparation, negotiation, and brokering of a residential
mortgage loan.
(((9))) (10) As a loan originator, may I be paid my
portion of the mortgage broker fee directly from the loan
closing?
(a) Yes. If authorized in the mortgage broker's demand, the settlement service provider may pay your portion of the mortgage broker fee directly to you; provided however, that the HUD-1 or equivalent settlement statement has the following information:
(i) Your name as it appears on your loan originator license;
(ii) Your loan originator license ((number)) unique
identifier; and
(iii) The amount to be paid to you by the settlement service provider.
(b) You must provide a copy of the HUD-1 or equivalent settlement statement to the licensed mortgage broker within twenty-four hours of your receipt of funds from closing.
(((10))) (11) May a loan originator bring a lawsuit
against a borrower for the collection of compensation? No.
Only licensed mortgage brokers, or exempt mortgage brokers,
may bring collection actions against borrowers to collect
compensation.
(((11))) (12) May I work as a licensed loan originator
for a mortgage broker located out of the state? Yes. You may
originate loans for any mortgage broker ((you are affiliated
with)) who sponsors you and who is licensed under Washington
law.
(((12))) (13) May a licensed loan originator hire
employees or independent contractors to assist in the mortgage
broker licensee's activities? No. Only the mortgage broker
licensee can have employees or independent contractors. This
prohibition against loan originators hiring employees or
independent contractors includes clerical or administrative
personnel whose work is related to the mortgage broker
licensee's activities, and loan processors.
(((13))) (14) Do loan processors have to be licensed as
loan originators? W-2 employee loan processors are not
required to have a loan originator license provided they work
under the supervision and instruction of a licensed or exempt
mortgage broker and do not hold themselves out as able to
conduct the activities of a mortgage broker or loan
originator. Independent contractor loan processors must be
licensed as a mortgage broker, mortgage broker branch office,
or loan originator.
(((14))) (15) May loan processors work on files from an
unlicensed location? A loan processor may work on loan files
from an unlicensed location under the following circumstances:
(a) The loan files are in electronic format and the loan processor accesses the files directly from the licensed mortgage broker's main computer system. The loan processor may not maintain any electronic files on any computer system other than the system belonging to the licensed mortgage broker.
(b) The loan processor does not conduct any of the activities of a licensed loan originator.
(c) The licensed mortgage broker must have safeguards in place for the computer system that safeguards borrower information.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-300, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-300, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-300, filed 11/21/06, effective 1/1/07.]
(a) Be eighteen years or older.
(b) Have a high school diploma, an equivalent to a high school diploma, or three years experience in the industry. The experience must meet the criteria in WAC 208-660-250 (1)(e)(i) and (ii).
(c) Pass a licensing test. You must take and pass ((a
test that assesses your knowledge of the mortgage business and
related regulations)) the national and state components of the
NMLSR tests. See WAC 208-660-360, Loan originators -- Testing.
(d) Submit an application. You must ((complete)) submit
an on-line application ((in a form prescribed by the
director)) through the NMLSR.
(e) Prove your identity. You must provide information to prove your identity.
(f) Pay the application fee. You must pay an application fee for your application, as well as an administrative fee to the NMLSR. See WAC 208-660-550, Department fees and costs.
(2) In addition to reviewing my application, what else will the department consider to determine if I qualify for a loan originator license?
(a) General fitness and prior compliance actions. The department will investigate your background to see that you demonstrate the experience, character, and general fitness that commands the confidence of the community and creates a belief that you will conduct business honestly and fairly within the purposes of the act. This investigation may include a review of the number and severity of complaints filed against you, or any person you were responsible for, and a review of any investigation or enforcement activity taken against you, or any person you were responsible for, in this state, or any jurisdiction.
(b) License suspensions or revocations.
(i) You are not eligible for a loan originator license if
you have been found to be in violation of the act or the
rules, or have had a license issued under the act or any
similar state statute suspended ((or revoked within five years
of the filing of the present application)).
(ii) You are not eligible for a loan originator license if you have ever had a license issued under the Mortgage Broker Practices Act or the Consumer Loan Act or any similar state statute revoked.
(iii) For purposes of this subsection, a "similar statute" may include states involving other financial services, such as insurance, securities, escrow or banking.
(c) Criminal history.
(i) You are not eligible for a loan originator license if you have ever been convicted of a felony involving an act of fraud, dishonesty, breach of trust, or money laundering.
(ii) You are not eligible for a loan originator license if you have been convicted of a gross misdemeanor involving dishonesty or financial misconduct, or a felony not involving fraud, dishonesty, breach of trust, or money laundering, within seven years of the filing of the present application.
(d) Financial background.
(i) The department will investigate your financial background including a review of your credit report to determine if you have demonstrated financial responsibility including, but not limited to, an assessment of your current outstanding judgments (except judgments solely as a result of medical expenses); current outstanding tax liens or other government liens and filings; foreclosure within the last three years; or a pattern of seriously delinquent accounts within the past three years.
(ii) Specifically, you are not eligible to receive a loan originator license if you have one hundred thousand dollars or more of tax liens against you at the time of appointment by a licensed mortgage broker.
(((ii) You may not be eligible to receive a loan
originator license if your financial background during the two
years prior to the appointment application shows a history of
unpaid debts.))
(3) What will happen if my loan originator license application is incomplete? After submitting your on-line application through the NMLSR, the department will notify you of any application deficiencies.
(4) How do I withdraw my application for a loan originator license? Once you have submitted the on-line application through NMLSR you may withdraw the application through NMLSR. You will not receive a refund of the NMLSR application fee but you may receive a partial refund of your licensing fee if the fee exceeds the department's actual cost to investigate the license application.
(5) When will the department consider my loan originator
license application to be abandoned? If you do not respond
((within ten business days to)) as directed by the
department's ((second)) request for information and within
fifteen business days, your loan originator license
application is considered abandoned and you forfeit all fees
paid. Failure to provide the requested information will not
affect new applications filed after the abandonment. You may
reapply by submitting a new application package and new
application fee.
(6) What happens if the department denies my application for a loan originator license, and what are my rights if the license is denied? Under the Administrative Procedure Act, chapter 34.05 RCW, you have the right to request a hearing. To request a hearing, notify the department, in writing, within twenty days from the date of the director's notice to you notifying you your license application has been denied. See also WAC 208-660-009.
(7) How will the department provide me with my loan originator license? The department may use any of the following methods to provide you with your loan originator license:
(a) ((A printed paper license sent to you by regular
mail.
(b))) A license sent to you electronically that you may print.
(((c))) (b) A license verification available on the
department's web site and accessible for viewing by the
public.
(8) May I transfer, sell, trade, assign, loan, share, or give my loan originator license to someone else? No. A loan originator license authorizes only the individual named on the license to conduct the business at the location listed on the license.
(9) How do I change information on my loan originator license? You must submit an amendment to your license through the NMLSR. You may be charged a fee.
(10) What is an inactive loan originator license? When a
licensed loan originator is not sponsored by a licensed or
exempt company, the license is inactive. ((When a person
holds an inactive license, they may not conduct any of the
activities of a loan originator, or hold themselves out as a
licensed loan originator.
(11) When my loan originator license is inactive, am I subject to the director's enforcement authority? Yes. Your license is granted under specific authority of the director and under certain situations you may be subject to the director's authority even if you are not doing any activity covered by the act.
(12))) If a licensed loan originator works for a consumer loan company (chapter 31.04 RCW) as a W-2 employee, they may continue to do business under their inactive license until June 30, 2010, or until the company goes onto the NMLSR and sponsors their license.
(11) When my loan originator license is inactive, must I continue to pay annual fees, and complete continuing education for that year? Yes. You must comply with all the annual licensing requirements or you will be unable to renew your inactive loan originator license.
(((13) May I originate loans from a web site when my
license is inactive? No. You may not originate loans, or
engage in any activity that requires a license under the act,
while your license is inactive.
(14))) (12) How do I activate my loan originator license? The sponsoring company must submit a sponsorship request for your license through the NMLSR. The department will notify you and all the companies you are working with of the new working relationship if approved.
(((15))) (13) When may the department issue interim loan
originator licenses? To prevent an undue delay, the director
may issue interim loan originator licenses with a fixed
expiration date. The license applicant must have
substantially met the initial licensing requirements, as
determined by the director, to receive an interim license.
((For purposes of this section, undue delay includes the
adjustment of license expiration or renewal dates to coincide
with the implementation of systems designed to assist in
uniformity and provide data repositories of licensing
information.))
One example of having substantially met the initial licensing requirements is: Submitting a complete application, paying all application fees, and the department having received and reviewed the results of the applicant's background check.
(((16))) (14) When does my loan originator license
expire? The loan originator license expires annually on
December 31st. If the license is an interim license, it may
expire in less than one year.
(((17))) (15) How do I renew my loan originator license?
(a) Before the license expiration date you must renew your license through the NMLSR. Renewal consists of:
(i) Pay the annual assessment fee; and
(ii) Meet the continuing education requirement.
(b) The renewed license is valid until it expires, or is surrendered, suspended or revoked.
(((18))) (16) If I let my loan originator license expire,
must I apply to get a new license? If you complete all the
requirements for renewal ((within forty-five days of the
expiration date)) on or before February 28th each year, you
may renew an existing license. However, if you renew your
license during this ((forty-five day)) two-month period, in
addition to paying the annual assessment on your license, you
must pay an additional fifty percent of your annual
assessment. See subsection (((17))) (15) of this section for
the license renewal requirements.
During this ((forty-five day)) two-month period, your
license is expired and you must not conduct any business under
the act that requires a license.
Any renewal requirements received by the department must
be evidenced by either a United States Postal Service postmark
or department "date received" stamp ((within the forty-five
days)) prior to March 1st each year. If you fail to comply
with the renewal request requirements ((within the forty-five
days)) prior to March 1st, you must apply for a new license.
(((19))) (17) If I let my loan originator license expire
and then apply for a new loan originator license within one
year of the expiration, must I comply with the continuing
education requirements from the prior license period? Yes. Before the department will consider your new loan originator
application complete, you must provide proof of satisfying the
continuing education requirements from the prior license
period.
(((20))) (18) May I still originate loans if my loan
originator license has expired? No. Once your license has
expired you may no longer conduct the business of a loan
originator, or hold yourself out as a licensed loan
originator, as defined in the act and these rules.
(((21))) (19) What happens to the loan applications I
originated before my loan originator license expired?
Existing loan applications must be processed by the licensed
mortgage broker or another licensed loan originator working
for the mortgage broker.
(((22))) (20) May I surrender my loan originator's
license? Yes. Only you may surrender your license before the
license expires through the NMLSR.
Surrendering your loan originator license does not change your civil or criminal liability, or your liability for any administrative actions arising from acts or omission occurring before the license surrender.
(((23))) (21) Must I display my loan originator license
where I work as a loan originator? No. Neither you nor the
mortgage broker company is required to display your loan
originator license. However, evidence that you are licensed
as a loan originator must be made available to anyone who
requests it.
(((24))) (22) If I operate as a loan originator on the
internet, must I display my license number on my web site?
Yes. You must display your license number, and the license
number and name as it appears on the license of the licensed
mortgage broker you represent, on the web site.
(((25))) (23) Must I include my ((loan originator))
license number on any documents? You must include your
license number immediately following your name on
solicitations, including business cards, advertisements, and
residential mortgage loan applications.
(((26))) (24) When must I disclose my loan originator
license number? In the following situations you must disclose
your loan originator license number and the name and license
number of the mortgage broker you are associated with:
(a) When asked by any party to a loan transaction, including third party providers;
(b) When asked by any person you have solicited for business, even if the solicitation is not directly related to a mortgage transaction;
(c) When asked by any person who contacts you about a residential mortgage loan;
(d) When taking a residential mortgage loan application.
(((27))) (25) May I conduct business under a name other
than the name on my loan originator license? No. You must
only use the name on your license when conducting business. If you use a nickname for your first name, you must use your
name like this: "FirstName "Nickname" LastName."
(26) Will I have to obtain an individual bond if the company I work for is exempt from licensing? Reserved.
(27) Will I have to file quarterly call reports if I have an individual bond? Reserved.
[Statutory Authority: RCW 43.320.040. 09-12-111, § 208-660-350, filed 6/2/09, effective 7/3/09. Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-350, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-350, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 07-13-079, § 208-660-350, filed 6/18/07, effective 7/19/07; 06-23-137, § 208-660-350, filed 11/21/06, effective 1/1/07.]
(2) Who provides prelicensing education? The NMLSR approves course providers and courses for prelicensing education. See the NMLSR Resource Center for a list of approved providers and courses.
(3) Must I take continuing education in the year I complete the prelicensing education? No. You will not have a continuing education requirement in the year in which you complete prelicensing education.
[]
(2) Where may I find information about the loan
originator test? ((The department will publish the names and
contact information of approved testing providers on the
department web site.)) The NMLSR contracts for its test
provider. You will find information on the test provider on
the NMLSR web site at www.stateregulatoryregistry.org.
(3) How much does the loan originator test cost? Testing
costs are set by contract between the test provider and the
((department)) NMLSR and may be modified from time to time. The department will publish the current testing fee ((with the
testing provider contact information)) on its web site or you
may find it on the NMLSR web site at
www.stateregulatoryregistry.org.
(4) How do I register to take the loan originator test?
The department will ((publish registration information with
the testing provider contact information)) provide a link to
the NMLSR test provider on its web site.
(5) What topics may be covered in the loan originator
test? At a minimum, the test topics will include ethics,
federal and state law and regulation pertaining to mortgage
origination, federal and state law and regulation on fraud,
consumer protection, nontraditional mortgage products, and
fair lending. ((See WAC 208-660-600.))
(6) After passing the loan originator test, will I have to take it again? You must retake the loan originator test if you have not been a loan originator within the past five years.
(7) If I have taken and passed the state loan originator test, must I take the NMLSR state test? If you are licensed on or before July 30, 2009, and you took your loan originator test after May 2007, you will not be required to take the NMLSR state test if you remain licensed.
(8) How soon after failing the loan originator test may I
take it again? ((After taking and failing the test three
consecutive times, you must then wait at least fourteen days
before taking the test again.)) You may retake a test three
consecutive times with each consecutive taking occurring at
least thirty days after the preceding test. After failing
three consecutive tests, you must wait at least six months
before taking the test again.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-360, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-360, filed 11/21/06, effective 1/1/07.]
(a) You must have at least eight hours to satisfy the federal requirement. The eight hours of education must include three hours of federal law and regulations; two hours of ethics on fraud, consumer protection, and fair lending issues; and two hours on lending standards for the nontraditional mortgage product marketplace.
(b) You must have at least one additional hour of continuing education to satisfy the Washington requirement.
(2) Who approves the continuing education for loan originators?
(a) The NMLSR approves all education that meets the federal requirement.
(b) Washington has approved providers and courses that can provide education to meet the Washington requirement until the end of 2010.
(3) Where may I get information about continuing education for loan originators?
(a) The ((department will publish a list of the approved
professional organizations that provide continuing education,
and approved individual courses on the department's web site. The professional organizations will have detailed information
about the continuing education courses they offer. See also
WAC 208-660-600.
(2) How many clock hours of loan originator continuing education must I have each year? You must complete a minimum of eight hours annually.
(3))) NMLSR web site will have information about the approved NMLSR courses.
(b) Washington will have information about the Washington approved courses and providers meeting the Washington requirement on its web site through 2010.
(4) As a loan originator, may I take the same approved course multiple times to meet my annual continuing education requirement? No. You may not take the same approved course in the same or successive years to meet the annual requirements for continuing education.
(((4))) (5) If I teach an approved continuing education
course may I use my course as credit toward my annual loan
originator continuing education requirement? Yes. Up until
December 31, 2009, as an instructor of an approved continuing
education course, you may receive two continuing education
credits for ((your annually required loan originator
continuing education courses from the)) each course(((s)))
hour you teach. ((You will receive credit at the rate of one
course taught equaling two continuing education course
credits.
(5))) If approved as an NMLSR course provider you may receive two credit hours for each one hour taught.
(6) How do I receive credit toward my continuing education requirement when I teach an approved continuing education course? When you renew your license at the end of 2009 and seek to get credit for continuing education, submit to the department documentation evidencing approval of the continuing course you taught. The department will credit you with completing two continuing education courses for each one approved course you teach.
(((6))) (7) Is ethics a required continuing education
course for loan originators? Yes. You must take at least two
ethics hours annually. The annual ethics credits must include
the topics of fraud, consumer protection, and fair lending.
(((7))) (8) If I take a loan originator continuing
education course approved ((for multiple jurisdictions,)) by
the NMLSR will the department accept it as part of my
continuing education requirement? Yes. ((There will be)) The
NMLSR approved continuing education courses ((that meet the
requirements for all states)) will satisfy the federal
requirement. Individual states will have individual state
specific requirements.
(((8))) (9) Can I receive credit for continuing education
by attending the Mortgage Broker Practices Act Commission
meetings? Yes. You will receive one credit hour by attending
one or more mortgage broker commission meeting(s).
(10) If I accumulate more than the required loan originator continuing education course credits during a year, may I carry-over the excess credit to the next year? No. Continuing education credits only apply to the year in which they are taken.
(((9))) (11) If I fail to complete the required
continuing education, what happens to my loan originator
license? When your license expires, the department will not
renew it, and you cannot continue conducting any business
under the act. See WAC 208-660-350(((18))) (16) to renew your
license within ((forty-five days)) two months of it expiring. See also, WAC 208-660-350(((19))) (15).
(((10) How will I know which courses and providers
satisfy the continuing education requirement? The department
will approve continuing education courses offered by course
providers and will approve professional organizations offering
courses. The providers, courses, and contact information will
be listed on the department's web site.
(11))) (12) How do I provide the department with proof of the continuing education courses I have completed? For the federal continuing education, the NMLSR will provide the process for receiving and calculating your continuing education. For Washington specific continuing education, you must provide the department with proof of your satisfactory completion of the course, in a form prescribed by the department.
(((12) If the department reissues my license and the new
expiration date does not coincide with the prior annual
assessment period, will the department still give me credit
for the continuing education courses I have taken in
preparation for meeting the prior annual assessment date?
Yes. The department will give you credit for the continuing
education courses you have taken. You will not lose any
credits due to the department's license expiration date
adjustment.))
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-370, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-370, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-370, filed 11/21/06, effective 1/1/07.]
(a) The total number of residential mortgage loans secured by Washington real estate that you originated and closed in the prior calendar year; and
(b) The total dollar volume (principal loan amounts) of the residential mortgage loans secured by Washington real estate that you originated and closed in the prior calendar year. In the case of an open or closed end home equity line of credit, the amount to be reported is the loan or line of credit limit.
(2) When must I provide the mortgage broker annual report
to the department? You must provide the completed report to
the department by March 31st of each year. ((The first annual
report, for activity occurring in 2007, must be received by
the department before or on March 31, 2008.))
(3) What period of time must the mortgage broker annual report cover? The mortgage broker annual report must cover the prior calendar year from January 1st to December 31st.
(4) What action will the department take if I fail to file my mortgage broker annual report?
(a) ((When the report is over thirty days late,)) The
department may begin an enforcement action against you if you
fail to file the report on time.
(b) When your license is due for renewal, the department will not renew it if you have not filed your annual report.
(5) ((How do I notify the department when I want to
change information on my mortgage broker or loan originator
license? You must file a license amendment through the NMLSR
within thirty days of the change occurring.
(6) As a designated broker or loan originator, must I notify the department if I change my residential address or telephone number? Yes. Whether your license is active or inactive, you must notify the department, through the NMLSR, within thirty days of a change in your residential address and telephone number.
(7) As a designated broker or loan originator must I notify the department if I change my name? Yes. Whether your license is active or inactive, you must notify the department, through NMLSR, within thirty days of a name change.
(8))) What are my quarterly filing requirements? Reserved.
(6) Will the filing of the fourth quarter call report satisfy the annual report requirement? Reserved.
(7) As a licensed mortgage broker what are my reporting responsibilities when something of significance happens to my business?
(a) Prior notification required. You must notify the director through amendment to the NMLSR twenty days prior to a change of:
(i) Principal place of business or any of its branch offices;
(ii) Name or legal status (e.g., from sole proprietor to corporation, etc.);
(iii) Legal or trade name; or
(iv) A change of ownership control of ten percent or more. The department will consider the qualifications of the new people and notify you whether or not the proposed change is acceptable. You may have to submit fingerprint cards for new controlling people directly to DFI.
(b) Post notification within ten days. You must notify the director through the NMLSR or in writing to the director within ten days after an occurrence of any of the following:
(i) Change in mailing address, telephone number, fax number, or e-mail address;
(ii) Cancellation or expiration of its Washington state master business license;
(iii) Change in standing with the Washington secretary of state;
(iv) Change in its standing with the state of Washington secretary of state, including the resignation or change of the registered agent;
(v) Failure to maintain the appropriate unimpaired capital under WAC 208-620-340;
(vi) Receipt of notification of cancellation of your surety bond;
(vii) Receipt of notification of license revocation proceedings against you in any state;
(viii) If you, or any officer, director, or principal is convicted of a felony, or a gross misdemeanor involving lending, brokering or financial misconduct; or
(ix) Name and mailing address of your registered agent if you are out-of-state.
(c) Post notification within twenty days. You must notify the director in writing within twenty days after the occurrence of any of the following developments:
(i) The filing of a felony indictment or information related to lending or brokering activities against you, or any officer, board director, or principal, or an indictment or information involving dishonesty against you, or any officer, board director, or principal;
(ii) The receipt of service of notice of the filing of any material litigation against you; or
(iii) The change in your residential address or telephone number.
(8) Must I notify the department of the physical address of my mortgage broker books and records? Yes. You must provide the physical address of your mortgage broker books and records in your initial license application through NMLSR. If the location of your books and records changes, you must provide the department, through the NMLSR, with the new physical address within five business days of the change.
(9) Must I notify the department if my designated broker leaves, or is no longer my designated broker? Yes. You must notify the department, through NMLSR, within five business days of the loss of or change of status of your designated broker. See WAC 208-660-180(3).
(10) ((When and how do I change the information about my
registered agent? Within five business days of the change,
you must file a statement of change through the NMLSR.
(11))) If I am a registered agent under the act, must I notify the department if I resign? Yes. You must provide the department with your statement of resignation letter at least thirty-one days prior to the intended effective date. You must also provide a copy of the resignation letter to the licensed mortgage broker. The department will terminate your appointment thirty-one days after receiving your resignation letter.
(((12) Must I notify the department if I change the
business structure of my company? When must I notify the
department? If the change to your business adds officers,
directors, or principal stockholders owning ten percent or
more of the company, you must notify the department, through
the NMLSR, at least thirty days prior to the change. The
department will consider the qualifications of the new people
and notify you whether or not the proposed change is
acceptable. You may have to submit fingerprint cards for new
controlling people directly to DFI.
(13))) (11) What are my responsibilities when I sell my business?
(a) At least thirty days prior to the effective date of sale, you must notify the department of the pending sale by completing the following: Update and file all required information through the NMLSR for your main and any branch offices, including updating information about the location of your books and records.
(b) You must give written notice to borrowers whose applications or loans are in process, advising them of the change in ownership.
(c) You must give written notice to third party providers that have or will provide services on loans in process, and all third-party providers you owe money to, bringing accounts payable current.
(d) ((Surrender all physical licenses to DFI.
(e))) You must reconcile the trust account and return any funds to the borrowers or others to whom they belong, or transfer funds into a new trust account at the borrower's direction. If excess funds still remain and are unclaimed, follow the procedures provided by the department of revenue's unclaimed property division.
(((14))) (12) Must I notify the department if I cease
doing business in this state? Yes. You must notify the
department within twenty days after you cease doing business
in the state by updating your MU1 record ((and filing a
surrender)) through the NMLSR, and filing your Mortgage Broker
annual report directly with DFI.
(((15))) (13) Must I notify the department of changes to
my trust account? Yes. You must notify the department within
five business days of any change in the status, location,
account number, or other particulars of your trust account,
made by you or the federally insured financial institution
where the trust account is maintained. A change in your trust
account includes the addition of a trust account.
(((16) Must I notify the department of changes to my
Washington master business license? Yes. You must notify the
department within five business days of any changes to your
Washington master business license made by you or the agency
issuing the license.
(17) Must I notify the department of changes to my standing with the Washington secretary of state? Yes. You must notify the department within five business days of any changes to your standing with the Washington secretary of state made by you or the secretary of state.
(18))) (14) What must I do if my licensed mortgage broker company files for bankruptcy?
(a) ((Chapter 7 bankruptcy. If you are a licensed
mortgage broker that files for a Chapter 7 bankruptcy, you
must:
(i))) Notify the director ((and surrender your mortgage
broker license)) within ten business days ((of)) after filing
the bankruptcy.
(((ii) Provide the department with a mortgage broker
annual report for the calendar year preceding the filing
within ten business days of filing the bankruptcy.
(b) Chapter 11 bankruptcy. If your licensed mortgage broker company files for a Chapter 11 bankruptcy, you must notify the director within ten business days of filing the bankruptcy.
(c) Chapter 13 bankruptcy. If your licensed mortgage broker company files for a Chapter 13 bankruptcy, you must:
(i) Notify the director and surrender your mortgage broker license within ten business days of filing the bankruptcy.
(ii) Provide the department with a mortgage broker annual report for the calendar year preceding the filing within ten business days of filing the bankruptcy.
(19))) (b) Respond to the department's request for information about the bankruptcy.
(15) If I am a designated broker and file for personal bankruptcy, what are my reporting responsibilities? A designated broker must notify the department in writing within ten business days of filing for bankruptcy protection.
(((20))) (16) If I am a designated broker and file for
personal bankruptcy, what action may the department take? The
director may require the licensed mortgage broker to replace
you with another designated broker.
(((21))) (17) If I am a loan originator and file for
personal bankruptcy, what are my reporting responsibilities?
A licensed loan originator must notify the director in writing
within ten business days of filing for bankruptcy protection.
(((22))) (18) If I am a loan originator and file for
personal bankruptcy, what action may the department take?
Depending on the circumstances, the director may revoke or
condition your license.
(((23))) (19) When may I apply for a license after
surrendering one due to my personal bankruptcy filing? If you
surrendered your license, you may apply for a license at any
time. However, the department may deny your license
application for three years after the bankruptcy has been
discharged provided that no new bankruptcies have occurred or
are in progress.
(((24) When may I apply for a license after the
department has revoked my license due to my personal
bankruptcy filing? The director will not issue a license to
any person who has had their license revoked within five years
of applying. While you may apply at any time, the application
will be denied until the five years have elapsed. For this
reason it is important for you to consider a surrender of your
license rather than allowing it to be revoked.
(25))) (20) Who in the mortgage broker company must notify the department if they are charged with or convicted of a crime? Licensees, whether on active or inactive license status, must notify the department in writing within ten business days of being:
(a) Charged by indictment or information with any felony, or a gross misdemeanor involving dishonesty or financial misconduct in any jurisdiction.
(b) Convicted of any felony, or any gross misdemeanor involving dishonesty or financial misconduct in any jurisdiction.
(c) Convicted of any felony involving fraud, dishonesty, breach of trust, or money laundering in any jurisdiction.
(d) Convicted outside of Washington for any crime that if charged in Washington would constitute a felony, or gross misdemeanor for dishonesty or financial misconduct.
(((26))) (21) Who in the mortgage broker company must
notify the department if they are the subject of an
administrative enforcement action? Licensees, whether holding
active or inactive licenses, must notify the department in
writing within ten business days of the occurrence if:
(a) Charged with any violations by an administrative authority in any jurisdiction; or
(b) The subject of any administrative action, including a license revocation action, in any jurisdiction.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-400, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-400, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-400, filed 11/21/06, effective 1/1/07.]
(2) Are lock-in agreement fees paid by a borrower to the mortgage broker considered trust funds? Yes, these fees are considered trust funds and must be deposited in the mortgage broker's trust account, unless the check is made payable to the lender. If the check is made payable to the lender, the mortgage broker has a duty to exercise ordinary care to see that the check is not used for any unauthorized purpose. The mortgage broker must deliver the check to the lender pursuant to any agreement with the lender, or within three business days of receiving the funds.
(3) Must I have a trust account if I receive funds from borrowers for the payment of third-party providers? Yes. All funds received from borrowers, or on behalf of borrowers, for payments to third-party providers are trust funds and are considered held in trust immediately upon receipt. You must deposit those funds in a trust account in your name as it appears on your license, or if exempt in the name of the exempt broker, in a federally insured financial institution's branch located in this state within three business days of receiving the funds. The funds must remain on deposit until disbursed to the third-party provider except as permitted by the act and these rules. The mortgage broker is responsible for depositing, holding, disbursing, accounting for and otherwise safeguarding the funds in accordance with the act and these rules.
(4) Must I have a trust account if I do not receive any trust funds? No. If you do not accept trust funds at any point before, during, or after a loan transaction, a trust account is not required.
(5) Must I have a trust account if I am a mortgage broker
exempt from licensing under the act? Mortgage brokers exempt
under RCW 19.146.020 (1)(a), (b), (c), (d), (((f), (h))) and
(g) are not required to have a trust account even if they
receive trust funds. ((Mortgage brokers exempt under RCW 19.146.020 (1)(e) and (g), and 19.146.020(4) are required to
comply with RCW 19.146.050 and these rules.))
(6) What does it mean to receive trust funds "on behalf of borrowers"? Trust funds are identified by purpose rather than source. Funds received by the mortgage broker from the borrower for the payment of third-party provider services are trust funds. Funds received from relatives of borrowers, the seller in a real estate transaction, or an escrow company or lender reimbursing a mortgage broker for payments advanced are trust funds. Funds deposited to a borrower's subaccount by the mortgage broker as an advance are funds received on behalf of the borrower and are trust funds.
(7) What forms of payment must trust funds take? Trust funds may be in any form that allows deposit into the trust account, including, but not limited to, cash, check, or any electronic transmission of funds, including, but not limited to bank wires, ACH authorization, credit card or debit transactions, or on-line payments through a web site.
(8) How do I receive trust funds through electronic transmission?
(a) The trust funds must be transmitted directly from the borrower, or other person on behalf of the borrower, into your trust account, in a federally insured financial institution located in the state of Washington.
(b) Each electronic transmission must be evidenced by a record including a traceable identifying name or number supplied by the federally insured financial institution or transferring entity. Electronic transmissions must be included in the monthly trust account reconciliation.
(9) When must I deposit trust funds? You must deposit all funds you receive, that are required to be held in trust, before the end of the third business day following your receipt of the funds.
(10) How must I document deposits?
(a) You must document all deposits to the trust account(s) by having a bank deposit slip which has been validated by bank imprint, or an attached deposit receipt which bears the signature of an authorized representative of the mortgage broker indicating that the funds were actually deposited into the proper account(s).
(b) You must post the deposit of funds by wire transfer or any means other than cash, check, or money order in the same manner as other receipts. Any such transfer of funds must include a traceable identifying name or number supplied by the federally insured financial institution or transferring entity. You must also retain a receipt for the deposit of the funds which must contain the traceable identifying name or number supplied by the federally insured financial institution or transferring entity.
(11) May I deposit funds other than trust funds into my trust account? You may advance your own funds into the trust account(s) to prevent a disbursement in excess of an individual borrower's subaccount, provided that the exact sum of deficiency is deposited and detailed records of the deposit and its purpose are maintained in the trust ledger and the trust account(s) check register. Any deposits of your own funds into the trust account(s) must be held in trust in the same manner as funds paid by borrowers for the payment of third-party providers and treated accordingly in compliance with the act and these rules.
(12) May a loan originator accept trust funds? A loan originator may not solicit or receive fees for a third-party provider of goods or services except that a loan originator may transfer funds from a borrower to a licensed mortgage broker, exempt mortgage broker, or third-party provider, if the loan originator does not deposit, hold, retain, or use the funds for any purpose other than the payment of bona fide fees to third-party providers. The funds must be in the form of a check made payable to a licensed mortgage broker, exempt mortgage broker, or third-party provider. The loan originator must transfer the borrower's funds to the licensed mortgage broker, exempt mortgage broker, or third-party provider within one business day of receiving the check from the borrower.
(13) May a mortgage broker accept and hold a check from a borrower that is made payable to a third-party provider and intended to be used to pay for third-party provider services without depositing the check into a trust account? Yes. The check must be payable to a specific third-party provider. The payee line may not be left blank. The mortgage broker has a duty to exercise ordinary care to see that the check is not used for any unauthorized purpose. The mortgage broker must deliver the check to the third-party provider within the time frames and requirements established in RCW 19.146.0201(12).
(14) May a loan originator accept and hold a check from a borrower that is made payable to a third party and intended to be used to pay for third-party provider services? A loan originator may only hold a borrower's check for the purpose of transferring the funds from the borrower to the licensed mortgage broker, exempt mortgage broker, or third-party provider. The loan originator must transfer the borrower's funds to the licensed mortgage broker, exempt mortgage broker, or third-party provider within one business day of receiving the check from the borrower.
(15) Is a lender or mortgage broker, or agent or employee of a lender or mortgage broker, considered a third party? A lender is considered a third party only when the lender provides lock-in arrangements to the mortgage broker in connection with the preparation of a borrower's loan.
(16) If a mortgage broker receives funds from a third party, such as a closer, or a lender, as reimbursement for advancements for the payment of third-party provider services, are these funds considered trust funds? Yes, all funds received by the mortgage broker on behalf of the borrower for the payment of third-party providers are considered trust funds.
(17) What books and records must I keep regarding my trust account? You must maintain as part of your books and records:
(a) A trust account deposit register and copies of all validated deposit slips or signed deposit receipts for each deposit to the trust account;
(b) A record of all invoices for payments made on behalf of a borrower including but not limited to payments for appraisals, credit reports, title cancellations, and verification of deposit;
(c) A ledger for each trust account. Each ledger must contain a separate subaccount ledger sheet for each borrower from whom funds are received for payment of third-party providers. Each receipt and disbursement pertaining to such funds must be posted to the ledger sheet at the time the receipt or disbursement occurs. Entries to each ledger sheet must show the date of deposit, identifying check or instrument number, amount and name of remitter. Offsetting entries to each ledger sheet must show the date of check or electronic transmission, check number or identifying electronic transmission number, amount of check or electronic transmission, name of payee and invoice number if any. Canceled or closed ledger sheets must be identified by time period and borrower name or loan number;
(d) A trust account check register consisting of a record of all deposits to and disbursements from the trust account whether by check or electronic transmission;
(e) Reconciled trust account bank statements;
(f) A monthly trial balance of the ledger of trust accounts, and a reconciliation of the ledger of trust accounts with the related bank statement(s) and the related check register(s). The reconciled balance of the trust account(s) must at all times equal the sum of:
(i) The outstanding amount of funds received from or on behalf of borrowers for payment of third-party providers; and
(ii) The outstanding amount of any deposits into the trust fund of the mortgage broker's own funds in accordance with subsection (11) of this section; and
(g) A printed and dated source document file to support any changes to existing accounting records.
Any alternative records you propose for use must be approved in advance by the director.
(18) What is a "subaccount"? A "subaccount" is a recordkeeping segregation of each borrower's funds held in the mortgage broker's single deposit trust account that holds the aggregated funds for the mortgage broker's clients. Alternatively, the mortgage broker may establish a separate bank account for each borrower. When added together, individual subaccounts must exactly equal the total of funds held in trust.
(19) May I transfer funds between a borrower's subaccounts? If a borrower has more than one loan application pending with a mortgage broker, the mortgage broker must maintain a separate subaccount ledger for each loan application. The borrower must consent to any transfer of trust account funds between the individual subaccounts associated with these pending loan applications. The consent must be maintained in the borrower's loan file and referenced in the borrower's subaccount ledger sheets.
(20) May I be reimbursed for funds that I have advanced into the trust account?
(a) If you deposit your own funds into the trust account as provided in subsection (11) of this section, you may receive reimbursement for such deposit at closing into your general business bank account provided:
(i) All third-party provider's charges associated with your deposit have been paid;
(ii) The HUD-1 Settlement Statement provided to the borrower clearly reflects the line item, "deposit paid by broker," and the amount deposited;
(iii) The HUD-1 Settlement Statement provided to the borrower clearly reflects the line item, "reimbursement to broker for funds advances," and the amount reimbursed; and
(iv) Any funds disbursed by escrow at closing to you for payment of unpaid third-party providers' expenses charged or to be charged to you are deposited into the borrower's subaccount of the trust account.
(b) If you advance your own funds into the trust account as provided in subsection (11) of this section, and the loan does not close, the funds remain the property of the borrower.
(21) May I disburse trust funds through electronic transmission? Yes. You may disburse trust funds from the trust account by electronic transmission. Each electronic transmission must be evidenced by a record including a traceable identifying name or number supplied by the federally insured financial institution or transferring entity.
Electronic transmission(s) must be included in the monthly trust account reconciliation.
(22) How must I handle trust account disbursements?
(a) Disbursements from trust accounts may be by electronic transmission or manual check. If a manual check is used, the check must on its face identify the specific third-party provider transaction or borrower refund, except as specified in this section. If an electronic transmission is used, each transmission must be evidenced by a record including a traceable identifying name or number supplied by the federally insured financial institution or transferring entity.
(b) Disbursements may be made from the trust account(s) for the payment of bona fide third-party providers' services rendered in the course of the borrower's loan origination, if the borrower has consented in writing to the payment. Such consent may be given at any time during the application process and in any written form, provided that it contains sufficient detail to verify the borrower's consent to the use of trust funds. No disbursement on behalf of the borrower may be made from the trust account until the borrower's or broker's deposit of sufficient funds into the trust account(s) is available for withdrawal.
(23) What are the requirements concerning the checks I write from my trust account? You must use checks that are prenumbered by the supplier (printer) unless you use an automated check writing system which numbers all checks in sequence. All trust account checks must have the words "trust account" on the front. If you use an automated program that writes checks, the check number must appear in the magnetic coding which also identifies the account number for readability by federally insured financial institution computers and the program may assign suffixes or subaccount codes before or after the check number for identification.
(24) What disbursements are prohibited? Among other prohibited disbursements, no disbursement may be made from a borrower's subaccount:
(a) In excess of the amount held in the borrower's subaccount (commonly referred to as a disbursement in excess);
(b) In payment of a fee owed to any employee of the mortgage broker or in payment of any business expense of the mortgage broker;
(c) For payment of any service charges related to the management or administration of the trust account(s);
(d) For payment of any fees owed to the mortgage broker by the borrower, or to transfer funds from the subaccount to any other account; and
(e) For the payment of fees owed to the broker under RCW 19.146.070 (2)(a).
(25) When may a mortgage broker transfer excess funds from a borrower subaccount?
(a) A mortgage broker may, in the case of a closed and funded transaction, transfer excess funds remaining in the individual borrower's subaccount into the mortgage broker's general business bank account in full or partial payment of fees owed to the mortgage broker upon determination that all third-party providers' expenses have been accurately reported in the loan closing documents and have been paid in full, and that the borrower has received credit in the loan closing documents for all funds deposited in the trust account.
(b) Each mortgage broker must maintain a detailed audit trail for any disbursements from the borrower's subaccount(s) into the mortgage broker's general business bank account, including documentation in the form of a final HUD-1 Settlement Statement form showing that credit has been received by the borrower in the closing and funding of the transaction. The disbursements must be made by a check drawn or electronic transmission on the trust account and deposited directly into the mortgage broker's general business bank account.
(26) What if there are funds remaining in a borrower's subaccount after all third-party providers have been satisfied? Any remaining funds in a borrower's subaccount must be returned to the borrower within five business days of the determination that all payments to third-party providers owed by the borrower have been satisfied.
(27) What if the mortgage broker cannot locate a borrower in order to remit excess funds in the borrower's subaccount? The mortgage broker must follow the procedures provided by the department of revenue's unclaimed property division to handle any trust funds held for a borrower who cannot be located.
(28) Is a mortgage broker responsible for all disbursements out of the trust account? Yes. A mortgage broker is responsible for all disbursements from the trust account whether disbursed by personal signature, signature plate, signature of another person authorized to act on its behalf, or any authorized electronic transfer.
(29) If a mortgage broker receives a check from closing that includes both the mortgage broker's fee and a payment or payments for third-party providers, how does the mortgage broker lawfully handle the funds? The mortgage broker may either:
(a) Split the check at the teller window at the time of deposit and route any moneys due to third-party providers to an approved trust account, and moneys due it to its general account; or
(b) Deposit the entire check into the trust account. After paying any and all moneys due to third-party providers and insuring that the borrower has received credit for all funds deposited in the trust account, the mortgage broker may transfer excess funds remaining in the individual borrower's subaccount into the mortgage broker's general business bank account. This amount must be equal to the fee disclosed on the final HUD-1 Settlement Statement, less any amounts already received by the mortgage broker, and must be duly recorded in the trust subaccount ledger. The mortgage broker may not transfer moneys from the trust account to its general business bank account before the loan is closed.
(30) Is the mortgage broker allowed to transfer funds out of the trust account for any reason other than for payment to a third-party provider? The mortgage broker may transfer the borrower's funds out of the trust account by check back to the borrower or to any party so instructed in writing by the borrower. A mortgage broker, when complying with these rules, may transfer excess trust funds to itself; however, failure to comply with these rules is a serious violation punishable by imprisonment, other penalties, or both as authorized by the act.
(31) How do I pay a third-party provider's fees if escrow disburses the funds to me and I don't have a trust account? You must return the funds to escrow for proper disbursement, or maintain a trust account for such incidental occurrences.
(32) If I choose not to have a trust account, and a closing agent did not follow written instructions and issued a check to me after closing that has fees in it for third-party providers, may I deposit the check into my business account and pay those third-party providers immediately? No. You must not deposit those fees into your business account under any circumstances.
(33) After closing, if an escrow agent, title company, or lender wires funds into my general account that are intended for third-party providers, will the department take action against me for a violation of the trust fund requirements? Provided that the number of times funds are mistakenly wired to your general account is immaterial compared to the total number of loans you closed and you can provide proof that you took the following steps, the department will not take action against you for a violation of the trust account requirements under RCW 19.146.050:
(a) You gave the escrow agent, title company, or lender clear written instruction not to send funds intended for third-party providers to you; and you forwarded all funds mistakenly wired to your general account to the proper party on or before the end of the third business day after receipt; or
(b) You provided accurate wire instruction for the trust account and the funds transmitter caused the error by accidentally placing the funds into your general account, and within one day you transfer all trust funds to your trust account.
(34) How does a mortgage broker disburse funds from a subaccount when there is more than one borrower due to receive those funds? When disbursing funds back to the borrowers, a mortgage broker must make the trust account disbursement check payable to all borrowers with the term "and" written between each borrower's name. When disbursing funds to another party instructed by the borrowers, all borrowers must sign the written notice of instruction.
(35) May mortgage brokers using an interest-bearing trust account keep the interest? No. Mortgage brokers using an interest bearing account must refund or credit to the borrower the interest earned on the borrower's subaccount. The refund or credit to the borrower may be made either at closing or upon withdrawal or denial of the borrower's loan application.
(36) Are there any separate requirements for a computerized accounting system? Yes. The requirements are as follows:
(a) Your computer system must provide the capability to back up data files;
(b)(i) You must print the following documents at least once per month and retain them as part of your books and records:
(A) Trust account deposit register;
(B) Trust account check register;
(C) Trial balance ledger;
(ii) You must print each subaccount at closure and retain the closure document as part of your books and records;
(c) You must ensure that all written checks are included within your computer accounting system; and
(d) You must print your computer-generated reconciliations of the trust account at least once each month and retain the printouts as a part of your books and records.
(37) Are there penalties for violating trust account requirements under RCW 19.146.050? A violation of this section is a class C felony and may be punishable by imprisonment. In addition, a mortgage broker or other person violating this section may be subject to penalties as enumerated under RCW 19.146.220.
[Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-410, filed 11/21/06, effective 1/1/07.]
(2) May I be a licensed mortgage broker in Washington and have branch offices both in Washington and outside of Washington? Yes. However, each of your branch offices that offer Washington residential mortgage loans must hold a Washington license, even if the location is outside Washington.
(3) May my mortgage broker business be conducted entirely on the internet? Yes. But you must have a license for all locations including those that offer loans by mail or internet.
(4) May I work as a loan originator in Washington if I do not have a physical location in Washington? Yes. You may originate Washington loans from any location licensed under the act, inside or outside of Washington.
(5) May I work as a licensed loan originator for a licensed mortgage broker that is out of the state? Yes, as long as the location from which you work is licensed under the act.
(6) If my mortgage broker business is not located in Washington, where must I keep my records? If your business is located outside of Washington, you may either maintain the books and records at a location in Washington, or pay the department's travel expenses to the out-of-state location to examine the books and records. Travel expenses may include, but are not limited to, transportation, meals, and lodging.
(7) What additional requirements must I comply with if my business does not have a physical location in Washington? You must continuously maintain a registered agent in Washington and provide the department, through the NMLSR, with the registered agent's name, physical and mailing address, and written consent to be the registered agent.
(8) How do I change the information about my registered
agent? You must update the information in the NMLSR within
((five)) ten business days from the change.
(9) If I am a registered agent under the act, what must I do to resign as registered agent?
(a) Provide the department with a statement of resignation at least thirty-one days prior to the intended effective date of your resignation.
(b) Provide a copy of the statement of resignation to the licensed mortgage broker.
(c) The department will terminate your appointment on the thirty-first day after the date on which the statement of resignation was delivered.
(((10) Where must the director initiate lawsuits arising
under the act against out-of-state licensees? Lawsuits
initiated by the director under the act must be initiated in
the superior court of Thurston County, Washington.))
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-420, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-420, filed 11/21/06, effective 1/1/07.]
(2) What is the disclosure required under RCW 19.146.030(1)? A full written disclosure 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, and specifying the fee or fees which inure to the benefit of the mortgage broker. A good faith estimate of a fee or cost must be provided if the exact amount of the fee or cost is not determinable. This subsection does not require disclosure of the distribution or breakdown of loan fees, discount, or points between the mortgage broker and any lender or investor.
The specific content of the disclosure required under RCW 19.146.030(1) is identified in RCW 19.146.030(2).
(3) What is the disclosure required under RCW 19.146.030(2)? Mortgage brokers must disclose the following content:
(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 and Regulation Z, as now or hereafter amended, is considered compliance with the disclosure content requirements of this subsection; however, RCW 19.146.030(1) governs the delivery requirement of these disclosures;
(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 RESPA and Regulation X, as now or hereafter amended, is considered compliance with the disclosure content requirements of this subsection; however, RCW 19.146.030(1) governs the delivery requirement of these disclosures;
(c) If applicable, the cost, terms, duration, and conditions of a lock-in agreement and whether a lock-in agreement has been entered, and whether the lock-in agreement is guaranteed by the mortgage broker or lender, and if a lock-in agreement has not been entered, disclosure in a form acceptable to the director that the disclosed interest rate and terms are subject to change;
(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;
(e) Whether and under what conditions any lock-in fees are refundable to the borrower; and
(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.
(4) What is the disclosure required under RCW 19.144.020? See WAC 208-600-200.
(5) How do I disclose my yield spread premium (YSP) from the lender?
(a) You ((should)) must disclose the YSP ((in the 800
series of lines)) as a dollar amount credited to the borrower
on the GFE. ((The YSP must be listed using the words "yield
spread premium" and expressed as a dollar amount or dollar
amount range.))
(b) You must direct the settlement service provider to
disclose the YSP ((in the 800 series of)) on line((s)) 802 on
the HUD-1 or equivalent settlement statement. The YSP must be
((listed using the words "yield spread premium" and))
expressed as a dollar amount.
(c) Failure to properly disclose the yield spread premium (YSP) is a violation of RCW 19.146.0201 (6) and (11), and RESPA.
(6) Are there additional disclosure requirements related to interest rate lock-ins? Yes. Pursuant to RCW 19.146.030(3), if subsequent to the written disclosure being provided under this section, a mortgage broker or loan originator enters into a lock-in agreement with a borrower or represents to the borrower that the borrower has entered into a lock-in agreement, then within three business days the mortgage broker or loan originator must deliver or send by first-class mail to the borrower a written confirmation of the terms of the lock-in agreement, which must include a copy of the disclosure made under subsection (3)(c) of this section.
(7) What must I disclose to the borrower if they do not choose to enter into a lock-in agreement? If a lock-in agreement has not been entered into, you must disclose to the borrower that the disclosed interest rate and terms are subject to change.
(8) Will a lock-in agreement always guarantee the interest rate and terms? No. A lock-in agreement may or may not be guaranteed by the mortgage broker or lender. The lock-in agreement must clearly state whether the lock-in agreement is guaranteed by the mortgage broker or lender.
(9) Must a mortgage broker enter into a lock-in agreement with a borrower? No. The statute does not require a mortgage broker to enter into a lock-in agreement with a borrower.
(10) Are there any model forms that suffice for the disclosure content under RCW 19.146.030(2)? Yes. The following model forms are acceptable forms of disclosure:
(a) For RCW 19.146.030 (2)(a), mortgage brokers are encouraged to use the federal truth-in-lending disclosure form for mortgage loan transactions provided under the Truth-in-Lending Act and Regulation Z, as now or hereafter amended. However, the federal truth-in-lending disclosure only suffices for the content of disclosures under RCW 19.146.030 (2)(a). The delivery of disclosures is governed by RCW 19.146.030(1).
(b) For RCW 19.146.030 (2)(b), mortgage brokers are encouraged to use the federal good faith estimate disclosure form provided under the Real Estate Settlement Procedures Act and Regulation X, as now or hereafter amended. However, the federal good faith estimate disclosure only suffices for the content of disclosures under RCW 19.146.030 (2)(b). The delivery of disclosures is governed by RCW 19.146.030(1).
(c) For RCW 19.146.030 (2)(c), (d), (e), (f) and (3), the department encourages mortgage brokers to use the department published model disclosure forms that can be found on the department's web site.
(11) May my mortgage broker fees increase following the disclosures required under RCW 19.146.030(1)? Pursuant to RCW 19.146.030(4), a mortgage broker must not charge any fee that inures to the benefit of the mortgage broker if it exceeds the fee disclosed on the initial written good faith estimate disclosure required in RCW 19.146.030 (1) and (2)(b), unless:
(a) The need to charge the fee was not reasonably foreseeable at the time the written disclosure was provided; and
(b) The mortgage broker has provided to the borrower, no less than three business days prior to the signing of the loan closing documents, a clear written explanation of the fee and the reason for charging a fee exceeding that which was previously disclosed.
(12) Are there any situations in which fees that benefit the mortgage broker can increase without additional disclosure? Yes, there are two possible situations where an increase in the fees benefiting the mortgage broker may increase without the requirement to provide additional disclosures. These situations are:
(a) The additional disclosure is not required if the borrower's closing costs, excluding prepaid escrowed costs of ownership, on the final settlement statement do not exceed the total closing costs, excluding prepaid escrowed costs of ownership, in the most recent good faith estimate provided to the borrower. For purposes of this section "prepaid escrowed costs of ownership" mean any amounts prepaid by the borrower for the payment of taxes, property insurance, interim interest, and similar items in regard to the property used as security for the loan; or
(b) The fee or set of fees that benefit the mortgage broker are disclosed as a percentage of the loan amount and the increase in fees results from an increase in the loan amount, provided that:
(i) The increase in loan amount is requested by the borrower; and
(ii) The fee or set of fees that are calculated as a percentage of the loan amount have been disclosed on the initial written disclosure as both a percentage of the loan amount and as a dollar amount based upon the assumed loan amount used in the initial written disclosure; and
(iii) The total aggregate increase in the fee or set of fees that benefit the mortgage broker as a result of the increase in loan amount is less than seven hundred fifty dollars.
This section does not apply to the disclosure required in RCW 19.144.020.
(13) What action may the department take if I improperly
disclose my mortgage broker fees on the good faith estimate
and HUD-1/1A statement ((on lines other than 808 through
811))? If you fail to disclose your mortgage broker fees as
required, the department may request, direct, or order you to
refund those fees to the borrower((. For example, if you
disclose your mortgage broker fees as loan origination fees or
discount points, the department may find that this is a
deceptive practice and take action against you as indicated))
if the result of that disclosure resulted in confusion or
deception to the borrower.
(14) May the department take action against a mortgage broker when mortgage broker fees are disclosed incorrectly on the HUD-1/1A and the incorrect disclosure was made by an independent escrow agent, title company, or lender? If the mortgage broker can show the department that they disclosed their fees correctly on the good faith estimate, and have instructed the independent escrow agent, title company, or lender to disclose the fees correctly on the HUD-1/1A, and the independent escrow agent, title company, or lender has not followed the instructions, the department may not take action against the mortgage broker.
(15) What action may the department take if I fail to provide additional disclosures as required under RCW 19.146.030(4)? Generally, the department may request, direct, or order you to refund fees.
(16) How will the department determine whether to request, direct or order me to refund fees to the borrowers? Generally, the department will make its determination by answering the following questions:
(a) Has an initial good faith estimate disclosure of costs been provided to the borrower in accordance with RCW 19.146.030 (1) and (2)(b)?
(b) Were any subsequent good faith estimate disclosures of costs provided to the borrower no less than three business days prior to the signing of the loan closing documents? Additionally, was the subsequent disclosure accompanied by a clear written explanation of the change?
(c) How were the costs disclosed in each good faith estimate (e.g., dollar amount, percentage, or both)?
(d) Did the total costs, excluding prepaid escrowed costs of ownership, on the final settlement statement exceed the total closing costs, excluding prepaid escrowed costs of ownership, in the most recent good faith estimate provided to the borrower no less than three business days prior to the signing of the loan closing documents?
(e) If the costs at closing did exceed the most recent disclosure of costs was the need to charge the fee reasonably foreseeable at the time the written disclosure was provided?
(f) If the costs at closing did exceed the most recent disclosure of costs did the mortgage broker provide a clear written explanation of the fee and the reason for charging a fee exceeding that which was previously disclosed, no less than three business days prior to the signing of the loan closing documents?
(17) If I failed to provide the initial good faith estimate or TILA disclosure under RCW 19.146.030 (1) and (2)(a) and (b) what action may the department take? If you have not provided the initial good faith estimate or TILA disclosure as required, including both delivery and content requirements, the department may request, direct or order you to refund to the borrower fees that inured to your benefit.
(18) If I received trust funds from a borrower, but failed to provide the disclosures as required in RCW 19.146.030 (1) and (2), what action may the department take? If you did not provide the disclosures as required, including both delivery and content requirements, the department may request, direct, or order you to refund to the borrower any trust funds they have paid regardless of whether you have already expended those trust funds on third-party providers.
(19) Under what circumstances must I redisclose the initial disclosures required under the act? Generally, any loan terms or conditions that change must be redisclosed to the borrower no less than three business days prior to the signing of the loan closing documents. Some examples are:
(a) Adjustable rate loan terms, including index, margin, and any changes to the fixed period.
(b) The initial fixed period.
(c) Any balloon payment requirements.
(d) Interest only options and any changes to the options.
(e) Lien position of the loan.
(f) Terms and the number of months or years for amortization purposes.
(g) Prepayment penalty terms and conditions.
(h) Any other term or condition that may be specific to a certain loan product.
(20) ((Must I provide the written disclosures required
under RCW 19.146.030 if all I do is obtain a credit report on
a consumer who has identified a specific property for a
purchase and sales agreement or contract, or a refinance loan?
Yes. At that point, you have collected enough information on
behalf of the consumer for you to anticipate a credit decision
under RESPA's Regulation X, 24 CFR Sections 3500 et seq. and
you must provide the consumer with all required disclosures. See the definition of "application" in these rules.
(21))) If a loan application is canceled or denied within three days of application must I provide the disclosures required under RCW 19.146.030? If you have not used any borrower trust funds and those funds have been returned to the borrower in conformance with these rules, the disclosures pursuant to RCW 19.146.030 are not required.
(((22))) (21) Is a mortgage broker that table funds a
loan exempt from disclosures? No. A mortgage broker must
provide all disclosures required by the act, and disclose all
fees as required by Regulation X, regardless of the funding
mechanism used in the transaction.
(((23) What must I disclose to a potential borrower when
I advertise my business or services to them using information
about their current loan? You must disclose the source from
which you obtained the information about the borrower's
current loan when the information was not obtained by
soliciting, making a residential loan, or assisting that
potential borrower in obtaining or applying to obtain a
residential mortgage loan. If the information was provided by
a company that searched public records and provided you the
information, the "source" is the company that provided the
records, not "public records."
(24))) (22) What must I provide to the borrower if I am unable to complete a loan for them and they have paid for services from third-party providers? If you are unable to complete a loan for the borrower for any reason, and if the borrower has paid you for third-party provider services, and the borrower makes a written request to you, you must provide the borrower with copies of the product from any third-party provider, including, but not limited to, an appraisal, title report, or credit report. You must provide the copies within five business days of the borrower's request.
The borrower may also request that you provide the originals of the documents to another mortgage broker or lender of the borrower's choice. By furnishing the originals to another mortgage broker or lender, you are conveying the right to use the documents to the other broker or lender. You must, upon request by the other broker or lender, provide written evidence of the conveyance. You must provide the originals to the mortgage broker or lender within five business days of the borrower's request.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-430, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-430, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-430, filed 11/21/06, effective 1/1/07.]
(a) Mortgage transaction documents.
(i) All forms of loan applications, written or electronic (the Fannie Mae 1003 is an example);
(ii) The initial rate sheet or other supporting rate information;
(iii) The last rate sheet, or other supporting rate information, if there was a change in rates, terms, or conditions prior to settlement;
(iv) All written disclosures required by the act and federal laws and regulations. Some examples of federal law disclosures are: The good faith estimate, truth in lending disclosures, Equal Credit Opportunity Act disclosures, affiliated business arrangement disclosures, and RESPA servicing disclosure statement;
(v) Documents and records of compensation paid to employees and independent contractors;
(vi) An accounting of all funds received in connection with loans, including a trust account statement with supporting data;
(vii) Rate lock agreements and the supporting rate sheets or other rate supporting document;
(viii) Settlement statements (the final HUD-1 or HUD-1A);
(ix) Broker loan document requests (may also be known as loan document request or demand statements) that include any prepayment penalties, terms, fees, rates, yield spread premium, loan type and terms;
(x) Records of any fees refunded to applicants for loans that did not close;
(xi) All file correspondence and logs; and
(xii) All mortgage broker contracts with lenders and all other correspondence with the lenders.
(b) Advertisements. All advertisements placed by or at the request of the mortgage broker that mention rates or fees, and the corresponding rate sheets for the advertised rates. The copies must include newspaper and print advertising, scripts of radio and television advertising, telemarketing scripts, all direct mail advertising, and any advertising distributed directly by delivery, facsimile, or computer network. The record of each advertisement must include the date or dates of publication, the name of the publisher if advertised by newsprint, radio, television or telephone information line, or in the case of a flyer, the dates, methods and areas of distribution.
(c) Trust accounting records. See WAC 208-660-410, Trust accounting.
(d) Other. All other books, accounts, records, papers, documents, files, and other information relating to the mortgage broker operation. Examples include, but are not limited to, personnel files, company policy and procedure documents, training materials, records evidencing compliance with applicable federal laws and regulations, and complaint correspondence and supporting documents. See also the department's Mortgage Broker Examination Manual, available on the department web site.
(2) What books and records must I keep for my trust account? See WAC 208-660-410, Trust accounting.
(3) How long must I keep my books and records to comply with the act?
(a) You must keep the books, accounts, records, papers, documents, files, and other information relating to the mortgage broker operation for a minimum of twenty-five months.
(b) You must keep the mortgage transaction documents
described in subsection (1)(a) of this section for a minimum
of three years. It may be a prudent business practice to keep
your books and records longer ((than twenty-five months)). For example, if a consumer's loan becomes an adjustable rate
mortgage ((after a two-year fixed mortgage rate term)), the
consumer may become unhappy that the terms of their mortgage
have changed and file a complaint against you. The department
must begin an investigation into the complaint. If you do not
have the records to show proof of proper disclosures and all
other compliance with state and federal laws, the department
may rely solely on the consumer's records as evidence in the
case.
(4) Where must I keep my business records?
(a) You must keep all books and records in a location that is on file with and readily available to the department during normal business hours. In the event of a department examination, the location must have the work space and resources that are conducive to business operations. A readily available location may include places of business, personal residences, computers, safes, or vaults. See WAC 208-660-400(8) for the reporting requirements if the address changes.
(b) If your usual business location is outside of Washington, you may either maintain the books and records at a readily available location in Washington, or pay the department's expenses to travel to the location to examine the books and records stored out-of-state. Travel costs may include, but are not limited to, transportation costs, meals, and lodging.
(5) May I keep my books and records electronically? Yes. You may keep the required records described in subsection (1) of this section by electronic display equipment if you can meet all of the following requirements:
(a) The equipment must be made available to the department for the purposes of an examination or investigation;
(b) The records must be stored exclusively in a
((nonrewriteable)) nonrewritable and nonerasable format;
(c) The hardware or software needed to display the records must be maintained during the required retention period under subsection (3) of this section.
If the department requests the books and records in hard copy, you must provide it in that form and within the time frame requested or directed by the department.
[Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-450, filed 11/21/06, effective 1/1/07.]
(2) How may I discuss property values with an appraiser, prior to the appraisal, without the discussion constituting improperly influencing the appraiser? You may inform the appraiser of your opinion of value, the borrower's opinion of value, or the list or sales price of the property. You are prohibited from telling the appraiser the value you need or that is required for your loan to be successful.
(3) What business practices are prohibited? The following business practices are prohibited:
(a) Directly or indirectly employing any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person.
(b) Engaging in any unfair or deceptive practice toward any person.
(c) Obtaining property by fraud or misrepresentation.
(d) Soliciting or entering 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.
(e) Charging discount points on a loan which does not result in a reduction of the interest rate. Some examples of discount point misrepresentations are:
(i) A mortgage broker or lender charging discount points on the good faith estimate or settlement statement payable to the mortgage broker or any party that is not the actual lender on the resident mortgage loan.
(ii) Charging loan fees or mortgage broker fees that are represented to the borrower as discount points when such fees do not actually reduce the rate on the loan, or reflecting loan origination fees or mortgage broker fees as discount points.
(iii) Charging discount points that are not mathematically determinable as the same direct reduction of the rate available to any two borrowers with the same program and underwriting characteristics on the same date of disclosure.
(f) Failing to clearly and conspicuously disclose whether a payment advertised or offered for a residential mortgage loan includes amounts for taxes, insurance, or other products sold to the borrower. This prohibition includes the practice of misrepresenting, either orally, in writing, or in any advertising materials, a loan payment that includes only principal and interest as a loan payment that includes principal, interest, tax, and insurance.
(g) Failing to provide the exact pay-off amount of a loan you own or service as of a certain date five or fewer business days after being requested in writing to do so by a borrower of record or their authorized representative.
(h) Failing to record a borrower's payment, on a loan you own or service, as received on the day it is delivered to any of the licensee's locations during its regular working hours.
(i) Negligently making any false statement or willfully making any omission of material fact in connection with any application or any information filed by a licensee in connection with any application, examination or investigation conducted by the department.
(j) Purchasing insurance on an asset secured by a loan without first attempting to contact the borrower by mailing one or more notices to the last known address of the borrower in order to verify that the asset is not otherwise insured.
(k) Willfully filing a lien on property without a legal basis to do so.
(l) Coercing, intimidating, or threatening borrowers in any way with the intent of forcing them to complete a loan transaction.
(m) Failing to reconvey title to collateral, if any, within thirty days when the loan is paid in full unless conditions exist that make compliance unreasonable.
(n) Failing to make disclosures to loan applicants and noninstitutional investors as required by RCW 19.146.030 and any other applicable state or federal law.
(o) Making, 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. An example is advertising a discounted rate without clearly and conspicuously disclosing in the advertisement the cost of the discount to the borrower and that the rate is discounted.
(p) Engage in bait and switch advertising.
Bait and switch means a deceptive practice of soliciting or promising a loan at favorable terms, but later "switching" or providing a loan at less favorable terms. While bait and switch will be determined by the facts of a case, the following examples, alone or in combination, may exhibit a bait and switch practice:
(i) A deceptive change of loan program from fixed to variable rate.
(ii) A deceptive increase in interest rate.
(iii) The misrepresentation of discount points. This may include discount points that have a different rate buydown effect than promised, or origination fees that a borrower has been led to believe are discount points affecting the rate.
(iv) A deceptive increase in fees or other costs.
(v) A deceptive disclosure of monthly payment amount. This practice may involve soliciting a loan with payments that do not include monthly amounts for taxes and insurance or other reserved items, while leading the borrower to believe that such amounts are included.
(vi) Additional undisclosed terms such as prepayment penalties or balloon payments, or deceiving borrowers about the effect of disclosed terms.
(vii) Additional layers of financing not previously disclosed that serve to increase the overall cost to the borrower. This practice may involve the surprise combination of first and second mortgages to achieve the originally promised loan amount.
(viii) Leading borrowers to believe that subsequent events will be possible or practical when in fact it is known that the events will not be possible or practical.
(ix) Advertising or offering rates, programs, or terms
that are not actually available at the time. See WAC 208-660-440(((4))) (5).
(q) Engage in unfair or deceptive advertising practices. Unfair advertising may include advertising that offends public policy, or causes substantial injury to consumers or to competition in the marketplace.
(r) Negligently making any false statement or knowingly and willfully make any omission of material fact in connection with any reports filed by a mortgage broker or in connection with any investigation conducted by the department.
(s) Making any payment, directly or indirectly, to any appraiser of a property, for the purposes of influencing the independent judgment of the appraiser with respect to the value of the property.
(t) Advertising a rate of interest without clearly and conspicuously disclosing the annual percentage rate implied by the rate of interest.
(u) Failing to comply with the federal statutes and regulations in RCW 19.146.0201(11).
(v) Failing to pay third-party providers within the applicable timelines.
(w) Collecting or charging, or attempting to collect or charge, or use or propose any agreement purporting to collect or charge any fees prohibited by the act.
(x) Acting as a loan originator and real estate broker or salesperson, or acting as a loan originator in a manner that violates RCW 19.146.0201(14).
(y) Failing to comply with any provision of RCW 19.146.030 through 19.146.080 or any rule adopted under those sections.
(z) Intentionally delay closing of a residential mortgage loan for the sole purpose of increasing interest, costs, fees, or charges payable by the borrower.
(aa) Steering a borrower to less favorable terms in order to increase the compensation paid to the company or mortgage loan originator.
(4) What federal guidance has the director adopted for use by the department in determining if a violation under subsection (3)(b) of this section has occurred? The director has adopted the following documents:
(a) The Conference of State Bank Supervisors and American Association of Residential Mortgage Regulators "Guidance on Nontraditional Mortgage Product Risks" (released November 14, 2006); and
(b) The Conference of State Bank Supervisors, American Association of Residential Mortgage Regulators, and National Association of Consumer Credit Administrators "Statement on Subprime Mortgage Lending," effective July 10, 2007 (published in the Federal Register at Vol. 72, No. 131).
(5) What must I do to comply with the federal guidelines on nontraditional mortgage loan product risks and statement on subprime lending? You must adopt written policies and procedures implementing the federal guidelines that are applicable to your mortgage broker business. The policies and procedures must be maintained as a part of your books and records and must be made available to the department upon request.
(6) When I develop policies and procedures to implement the federal guidelines, what topics must be included? The policies and procedures must include, at a minimum, the following:
(a) Consumer protection.
Communication with borrowers. Providers must focus on information important to consumer decision making; highlight key information so that it will be noticed; employ a user-friendly and readily navigable format for presenting the information; and use plain language, with concrete and realistic examples. Comparative tables and information describing key features of available loan products, including reduced documentation programs, also may be useful for consumers. Promotional materials and other product descriptions must provide information about the costs, terms, features, and risks of nontraditional mortgages that can assist consumers in their product selection decisions. Specifically:
• Borrowers must be advised of potential increases in payment obligations. The information should describe when structural payment changes will occur and what the new payment would be or how it was calculated. For example, loan products with low initial payments based on a fixed introductory rate that expires after a short time and then adjusts to a variable index rate plus a margin must be adequately described to the borrower. Because initial and subsequent monthly payments are based on these low introductory rates, a wide initial spread means that borrowers are more likely to experience negative amortization, severe payment shock, and an earlier than scheduled recasting of monthly payments.
• Borrowers must be advised as to the maximum amount their monthly payment may be if the interest rate increases to its maximum rate under the terms of the loan.
• Borrowers must be advised as to the maximum interest rate that can occur under the terms of the loan.
• Borrowers must be alerted to the fact that the loan has a prepayment penalty and the amount of the penalty.
• Borrowers must be made aware of any pricing premium based on reduced documentation.
(b) Control standards.
(i) Actual practices must be consistent with the written policies and procedures. Employees must be trained in the policies and procedures and performance monitored for compliance. Incentive programs should not produce high concentrations of nontraditional products. Performance measures and reporting systems should be designed to provide early warning of increased risk.
(ii) Reporting to DFI. In a separate written document, as prescribed by the director and submitted with the mortgage broker annual report, every licensee must submit information regarding the offering of nontraditional mortgage loan products.
(7) May I charge a loan origination fee or discount points when I originate but do not make a loan? No. You may not charge a loan origination fee or discount points as described in Regulation X, Part 3500, Appendix A.
(8) What mortgage broker fees may I charge? You may charge a mortgage broker fee that was agreed upon between you and the borrower as stated on a good faith estimate disclosure form or similar document provided that such fee is disclosed in compliance with the act and these rules.
(9) How do I disclose my mortgage broker fees on the good
faith estimate and settlement statement? You must disclose or
direct the disclosure of your fees on ((lines 808 through 811
of)) the good faith estimate and HUD-1/1A Settlement Statement
or similar document.
(10) May I charge the borrower a fee that exceeds the fee I initially disclosed to the borrower? Pursuant to RCW 19.146.030(4), you may not charge any fee that benefits you if it exceeds the fee you initially disclosed unless:
(a) The need to charge the fee was not reasonably foreseeable at the time the initial disclosure was provided; and
(b) You have provided to the borrower, no less than three business days prior to the signing of the loan closing documents, a clear written explanation of the fee and the reason for charging a fee exceeding that which was previously disclosed. See WAC 208-660-430 for specific details, disclosures, and exceptions implementing RCW 19.146.030(4).
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-500, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-500, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-500, filed 11/21/06, effective 1/1/07.]
(2) When may the department examine my business? The
department may examine your business ((if you have obtained a
mortgage broker main or branch office license within the last
five years.
(3) How many times may the department examine my business in a five-year period? Your business may be examined once during the first five years of licensing. This applies to the main office and each branch office. However, if violations are found during an examination, the department may conduct additional examinations to follow up with the correction of these violations. The time frame of any additional examination will depend, in part, on the department's assessment of the continuing risk associated with the violations found during the previous examination.
(4))) at any time.
(3) Will the department give me advance notice of an examination?
(a) The department will generally give you advance notice of at least thirty days of a routine examination to allow you to compile the requested documents and prepare for the examiner's arrival. However, you and the department may agree on an earlier date for the examination. Extensions of time beyond that are at the director's discretion.
(b) The department will not give you advance notice of "for cause" examinations. "For cause" means the department may have reason to believe you have violated the act.
(((5))) (4) What are the protocols for an examination of
my business? The examination protocols are detailed in the
department's Mortgage Broker Examination Manual. A summary of
the manual is available on the department's web site.
The basic protocols include, but are not limited to:
(a) Frequency of examinations. The department's examination frequency will be determined using appropriate measurements of risk and random selection.
The primary purpose for measuring risk to determine the examination schedule and frequency cycle is to help the department identify those mortgage brokers whose compliance practices display potential weaknesses requiring examination attention. These same measurements of risk assist the department in determining the need for expanding the scope of an examination or expanding the initial examination time period. The protocols for measuring risk may include, but are not limited to:
(i) The history of licensing;
(ii) Known enforcement issues or problems;
(iii) The number and severity of complaints;
(iv) The licensee's responsiveness to department inquiries;
(v) The licensee's volume of loan activity;
(vi) The number of licensed locations and staff size;
(vii) Prior examination or investigation results; and
(viii) The existence of internal and external systems and controls to ensure compliance.
(b) Advance notice. You will generally receive a department notice listing the documents the department will examine at your business. Your preparation before the arrival of the department examiners will help the examination proceed more efficiently. The department will make every effort to minimize the impact of the examination on your business.
(c) A preexamination meeting at your business. The department examiner(s) will meet with you upon arrival at your business location.
(d) The on-site review at your business. The department examiner will conduct the examination of your business.
(e) An exit meeting after you have provided all the requested information, and the examiner has completed the preliminary analysis. The examiner(s) may request additional information from you. After receiving that information and completing the preliminary analysis, the examiner may discuss the preliminary analysis with you.
(f) Post examination work and report. The department examiner will prepare an examination report and submit the report and examination file to the review examiner. After making any necessary changes, the department will deliver the report to you unless the violations are deemed serious and the file is delivered to enforcement.
(g) Notification of violations and opportunity for response. The department will document in the examination report any violations or deficiencies identified during the examination. You will have an opportunity to respond to the examination findings and any violations or deficiencies unless the violations are deemed serious or are repeat violations and the file is delivered to enforcement.
(h) A possible referral to enforcement. While any violation of the act or these rules may be referred to enforcement, it is usually the case that only serious or repeat violations are referred. An enforcement action may result in a suspension or revocation of your license, the imposition of fines, the payment of restitution, or a ban from the mortgage broker industry.
(((6))) (5) What is the scope of the examination of my
business? In general, the scope of the examination will
include, but is not limited to:
(a) Reviewing trust accounting compliance.
(b) Reviewing loan files.
(c) Conducting interviews to better understand the business, solicitation practices, transactional events, disclosure compliance, and complaint resolution.
(d) Reviewing the business books and records, including employee records.
(((7))) (6) When would the department expand the scope of
an examination of my business? If, during an examination, the
department finds a clear need to expand the scope of the
examination, it may do so. Two examples of a clear need to
expand the scope of an examination are:
(a) When the department finds an apparent violation of trust accounting.
(b) When apparent violations of the prohibited practices section of the act are discovered. See RCW 19.146.0201 for prohibited practices.
(c) When there are clear systemic violations requiring greater review than is possible in a routine examination.
These examples are illustrative only and do not limit the circumstances under which the department may decide to expand the scope of an examination.
(((8))) (7) Will I receive notice if the department
decides to expand the scope of the examination of my business?
Yes. The department will provide you with five business days'
written notice if examination findings clearly identify the
need to expand the scope of the examination. See subsection
(((7))) (6) of this section for examples of when the
department may decide to expand the scope of the examination.
The expanded examination may include a different location and may go beyond the initial five-year time limit.
(((9))) (8) Will I have to pay for an examination of my
business?
(a) If you are located in Washington, you do not have to pay for the costs of the examination.
(b) If you are located outside of Washington, you will have to pay for the examiner's travel costs. Travel costs include, but are not limited to, transportation costs, meals, and lodging. Travel reimbursement rates are established by the Washington state office of financial management.
(c) If your examination was the result of a referral from enforcement, the department may charge an investigative fee. The department will not charge an investigation fee in an investigation or examination if it is determined that no violation occurred, or when the mortgage broker or loan originator implements a remedy satisfactory to the complainant and the department, and no department order has been issued.
The department will send you an invoice and you will have thirty days to reimburse the department for the examination and the travel costs. See WAC 208-660-550, Department fees and costs.
(((10))) (9) May the department consider reports made by
independent certified professionals instead of conducting
their own examination of a mortgage broker business? Yes.
Instead of examining a mortgage broker's business, the
department may consider the reports of independent certified
professionals who have examined the mortgage broker using the
same standards used by the department (see the standards in
the department's Mortgage Broker Examination Manual). The
department may then prepare a report of examination that
incorporates all or part of the independent certified
professional's reports, or the examiner may expand the scope
of the examination.
(((11))) (10) What are the pros and cons of hiring my own
independent certified professional versus waiting for a
department examination? The department's cost of examination
will not be charged to you directly, although you may
experience some minor business interruption. If you hire your
own independent certified professional, you will incur the
cost of that examination; however, you will control the time
and manner in which the examination is conducted. The
greatest benefits you may derive from hiring your own
independent certified professional are:
(a) Early notice of problems you may encounter during an examination;
(b) The ability to correct deficiencies or problems at an early stage when the greatest benefit of correction may be derived;
(c) The early implementation of a sound compliance program; and
(d) The ability to control the timing for your convenience.
(((12))) (11) If I want the department to consider an
independent certified professional's report instead of
examining my business, how must I make that request, and who
submits the report to the department? When you receive notice
from the department that your business is scheduled for an
examination, you must notify the department that you wish the
department to consider the report of an independent certified
professional instead of the department examining your
business. The independent certified professional must then
submit their report directly to the department, in a form
acceptable to the department.
(((13))) (12) How may the department determine if the
independent certified professional's report meets the
standards of examination established by the department? The
department will compare the sufficiency of the report
submitted by the independent certified professional to the
requirements in the department's examination manual. If the
report is missing any of the requirements from the manual, the
department may require the licensee to provide the missing
information.
(((14))) (13) If the independent certified professional's
report is missing information, how may the department obtain
the missing information? The department may interview, obtain
records from, or otherwise contact the licensee, or with the
licensee's permission contact the independent certified
professional, if additional information is required for the
department's review of the report.
(((15))) (14) What will the department do if the
independent certified professional's report is not sufficient?
If the department determines the report is not sufficient, the
department will notify the licensee and schedule an
examination of the business.
(((16))) (15) What will the department do if the
independent certified professional's report is sufficient? If
the department determines the report is sufficient, the
department will prepare a report of examination that
incorporates all or part of the independent certified
professional's report.
(((17))) (16) May the department retain professionals or
specialists to examine a licensee? Yes. The department, at
its own expense, may retain attorneys, accountants, or other
professionals or specialists as examiners, auditors, or
investigators to examine a licensee.
(((18))) (17) Do I receive any reports from the
examination? Yes.
(a) When you have provided all the requested information, and the examiner has completed the preliminary analysis, the examiner will issue an exit report of examination containing preliminary examination findings.
(b) After additional department review, including the consideration of new information, if any, the department will issue a final report of examination.
(((19))) (18) Must I do anything as a result of the
examination? Yes. You will receive instructions from the
department on the actions you must take. For example, if
adverse findings or deficiencies were cited in the report of
examination, you must respond to those findings.
(((20))) (19) How do I respond to findings in a report of
examination? You must respond in writing within thirty days
of the date the department issues the report of examination.
Your response must address any deficiencies noted in the
report and describe the corrective actions you have taken.
(((21))) (20) What will happen if I do not respond to the
report of examination? If you fail to respond to the report
of examination, you may be referred to enforcement where
further administrative actions may be taken against you.
[Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-510, filed 11/21/06, effective 1/1/07.]
| Mortgage broker - license application fee | $371.00 |
| Mortgage broker - annual assessment (due upon initial licensing, then an annual renewal fee, per location) | $530.00 |
| Mortgage broker late renewal assessment (fifty percent of annual assessment) | $265.00 |
| Mortgage broker branch office - license application fee | $185.00 |
| Mortgage broker branch office - annual assessment (annual renewal fee, per location) | $530.00 |
| Mortgage broker - license amendment | No fee |
| Mortgage broker - change of designated broker | $25.00 |
| Loan originator - license application fee | $125.00 |
| Loan originator - annual assessment (not due until first renewal; then an annual renewal fee) | $125.00 |
| Loan originator late renewal assessment (fifty percent of annual assessment) | $62.50 |
| Loan originator - cancel association with any mortgage broker | No fee |
| Loan originator - license amendment - add a mortgage broker relationship | $50.00 |
| Loan originator - license amendment - other | No fee |
(3) Examinations.
(a) In Washington. The department does not charge a licensee located in Washington for the costs of an examination unless the examination is a referral from enforcement. See WAC 208-660-510(8).
(b) Outside of Washington. The department will charge the licensee for travel costs.
(c) If the department hires professionals, specialists, or both to examine an out-of-state licensee, the professional, specialist, or both will be considered examiners for the purpose of billing the licensee for travel costs.
(4) Investigations.
(a) The department will charge forty-eight dollars per hour for an examiner's time devoted to an investigation.
(b) The department will bill the licensee for the costs of services from attorneys, accountants, or other professionals or specialists retained by the director to aid in the investigation.
(5) Travel costs. If the mortgage business is out-of-state, the department will charge the business the travel costs associated with an examination or investigation. Travel costs include, but are not limited to, transportation costs (airfare, rental cars), meals, and lodging.
(6) How is the annual assessment calculated? The assessment is a flat rate per license.
(7) How does the department use license application fees? The fees collected by the department are used to pay the costs of administering the act.
[Statutory Authority: Chapters 43.320, 19.146 RCW. 08-14-114, § 208-660-550, filed 6/30/08, effective 7/31/08. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-550, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-550, filed 11/21/06, effective 1/1/07.]
(a))) course providers ((with)) and courses ((of
education approved by the director; or
(b) Course providers with courses of education approved
by professional organizations)) approved ((by the director))
through NMLSR.
(2) ((What does it mean to offer and administer a course
of education? Offering and administering a course of
education is the creation of a curriculum and the
administrative processes to operate and maintain the
curriculum. See the department's approval standards in
subsections (7) and (14) of this section.
(3) What is a "course of education" under the act? A course of education is formal training that satisfies all or part of the continuing education requirements of the act and these rules.
(4) What is a "course provider" under the act? A course provider is a person or organization that provides continuing education. Course providers may provide education that meets the requirements of the act and these rules by applying for and receiving approval from the department for a specific course of education.
(5) What is a "professional organization" under the act? A professional organization is an organization with at least ten members created for the primary purpose of furthering the professional interests of its members, protecting the public interest, or both. Education must be an essential element of the professional organization's purpose. A professional organization must have the director's approval to offer and administer courses of education.
(6) If I am a course provider not affiliated with a professional organization, how do I obtain approval for my courses of education? You must apply to the department for course approval. If the department approves the course, you will be issued a certificate of approval that will be effective for two years from the date of issuance.
(7) What standard is required and what will the department review when considering approval of continuing education provided by course providers not affiliated with professional organizations? Continuing education courses must provide the course taker with a working knowledge of, and competency in, the subject matter. To ensure this standard, the department will review the following when considering approval of education courses:
(a) The instructor's experience and qualifications;
(b) Whether the instructor or proposed course of education has been approved, denied, or rescinded by the department in the past; and
(c) The course materials and lesson plans for the proposed courses. Each course must run a minimum of three hours; the materials and lesson plans must have the content to support a presentation of this length.
(8) If I am a course provider with courses of education approved by a professional organization, may I also offer courses of education unaffiliated with the professional organization? Yes. However, your courses of education unaffiliated with the professional organization must be approved by the department.
(9) May the department rescind approval of a course provider's course of education? Yes. The department may rescind approval of a course of education:
(a) Upon a determination that the course of education does not meet the standards in subsection (7) of this section; or
(b) If the course provider does not provide the required quarterly reports described in subsection (13) of this section.
(10) What action must a course provider take if notified by the department that its course of education has been rescinded? The course provider must immediately:
(a) Cease advertising or soliciting for the course of education;
(b) Inform registered course takers of the department's rescission of course approval, and cancel the course of education; and
(c) Refund any fees paid by course takers for the course.
(11) May a course provider appeal the department's decision to deny or rescind course approval? Yes. A course provider may appeal the department's decision to deny or rescind a course. The course provider must appeal the decision to the department within twenty days of being notified by the department of the decision.
(12) If a course provider has appealed the department's denial or rescission of a course of education, must it still take the immediate action in subsection (10) of this section? Yes. A course provider appealing a department decision about a course of education must comply with subsection (10) of this section.
(13) I am a course provider who provides approved continuing education courses directly to licensees, or I provide courses with the approval of a professional organization. What reports must I provide to the department? You must provide quarterly reports to the department, in a form prescribed by the director. The reports must be received by the department no later than April 10, July 10, October 10, and January 10 of each year. The reports must contain the following information:
(a) The course taker's name;
(b) The course taker's license number, or Social Security number;
(c) The name of the course;
(d) The date the course was taken; and
(e) Whether the course taker received a certificate of satisfactory completion.
If you provide the reports electronically, the data must be encrypted as prescribed by the director.
(14) What standards will the department review when considering approving professional organizations to offer and administer courses of education under the act and rules? The department will review the following:
(a) A description of the course of education curriculum that satisfies the content of continuing education under subsection (22) of this section;
(b) Whether the professional organization has sufficient procedures and guidelines to:
(i) Establish a course(s) of education and approve a course provider(s);
(ii) Audit and evaluate an approved course(s) of education and course provider(s);
(iii) Remove courses and providers from the professional organization's curriculum;
(iv) Provide board reconsideration of denial or removal of a course of education or a course provider;
(v) Ascertain the identity of course of education takers;
(vi) Issue certificates of satisfactory completion, that include, at a minimum, the course taker's name, the course provider's name, the course title, and the date of course completion;
(vii) Collect, hold, disburse and refund course of education fees;
(c) Whether the professional organization requires members to adhere to an established code of conduct or ethics.
(15) Is the department liable for a professional organization's decision to approve, deny, or revoke authorization for a course provider to offer courses of education? No. The department is not liable for a professional organization's decision to approve, deny, or revoke a course provider's authorization to provide courses of education for the professional organization.
(16) Is the department liable for a course provider's contractual relationship with a professional organization? No. Course providers independently contract with professional organizations and the department is not liable for the consequences of that relationship.
(17) May the department remove a professional organization's authorization to offer and administer courses of education? Yes. The department may rescind a professional organization's authorization to offer and administer courses of education:
(a) Upon a determination that the professional organization fails to meet subsection (14) of this section; or
(b) If the professional organization fails to provide the required quarterly reports described in subsection (21) of this section.
(18) What action must a professional organization take if notified by the department that its authorization has been rescinded? The professional organization must immediately:
(a) Cease advertising or soliciting for all courses of education;
(b) Inform registered course takers of the department's rescission of approval, and cancel the courses of education; and
(c) Refund any fees paid by course takers for the courses.
(19) May a professional organization appeal the department's decision to deny or rescind authorization? Yes. A professional organization may appeal the department's decision to deny or rescind the professional organization's authorization to approve course providers. The professional organization must appeal the decision to the department within twenty days of being notified by the department of the decision.
(20) If a professional organization has appealed the department's denial or rescission of authorization, must it still take the immediate action in subsection (18) of this section? Yes. A professional organization appealing a department decision about a course provider or course of education must comply with subsection (18) of this section.
(21) When a professional organization is approved by the department to offer continuing education courses to licensees, and does so, what reports must the professional organization provide to the department? The professional organization must provide quarterly reports to the department, in a form prescribed by the director. The reports must be received by the department no later than April 10, July 10, October 10, and January 10 of each year. The reports must contain the following information:
(a) The course taker's name;
(b) The course taker's license number, or Social Security number if not currently licensed;
(c) The name of the course;
(d) The date the course was taken; and
(e) Whether the course taker received a certificate of satisfactory completion.
If you provide the reports electronically, the data must be encrypted as prescribed by the director.
(22) How long does department approval for a professional organization to offer continuing education courses last, and may the approval be renewed? Approval of a continuing education course is valid for two years. Approval may be renewed by applying to the director forty-five days prior to expiration of a current approval and providing detailed information about the course(s) and instructor(s) if they are to be changed.
(23) What topics must be included as continuing education courses? Continuing education courses must include some or all of the topics listed below. Courses may be designed to cover a range of topics or they may focus in detail on a single topic.
(a) General.
(i) Ethics in the mortgage industry.
The responsibilities and liabilities of the profession including instruction on fraud, consumer protection, and fair lending issues.
(ii) Lending standards for nontraditional mortgage products.
(iii) Arithmetical computations common to mortgage lending including without limitation, the computation of annual percentage rate, finance charge, amount financed, payment and amortization.
(b) Compliance and internal audit standards.
Proper use and application of the department's published standards and guidelines for examinations.
Internal audit and compliance practices, standards, methods and procedures.
Developing policies and procedures for regulatory compliance.
Responding to regulatory inquiries, directives, subpoenas and enforcement orders.
Training and supervision of mortgage professionals.
Establishing, managing, reconciling and reviewing a trust account (trust account compliance under the act and these rules).
(c) Washington law and associated regulations.
The Mortgage Broker Practices Act.
The Consumer Protection Act.
The Escrow Agent Registration Act.
The Usury Act.
Unfair practices with respect to real estate transactions (RCW 49.60.222).
Mortgage, deed of trust, and real estate contract statutes set forth in Title 61 RCW.
Real estate and appraisal law, including without limitation, the provisions of chapters 18.85 and 18.140 RCW.
Washington principal and agent law.
Any subsequent act or regulation applying to mortgage brokers.
(d) Federal law and associated regulations.
The Real Estate Settlement Procedures Act.
Truth in Lending Act.
Equal Credit Opportunity Act.
Fair Credit Reporting Act.
Fair Housing Act.
Home Mortgage Disclosure Act.
Community Reinvestment Act.
Gramm-Leach Bliley Act.
Home Ownership Protection Act.
Bank Secrecy Act.
Appraisal regulations.
Underwriting.
The SAFE Act (Title V of the Housing and Economic Reform Act of 2008 ("HERA")) Public Law No. 110-289.
Any subsequent act or regulation applying to mortgage brokers.
(e) Mortgage services and products.
Conventional.
Reverse mortgages.
FHA mortgages.
VA mortgages.
Nonprime mortgages.
Other products or services deemed relevant to continuing education by the department.
(24) May the department audit or review a course of education? Yes. The department may audit or review any continuing education course by registering for the course or attending the course of education unannounced by presenting the course provider with official identification prior to the start of the course. The department will not be charged any fee for official audit or review of the course of education.)) On what topics of education will I be tested?
(a) Prelicensing education. The topics of education will be federal law and regulations, ethics (fraud, consumer protection, fair lending) and lending standards for the nontraditional mortgage marketplace.
(b) Continuing education. The topics of education will be the same as for prelicensing education, plus Washington specific topics.
(3) What specific topics should I study in preparation for any of the required tests?
(a) General.
(i) Ethics in the mortgage industry.
The responsibilities and liabilities of the profession including instruction on fraud, consumer protection, and fair lending issues.
(ii) Lending standards for nontraditional mortgage products.
(iii) Arithmetical computations common to mortgage lending including without limitation, the computation of annual percentage rate, finance charge, amount financed, payment and amortization.
(b) Compliance and internal audit standards.
Proper use and application of the department's published standards and guidelines for examinations.
Internal audit and compliance practices, standards, methods and procedures.
Developing policies and procedures for regulatory compliance.
Responding to regulatory inquiries, directives, subpoenas and enforcement orders.
Training and supervision of mortgage professionals.
Establishing, managing, reconciling and reviewing a trust account (trust account compliance under the act and these rules).
(c) Washington law and associated regulations.
The Mortgage Broker Practices Act.
The Consumer Protection Act.
The Escrow Agent Registration Act.
The Usury Act.
Unfair practices with respect to real estate transactions (RCW 49.60.222).
Mortgage, deed of trust, and real estate contract statutes set forth in Title 61 RCW.
Real estate and appraisal law, including without limitation, the provisions of chapters 18.85 and 18.140 RCW.
Washington principal and agent law.
Any subsequent act or regulation applying to mortgage brokers.
(d) Federal law and associated regulations.
The Real Estate Settlement Procedures Act.
Truth in Lending Act.
Equal Credit Opportunity Act.
Fair Credit Reporting Act.
Fair Housing Act.
Home Mortgage Disclosure Act.
Community Reinvestment Act.
Gramm-Leach-Bliley Act.
Home Ownership Protection Act.
Bank Secrecy Act.
Appraisal regulations.
Underwriting.
The S.A.F.E. Act (Title V of the Housing and Economic Reform Act of 2008 ("HERA")) Public Law No. 110-289.
Any subsequent act or regulation applying to mortgage brokers.
(e) Mortgage services and products.
Conventional.
Reverse mortgages.
FHA mortgages.
VA mortgages.
Nonprime mortgages.
[Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 109. 09-01-156, § 208-660-600, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040, 19.146.223. 08-05-126, § 208-660-600, filed 2/20/08, effective 3/22/08. Statutory Authority: RCW 43.320.040, 19.146.223, 2006 c 19. 06-23-137, § 208-660-600, filed 11/21/06, effective 1/1/07.]