Subject of Possible Rule Making: Amend chapter 460-33A WAC to require mortgage broker-dealers to review investor suitability on an annual basis and in relation to the investor's other mortgage paper security holdings; require certain disclosures to investors in the sale of property acquired by investors through the foreclosure process; raise the face amount of the surety bond required by WAC 460-33A-040 (1)(b) from the amount established in 1986; make technical corrections to update references in WAC 460-33A-090(3) regarding dishonest and unethical practices; articulate the fiduciary duty of mortgage broker-dealers; and to require disclosure of loan to value ratios based on the tax assessed valuation of the property, as well as the "as is" appraised value if an appraisal was obtained.

     Statutes Authorizing the Agency to Adopt Rules on this Subject: RCW 21.20.450.

     Reasons Why Rules on this Subject may be Needed and What They Might Accomplish: The proposed revisions to chapter 460-33A WAC have been drafted to ensure mortgage broker-dealers review investor suitability on a periodic basis; to address concerns raised by investors in mortgage paper securities sold by mortgage broker-dealers registered in the state of Washington in connection with sales of property acquired by the investors through the foreclosure process; raise the face amount of the required surety bond from the amount established in 1986 ($50,000) to $100,000 in order to ensure the proceeds would be sufficient to aid investors in the event of failure of the mortgage broker-dealer; correct references to repealed provisions; ensure mortgage broker-dealers are aware of their fiduciary duty to investors; and to ensure adequate disclosure is provided to investors regarding loan to value ratios.

     Other Federal and State Agencies that Regulate this Subject and the Process Coordinating the Rule with These Agencies: The Securities Division is the sole securities regulator for these offerings.

     Process for Developing New Rule: Negotiated rule making; and a draft of the proposed revisions to chapter 460-33A WAC is available from the Securities Division.

     Interested parties can participate in the decision to adopt the new rule and formulation of the proposed rule before publication by contacting Faith L. Anderson, Securities Division, Department of Financial Institutions, P.O. Box 9033, Olympia, WA 98507-9033, (360) 902-8760, fax (360) 704-6946, fanderson@dfi.wa.gov, Securities Division Web Site: http://www.wa.gov/dfi/securities.

May 23, 2001

Deborah Bortner

Director of Securities

© Washington State Code Reviser's Office