WAC 460-33A-035
Limitations on the use of optional
registration of this chapter. Unless the director makes a
special notation on the permit issued to the mortgage
broker-dealer granting permission to offer the following types of
securities based upon a showing that the investors will be
adequately protected, the following types of securities cannot be
offered or sold under the rules of this chapter:
(1) Offerings involving construction loans may not be sold
using the rules of this chapter unless the loan to value ratio,
as determined utilizing the current value of the property without
considering future improvements, is within the limits established
by subsection (7) of this section.
(2) Offerings involving the mortgage broker-dealer, its
officers, agents, affiliates, and persons controlling the
mortgage broker-dealer or affiliates may not be sold as part of
the optional registration of the rules of this chapter unless the
registration with the director includes a full description of
these transactions. An offering "involves" the persons listed
where the person is the owner, the borrower, or has an interest
in the proceeds other than fees, commissions, or mark-ups.
(3) Offerings involving documents reserving the right to
subordinate the position of any investor to any mortgage, trust
deed or lien created at or after the sale.
(4) Offerings involving pooling or participations involving
more than ten investors may not be sold under the optional
registration of the rules of this chapter. However, where only
first liens are involved and the note amount equals or exceeds
one hundred thousand dollars, the registrant may sell to up to
twenty five investors. A husband and wife and their dependents
may be counted as one investor.
(5) Offerings in which the real property or other collateral
securing the notes, bonds or obligations is not within this state
unless the general offering circular contains disclosure of all
material facts concerning the relevant laws of the state in which
the real property is situated and a risk factor discussing the
risks of investing in out-of-state real estate.
(6) Offerings involving notes, bonds, or obligations secured
by a single mortgage, deed of trust or real estate contract or a
single group of mortgages, deeds of trust or real estate
contracts that are not identical in their underlying terms,
including the right to direct or require foreclosure, rights to
and rate of interest, and other incidents of being a lender, and
the sale to each purchaser or investor is not upon the same
terms; provided however, an offering may be subject to adjustment
for the face or principal amount or percentage interest purchased
and for interest earned or accrued.
(7) Offerings in which the aggregate principal amount of the
notes, bonds or obligations sold, together with the unpaid
principal amount of any encumbrances upon the real property
senior thereto, exceed the following percentages of the current
market value (as determined by WAC 460-33A-105) of the real
property:
(a) Single-family residences - eighty percent.
(b) Commercial and income-producing properties - seventy
percent.
(c) Unimproved property which has been zoned for commercial
or residential development - fifty percent. For purposes of this
section, "unimproved property" includes real property with
structures that cannot be legally occupied, do not substantially
conform with the appraisal of the property prepared pursuant to
WAC 460-33A-105, or otherwise lack the functional attributes or
basic amenities customarily found in the type of structures in
question.
(d) Other real property - forty percent.
(8) Offerings involving real estate paper in which a default
in any note, bond or obligation will not be a default in all
notes, bonds or obligations concerning a specific loan.
(9) Offerings in which the following actions may be taken on
behalf of the investors without the consent of investors holding
a majority percentage of the unpaid dollar amount of notes,
bonds, or obligations:
(a) Consenting to the sale or transfer by the borrower of
the collateral securing the loan, or the substitution of a new
borrower;
(b) Approving any modification to the loan which decreases
the rate of interest payable to the investors;
(c) Deferring or forgiving the payment of any principal or
interest;
(d) Making any agreements concerning the release,
substitution, or exchange of any collateral, or any portion of
the collateral, for the loan;
(e) Entering into any agreement to reduce the principal
amount of the loan (except for actual payments of principal);
(f) Making any concession with respect to compliance with
any material obligations imposed by the instruments evidencing or
securing the loan; or
(g) Extending or renewing the loan.
(10) Loans in which investors are required to designate the
servicing agent as their attorney-in-fact with respect to
documents and instruments, other than those described below,
which would otherwise require signing or other action by the
investors:
(a) Escrow instructions concerning the closing and
collection of the loan;
(b) Instruments necessary to substitute investors; and
(c) Partial or full satisfaction or release of the deed of
trust or other security instrument pursuant to the provisions of
the deed of trust or security agreement upon receipt of the
appropriate payment.
(11) Offerings in which the investors holding a majority
percentage of the unpaid dollar amount of any loan may not remove
the servicing agent.
(12) A registrant requesting a modification under this
section must request it in writing and must provide satisfactory
evidence that the interest of the public will be adequately
protected.
[Statutory Authority: RCW 21.20.450. 01-23-002, § 460-33A-035,
filed 11/7/01, effective 12/8/01. Statutory Authority: RCW 21.20.045. 92-18-009, § 460-33A-035, filed 8/21/92, effective
9/21/92. Statutory Authority: RCW 21.20.450. 86-21-107 (Order
SDO-140-86), § 460-33A-035, filed 10/20/86; 83-03-025 (Order
SDO-7-83), § 460-33A-035, filed 1/13/83.]