Washington Administrative Code › Title 208 - Financial Institutions, Department of (See also Titles 50, 419, and 460) › Chapter 208-660 - Mortgage brokers and loan originators-Licensing › RECORDS AND RESPONSIBILITIES › Section 208-660-410 - Trust accounting

Current through Register Vol. 24-14, July 15, 2024
(1)
What
				are trust funds?
Trust funds are all funds received from borrowers, or
				on behalf of borrowers, for payments to third-party providers. The funds are
				considered to be held in trust immediately upon receipt. Trust funds include,
				but are not limited to, borrower deposits for appraisal fees, credit report
				fees, title report fees, and similar fees to be paid for services rendered by
				third-party providers in the borrower's loan transaction. Funds received by a
				broker from a settlement agent or lender, on or after closing, for payments the
				broker made, or will make, to third-party service providers are not trust funds
				and therefore can be deposited directly into the broker's general
				account.
(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), and (g)     are not required to have a trust account even if
				they receive trust funds.
(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
				or the seller in a real estate transaction 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 online payments through a
				website.
(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.