PERMANENT RULES
FINANCIAL INSTITUTIONS
(Division of Consumer Services)
Effective Date of Rule: November 1, 2012.
Purpose: The proposed rules implement chapter 17, Laws of 2012, and are amendments that generally add clarity and consistency to the rules.
The rules are being amended under the authority of OFM Guideline 3(f), October 12, 2011.
Citation of Existing Rules Affected by this Order: Repealing WAC 208-620-395 and 208-620-432; and amending WAC 208-620-010, 208-620-045, 208-620-055, 208-620-104, 208-620-105, 208-620-260, 208-620-271, 208-620-320, 208-620-325, 208-620-328, 208-620-341, 208-620-378, 208-620-400, 208-620-430, 208-620-505, 208-620-510, 208-620-511, 208-620-515, 208-620-520, 208-620-545, 208-620-550, 208-620-551, 208-620-552, 208-620-568, 208-620-570, 208-620-610, 208-620-613, 208-620-620, 208-620-622, 208-620-630, 208-620-710, 208-620-725, 208-620-730, 208-620-805, 208-620-820, 208-620-825, and 208-620-900.
Statutory Authority for Adoption: RCW 43.320.040.
Other Authority: RCW 31.04.165.
Adopted under notice filed as WSR 12-13-072 on June 19, 2012.
Changes Other than Editing from Proposed to Adopted Version: WAC 208-620-010, "advertise," "advertising" and "advertising material," technical amendment to remove language referring to another statute. "Service or servicing a reverse mortgage loan," technical amendment of proposed language to fix a citation. "Simple interest method," proposed language amended to apply more generally to loan documents not specifically to one type of loan document, WAC 208-620-105(5), technical amendment to existing language for consistency, WAC 208-620-440(3), proposed language amended to remove language on a certain assessment methodology, WAC 208-620-510 (3)(a), technical amendment of proposed language for clarity, WAC 208-620-520(1), technical amendment of existing language for clarity, WAC 208-620-551 (2)(a)(iii), proposed language amended to clarify content of required notice to reflect servicer's right to recoup from the borrower amounts advanced on the borrower's behalf for the payment of insurance on the mortgaged property, WAC 208-620-551 (2)(d), proposed language amended for consistency with the federal law requirement, WAC 208-620-551(6), technical amendment of proposed language for consistency, WAC 208-620-552(1), technical amendment to existing language for consistency with federal law, WAC 208-620-552(2), new language added for consistency with the Mortgage Broker Practices Act, WAC 208-620-710 (3)(c), technical amendment of proposed language to correct reference to the act, WAC 208-620-710 (18)(a)(ii), new language added for clarity, WAC 208-620-710(19), technical amendment to fix a leap year problem with the month of February, WAC 208-620-710(24), technical amendment to existing language for consistency with current practice, WAC 208-620-710(28), new language added to reflect with current process, WAC 208-620-730 (7)(a), (b), technical amendment to remove existing obsolete language, WAC 208-620-825(12), technical amendments to proposed language for clarity, WAC 208-620-900, multiple technical amendments to proposed language for clarity, WAC 208-620-900 (3)(c), (e), proposed language amended to add language that compliance can be achieved by providing a monthly statement, WAC 208-620-900 (3)(f), new language to create a later compliance date, WAC 208-620-900 (4)(a), proposed language amended to provide a date certain for a requirement, WAC 208-620-900 (4)(a)(ii), new section created with existing proposed language to include a later compliance date, WAC 208-620-900 (5)(b)(iv), amended to provide a later compliance date, WAC 208-620-900 (5)(c), technical amendment to correct a citation, WAC 208-620-900(6), existing language stricken and moved, then amended. See WAC 208-620-900 (5)(b)(iv) and (7)(b), WAC 208-620-900 (6)(a)(i), amended to provide a later compliance date, WAC 208-620-900 (6)(a)(iii), amended to provide a date certain for a requirement, WAC 208-620-900 (6)(c), new language added requiring servicers to provide a copy of a loan modification agreement to the borrower, and WAC 208-620-900 (7)(b), proposed language amended to strike a requirement.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 1, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 2, Repealed 1.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 3, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 15 [14], Repealed 1.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 23, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 3, Amended 35, Repealed 2; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Date Adopted: August 29, 2012.
Deborah Bortner, Director
Division of Consumer Services
OTS-4722.6
AMENDATORY SECTION(Amending WSR 10-20-122, filed 10/5/10,
effective 11/5/10)
WAC 208-620-010
Definitions.
The definitions set forth
in this section apply throughout this chapter unless the
context clearly requires a different meaning.
"Act" means the Consumer Loan Act, chapter 31.04 RCW.
"Advertise, advertising, and advertising material" means any form of sales or promotional materials used in connection with the 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 controls, is controlled by, or is under common control with another.
"Annual percentage rate" has the same meaning as defined in Regulation Z, 12 C.F.R. Section 226 et seq.
"Application" means the submission of a borrower's financial information in anticipation of a credit decision relating to a residential mortgage loan, which 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. An application may be submitted in writing or electronically and includes 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.
"Bank Secrecy Act" means the Bank Secrecy Act (BSA), 31 U.S.C. 1051 et seq. and 31 C.F.R. Section 103.
"Bond substitute" means unimpaired capital, surplus and qualified long-term subordinated debt.
"Borrower" means any natural person who consults with or retains a licensee or person subject to this chapter in an effort to obtain or seek information about obtaining a loan, regardless of whether that person actually obtains such a loan.
"Commercial context" or "commercial purpose" means actions taken for the purpose of obtaining anything of value for oneself, or for an entity or individual for which the individual acts, rather than exclusively for public, charitable, or family purposes.
"Common ownership" exists if an entity or entities possess an ownership or equity interest of five percent or more in another entity.
"Creditor" has the same meaning as in the Truth in Lending Act, 15 U.S.C. 1602(f) and Regulation Z, 12 C.F.R. 1026 (formerly 12 C.F.R. 226).
"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.
"Depository Institutions Deregulatory and Monetary Control Act" means the Depository Institutions Deregulatory and Monetary Control Act of 1980 (DIDMCA), 12 U.S.C. § 1735f-7a.
"Director" means the director of the department of financial institutions or his or her designated representative.
"Equal Credit Opportunity Act" means the Equal Credit
Opportunity Act (ECOA), 15 U.S.C. section 1691 and Regulation
B, 12 C.F.R. ((Section)) Part 1002 (formerly Part 202).
"Fair Credit Reporting Act" means the Fair Credit Reporting Act (FCRA), 15 U.S.C. Section 1681 et seq.
"Fair Debt Collection Practices Act" means the Fair Debt Collection Practices Act, 15 U.S.C. section 1692.
"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 Trade Commission Act" means the Federal Trade Commission Act, 15 U.S.C. section 45(a).
"Filing" means filing, recording, releasing or reconveying mortgages, deeds of trust, security agreements or other documents, or transferring certificates of title to vehicles.
"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 C.F.R. Parts 313-314.
"Home Mortgage Disclosure Act" means the Home Mortgage
Disclosure Act (HMDA), 12 U.S.C. sections 2801 through 2810
and 12 C.F.R. ((Section)) Part 1003 (formerly Part 203).
"Immediate family member" means a spouse, child, sibling, parent, grandparent, or grandchild. This includes stepparents, stepchildren, stepsiblings, and adoptive relationships.
"Individual servicing a mortgage loan" means a person who on behalf of a lender or servicer licensed by this state, or a lender or servicer exempt from licensing, who collects or receives payments including payments of principal, interest, escrow amounts, and other amounts due, on existing obligations due and owing to the licensed lender or servicer for a residential mortgage loan when the borrower is in default, or in reasonably foreseeable likelihood of default, working with the borrower and the licensed lender or servicer, collects data and makes decisions necessary to modify either temporarily or permanently certain terms of those obligations, or otherwise finalizing collection through the foreclosure process.
For purposes of this definition "on behalf of a lender or servicer" means that the individual person is employed by the lender or servicer and does not receive any compensation or gain directly or indirectly from the borrower for performing the described activities.
"Insurance" means life insurance, disability insurance, property insurance, insurance covering involuntary unemployment and such other insurance as may be authorized by the insurance commissioner in accordance with Title 48 RCW.
"Lender" means any person that extends money to a borrower with the expectation of being repaid.
"License" means a license issued under the authority of this chapter with respect to a single place of business.
"License number" means your ((NMLSR)) NMLS unique
identifier displayed as prescribed by the director.
"Licensee" means a person who holds one or more current licenses.
"Live check" means a loan solicited through the mail in the form of a check, which, when endorsed by the payee, binds the payee to the terms of the loan agreement contained on the check.
"Loan" means a sum of money lent at interest or for a fee or other charges and includes both open-end and closed-end transactions.
"Loan originator" means the same as mortgage loan originator.
"Loan processor" means 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 from licensing, under chapter 31.04 RCW.
A loan processor engaged as an independent contractor for a licensee must hold a mortgage loan originator license.
"Long-term subordinated debt" means for the purposes required in RCW 31.04.045 outstanding promissory notes or other evidence of debt with initial maturity of at least seven years and remaining maturity of at least two years.
"Making a loan" means advancing, offering to advance, or making a commitment to advance funds for a loan.
"Material litigation" means proceedings that differ from the ordinary routine litigation incidental to the business. Litigation is ordinary routine litigation if it ordinarily results from the business and does not deviate from the normal business litigation. Litigation involving five percent of the licensee's assets or litigation involving the government would constitute material litigation.
"Mortgage broker" means the same as in RCW 19.146.010 except that for purposes of this chapter, a licensee or person subject to this chapter cannot receive compensation as both a consumer loan licensee making the loan and as a mortgage broker in the same transaction.
"Mortgage loan originator" or "loan originator" means an individual who for direct or indirect compensation or gain or in the expectation of direct or indirect compensation or gain (1) takes a residential mortgage loan application; or (2) offers or negotiates terms of a residential mortgage loan, including short sale transactions.
Mortgage loan originator also includes an individual who for compensation or gain performs residential mortgage loan modification services or holds himself or herself out as being able to perform residential mortgage loan modification services.
Mortgage loan originator also includes an individual who holds himself or herself out as being able to perform any of the activities described in this definition. 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 loan originator, including the use of business cards, stationery, brochures, rate lists or other promotional items.
Mortgage loan originator does not include any individual who performs purely administrative or clerical tasks and 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 the purposes of this definition, 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 consumer to obtain information necessary for the processing of a residential mortgage loan. An individual who holds himself or herself out to the public as able to obtain a loan is not performing administrative or clerical tasks.
Mortgage 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 to conduct those activities, 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. See the definition of real estate brokerage activity in this subsection.
This definition does not apply to an individual servicing a mortgage loan before July 1, 2011.
This definition does not apply to employees of a housing counseling agency approved by the United States department of Housing and Urban Development unless the employees of a housing counseling agency are required under federal law to be individually licensed as mortgage loan originators.
"((Nationwide Mortgage Licensing System and Registry
(NMLSR))) NMLS" means a ((mortgage)) multistate 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 and other license types.
(("Nontraditional mortgage product" means any mortgage
product other than a thirty-year fixed rate mortgage. This
definition is limited to implementation of the S.A.F.E. Act.))
"Out-of-state licensee" means a licensee that does not maintain a physical presence within the state, or a licensee that maintains headquarters or books and records outside Washington.
"Person" includes individuals, partnerships, associations, trusts, corporations, and all other legal entities.
"Principal" means either (1) any person who controls, directly or indirectly through one or more intermediaries, a ten percent or greater interest in a partnership, company, association or corporation; or (2) the owner of a sole proprietorship.
"Principal amount" means the loan amount advanced to or for the direct benefit of the borrower.
"Principal balance" means the principal amount plus any allowable origination fee.
"RCW" means the Revised Code of Washington.
"Real estate brokerage activity" means any activity that involves offering or providing real estate brokerage services to the public, including (1) acting as a real estate agent or real estate broker for a buyer, seller, lessor, or lessee of real property; (2) bringing together parties interested in the sale, purchase, lease, rental, or exchange of real property; (3) 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 such a transaction; (4) 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 (5) offering to engage in any activity, or act in any capacity, described in (1) through (4) of this definition.
"Real Estate Settlement Procedures Act" means the Real
Estate Settlement Procedures Act (RESPA), 12 U.S.C. Sections
2601 et seq., and Regulation X, 12 C.F.R. Part 1024 (formerly
24 C.F.R. ((Sections)) Part 3500 ((et seq))).
"Records" mean books, accounts, papers, records and files, no matter in what format they are kept, which are used in conducting business under the act.
"Referring a delinquent loan to foreclosure" means taking any step in furtherance of foreclosure. Examples include, but are not limited to: Sending a referral to a foreclosure trustee or attorney inside or outside of the servicing entity requesting they begin the foreclosure process; making a record in written or electronic form that flags, comments, blocks, suspends or in any way indicates in the electronic record of a mortgage loan that foreclosure has begun; any such marking of an electronic record that impairs the record in a way that payments will not be applied or will be routed into a suspense account.
"Registered mortgage loan originator" means any individual who (1) meets the definition of mortgage loan originator and is an employee of: 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 (2) 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 that is secured by a mortgage, deed of trust, or other equivalent consensual security interest on a dwelling (as defined in section 103(v) of the Truth in Lending Act) or residential real estate upon which is constructed or intended to be constructed a dwelling.
"Residential mortgage loan modification" means a change in one or more of a residential mortgage loan's terms or conditions. Changes to a residential mortgage loan's terms or conditions include, but are not limited to, forbearances; repayment plans; changes in interest rates, loan terms (length), or loan types; capitalizations of arrearages; or principal reductions.
"Residential mortgage loan modification services"
((includes negotiating, attempting to negotiate, arranging,
attempting to arrange, or otherwise offering to perform
residential mortgage loan modification services. Residential
mortgage loan modification services also includes the
collection of data for submission to an entity performing
mortgage loan modification services. Residential mortgage
loan modification services do not include actions by
individuals servicing a mortgage loan before July 1, 2011)).
See WAC 208-620-045.
(("Registered mortgage loan originator" means any
individual who (1) meets the definition of mortgage loan
originator and is an employee of: 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
(2) is registered with, and maintains a unique identifier
through, the nationwide mortgage licensing system and
registry.))
"S.A.F.E. Act" 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. 110-289, effective July 30, 2008; and Regulation G, 12 C.F.R. Part 1007; and Regulation H, 12 C.F.R. Part 1008.
"Senior officer" means an officer of a consumer loan company at the vice-president level or above.
"Service or servicing a loan." ((means on behalf of the
lender or investor of a residential mortgage loan:
(a) Collecting or receiving payments on existing obligations due and owing to the lender or investor, including payments of principal, interest, escrow amounts, and other amounts due;
(b) Collecting fees due to the servicer;
(c) Working with the borrower and the licensed lender or servicer to collect data and make decisions necessary to modify certain terms of those obligations either temporarily or permanently;
(d) Otherwise finalizing collection through the foreclosure process; or
(e) Servicing a reverse mortgage loan. See RCW 31.04.015(26).
"Service or servicing a reverse mortgage loan" means, pursuant to an agreement with the owner of a reverse mortgage loan: Calculating, collecting, or receiving payments of interest or other amounts due; administering advances to the borrower; and providing account statements to the borrower or lender. See RCW 31.04.015(27))) See WAC 208-620-055.
"Simple interest method" means the method of computing interest payable on a loan by applying the rate of interest specified in the note, or its periodic equivalent to the unpaid balance of the principal amount outstanding for the time outstanding. For nonresidential mortgage loans, each payment must first be applied to any unpaid penalties, fees, or charges, then to accumulated interest, and last to the unpaid balance of the principal amount until paid in full. In using such method, interest must not be payable in advance or compounded. For residential mortgage loans, each payment must be applied as directed in the loan documents.
"State" means the state of Washington.
"Subsidiary" means a person that is controlled by another.
"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.
"Telemarketing and Consumer Fraud and Abuse Act" means the Telemarketing and Consumer Fraud and Abuse Act, 15 U.S.C. § 6101 to 6108.
"Telephone Sales Rule" means the rules promulgated in 16 C.F.R. Part 310.
"Third-party residential mortgage loan modification services" means residential mortgage loan modification services offered or performed by any person other than the owner or servicer of the loan.
"Third-party service provider" means any person other than the licensee who provides goods or services to the licensee 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.
"Truth in Lending Act" means the Truth in Lending Act
(TILA), 15 U.S.C. Sections 1601 et seq., and Regulation Z, 12
C.F.R. Part 1026 (formerly 12 C.F.R. ((Sections)) Part 226
((et seq))).
"Unique identifier" means a number or other identifier
assigned by protocols established by the ((nationwide mortgage
licensing system and registry)) NMLS.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-010, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-010, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 78. 09-01-159, § 208-620-010, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-010, filed 1/27/06, effective 2/27/06. Statutory Authority: RCW 43.320.040, 31.04.045, [31.04].105, [31.04].145, [31.04].155 and [31.04].165. 96-04-013, § 208-620-010, filed 1/26/96, effective 2/26/96.]
[]
(1) Collecting or attempting to collect payments on existing obligations due and owing to the lender or investor, including payments of principal, interest, escrow amounts, and other amounts due;
(2) Collecting fees due to the servicer for the servicing activities;
(3) Working with the borrower to collect data and make decisions necessary to modify certain terms of those obligations either temporarily or permanently;
(4) Otherwise finalizing collection through the foreclosure process; or
(5) Servicing a reverse mortgage loan. See RCW 31.04.015(26).
[]
(2) Under RCW 31.04.025 (2)(e), any person making a loan primarily for business, commercial, or agricultural purposes unless the loan is secured by a lien on the borrower's primary residence.
(3) Under RCW 31.04.025 (2)(i), a nonprofit housing organization seeking exemption must meet the following standards:
(a) Has the status of a tax-exempt organization under Section 501(c)(3) of the Internal Revenue Code of 1986;
(b) Promotes affordable housing or provides home ownership education, or similar services;
(c) Conducts its activities in a manner that serves public or charitable purposes, rather than commercial purposes;
(d) Receives funding and revenue and charges fees in a manner that does not incentivize it or its employees to act other than in the best interests of its clients;
(e) Compensates its employees in a manner that does not incentivize employees to act other than in the best interests of its clients;
(f) Provides or identifies for the borrower residential mortgage loans with terms favorable to the borrower and comparable to mortgage loans and housing assistance provided under government housing assistance programs; and
(g) Meets other standards as prescribed by the director.
[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-104, filed 12/1/09, effective 1/1/10.]
(1) Registered mortgage loan originators ((employed by an
entity that is exempt from the act));
(2) Any individual who offers or negotiates terms of a residential mortgage loan with or on behalf of an immediate family member of the individual;
(3) Any individual who offers or negotiates terms of a residential mortgage loan secured by a dwelling that served as the individual's residence;
(4) A Washington licensed attorney who negotiates the
terms of a residential mortgage loan on behalf of a client as
an ancillary matter to the attorney's representation of the
client, unless the attorney is compensated by a lender, a
mortgage broker, or other mortgage loan originator or by any
agent of such lender, mortgage broker, or other mortgage loan
originator; ((and))
(5) Individuals who do not take residential mortgage loan applications or negotiate the terms of residential mortgage loans for compensation or gain or in the expectation of compensation or gain; and
(6)(a) An employee of a bona fide nonprofit organization who acts as a loan originator only with respect to his or her work duties to the bona fide nonprofit organization, and who acts as a loan originator only with respect to residential mortgage loans with terms that are favorable to the borrower.
(b) Terms favorable to the borrower are terms consistent with loan origination in a public or charitable context, rather than a commercial context.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-105, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-105, filed 12/1/09, effective 1/1/10.]
(1) If you broker)). Brokered loans ((under the Consumer
Loan Act license, you are subject to the act and the loans))
are subject to the annual assessment under WAC 208-620-240.
(((2) If you are licensed under the Mortgage Broker
Practices Act, chapter 19.146 RCW, you must comply with that
act. If you do hold that additional license, the loans you
broker are subject to that act and are not subject to the
annual assessment under this act.))
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-260, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-260, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040. 08-15-125, § 208-620-260, filed 7/22/08, effective 8/22/08. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-260, filed 1/27/06, effective 2/27/06.]
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-271, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-271, filed 12/1/09, effective 1/1/10.]
| 1. | Zero to twenty million in loans originated: | $30,000 |
| 2. | Twenty million to forty million: | $50,000 |
| 3. | Forty million to fifty million: | $100,000 |
| 4. | Fifty million and above: | $150,000 |
(a) If you originate residential mortgage loans, the bond amount is based on the annual dollar amount of residential mortgage loans you originate. Use the chart in subsection (1) of this section for the bond amount.
(b) If you only service residential mortgage loans, your bond amount at application is thirty thousand dollars. Thereafter and subject to annual adjustment, your bond amount is based on the annual dollar amount of the residential mortgage loans serviced pursuant to the following schedule (see RCW 31.04.045(6)):
| 1. | Zero to fifty million in loan principal: | $30,000 |
| 2. | Fifty million and above: | $50,000 |
(3) Third-party loan modification services. If you only offer third-party residential mortgage loan modification services, your bond amount is thirty thousand dollars.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-320, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-320, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 78. 09-01-159, § 208-620-320, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040. 08-15-125, § 208-620-320, filed 7/22/08, effective 8/22/08. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-320, filed 1/27/06, effective 2/27/06.]
(2) If you only service residential mortgage loans your initial bond amount is thirty thousand dollars. For subsequent years see the bonding chart in WAC 208-620-320.
(3) If you only provide third-party residential mortgage loan modification services, your bond amount is thirty thousand dollars initially and thereafter.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-325, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-325, filed 12/1/09, effective 1/1/10.]
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-328, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-328, filed 12/1/09, effective 1/1/10.]
[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-341, filed 12/1/09, effective 1/1/10.]
[]
(2) ((The licensee)) If you originate residential
mortgage loans, you must comply with RESPA ((Sec. 3500.15))
(12 C.F.R. 1024.14, including the required disclosures and
prohibitions on referral fees if:
(a) The licensee has effective control over the person sharing space; or
(b) The person sharing space has effective control over the licensee; or
(c) The licensee and the person sharing space are under common control by a third person; or
(d) The licensee is a corporation related to another corporation as parent to subsidiary and one refers business incident to or a part of a real estate settlement service to the other.
[Statutory Authority: RCW 43.320.040. 08-15-125, § 208-620-400, filed 7/22/08, effective 8/22/08. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-400, filed 1/27/06, effective 2/27/06.]
(1) Annual reports and assessment fee on activity ((due
March 1st)). You must provide the annual reports (annual
assessment report and consolidated annual report) and the
assessment fee by ((March 1st of each year)) the due date. ((The worksheet and annual assessment must also be provided to
the department by March 1st of each year.))
(2) Late penalties. ((A licensee that)) If you fail((s))
to submit the required annual reports((, worksheet,)) and
assessment fee by ((March 1st is)) the due date you are
subject to a penalty of fifty dollars ((per report)) for each
item for each day of delay. For example, if the department
receives the ((consolidated)) two annual reports and
((worksheet)) assessment fee on March 4th, ((the licensee))
you would have to pay an additional ((three)) four hundred
fifty dollars as a late penalty. If the items are filed with
the department more than thirty days after ceasing Washington
operations, the late penalty will accrue at the same rate.
The maximum late penalty that will be assessed is five
thousand dollars per reporting year. More penalties may be
assessed if the department must make a bond claim to collect
the amounts due. See subsection (3) of this section.
(3) Failure to file. If a licensee fails to pay its
annual assessment fee or file the annual reports by ((April
1st)) the due date the director may file a claim against the
licensee's surety bond for failing to ((faithfully conform to
and abide by)) comply with the Consumer Loan Act. The
department may make a claim ((on the licensee's surety bond))
for the late penalties under subsection (2) of this section
and the greater of:
(a) The assessment fee paid the previous year;
(b) The average annual assessment fee paid in the previous two years; or
(c) Fifteen hundred dollars.
(4) Annual reporting of residential mortgage loan data.
On an annual basis the company licensee must provide
information on the characteristics of residential mortgage
loan originations in an electronic format prescribed by the
((direction)) director.
(((5) Residential mortgage loan annual reports content.
(a) The director will provide the report format or forms and worksheet for the reporting requirement described in subsection (4) of this section.
(b) For the annual reporting of loan data, the company licensee must provide:
(i) Information sufficient to identify the mortgage loan and the unique identifier of the mortgage loan originator, mortgage broker (if applicable), and mortgage lender for the loan;
(ii) Information sufficient to enable a computation of key items in the federal truth in lending disclosures, including the annual percentage rate, finance charge, amount financed, a schedule of payments, and any deviations between the final disclosures and the most recent disclosures issued prior to the final disclosures;
(iii) Information included in the initial and any subsequent good faith estimate (GFE) disclosures required under the federal Real Estate Settlement Procedures Act including the rate, the date of any interest rate lock, itemization of settlement charges and all compensation;
(iv) Information included in the final HUD-1 Settlement Statement;
(v) Information related to the terms of the loans, including adjustable rate loan features (including timing of adjustments, indices used in setting rates, maximum and minimum adjustments, floors and ceilings of adjustments), the undiscounted interest rate (if maintained by the mortgage lender in an electronic format), penalties for late payments, and penalties for prepayment (including computation of the penalty amount, duration of prepayment penalty, the maximum amount of penalty);
(vi) Information typically used in underwriting, including the appraised value of the property, sales price of the property (if a purchase loan), loan to value, borrowers' income, monthly payment amount, housing debt-to-income ratio including taxes and insurance, total debt-to-income ratio including taxes and insurance, and credit score(s) of borrowers; and
(vii) Information included in a loan application register for mortgage lenders required to submit information pursuant to the federal Home Mortgage Disclosure Act.))
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-430, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-430, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040. 08-15-125, § 208-620-430, filed 7/22/08, effective 8/22/08. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-430, filed 1/27/06, effective 2/27/06.]
[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-505, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-505, filed 1/27/06, effective 2/27/06.]
(2) Proof of delivery. The licensee must be able to prove that the disclosures under subsection (1) of this section were provided within the required time frames. For purposes of determining the timeliness of the required early disclosures, the department may use the date of the credit report or may use the date of an application received from a broker. In most cases, proof of mailing is sufficient evidence of delivery. If the licensee has an established system of disclosure tracking that includes a disclosure and correspondence log, checklists, and a reasonable system for determining if a borrower did receive the documents, the licensee will be presumed to be in compliance.
(3) Residential mortgage loans -- Rate locks. Within three business days, including Saturdays, of receipt of a residential mortgage loan application you must provide the borrower with the following disclosure about the interest rate:
(a) If a rate lock agreement has not been entered into, you must disclose to the borrower that the disclosed interest rate and terms are subject to change. Compliance with the RESPA good faith estimate is considered compliance.
(b) If a rate lock agreement has been entered into you
must disclose to the borrower whether the rate lock agreement
is guaranteed ((and)), whether and under what conditions any
rate lock fees are refundable to the borrower, and:
(i) The number of days in the rate lock period;
(ii) The expiration date of the rate lock;
(iii) The rate of interest locked;
(iv) If applicable, the index and a brief explanation of the type of index used, the margin, the maximum interest rate, and the date of the first interest rate adjustment; and
(v) Any other terms of the rate lock agreement.
(c) If the borrower wants to lock the rate after the
initial disclosure, you must provide a new rate lock
((disclosure and a rate lock)) agreement within three business
days of the rate lock date that includes the ((following:
(i) The length of the rate lock period;
(ii) The expiration date of the rate lock;
(iii) The rate of interest locked;
(iv) If applicable, the index and a brief explanation of the type of index used, the margin, the maximum interest rate, and the date of the first interest rate adjustment; and
(v) Any other terms of the rate lock agreement)) items from (b) of this subsection.
(d) You must disclose payment of a rate lock fee as a cost in Block 2 of the GFE. On the HUD-1, the cost of the rate lock must be recorded on Line 802 and the credit must be recorded in section 204-209 with "P.O.C. (borrower)" recorded to the left of the borrower column.
(4) Residential mortgage loans -- Loans brokered ((loans))
to other creditors. Within three business days following
receipt of a residential mortgage loan application you must
provide to each borrower:
(a) If a rate lock agreement has not been entered into, you must disclose to the borrower that the disclosed interest rate and terms are subject to change. Compliance with the RESPA good faith estimate is in compliance with subsection (3)(a) of this section.
(b) An estimate of the annual percentage rate on the loan and a disclosure of whether or not the loan contains a prepayment penalty;
(((b))) (c) A good faith estimate that conforms with
RESPA ((24)), Regulation X, 12 C.F.R. ((3500)) 1024;
(((c))) (d) A truth in lending disclosure that conforms
with TILA, Regulation Z, 12 C.F.R. ((Section 226)) 1026.
(((d))) (e) A rate lock disclosure containing the
following:
(i) If a rate lock agreement has been entered into you
must disclose to the borrower whether the rate lock agreement
is guaranteed ((and)), whether and under what conditions any
rate lock fees are refundable to the borrower, and:
(A) The number of days in the rate lock period;
(B) The expiration date of the rate lock;
(C) The rate of interest locked;
(D) If applicable, the index and a brief explanation of the type of index used, the margin, the maximum interest rate, and the date of the first interest rate adjustment; and
(E) Any other terms of the rate lock agreement.
(ii) If the borrower wants to lock the rate after the
initial disclosure, you must provide a new rate lock
((disclosure and a rate lock)) agreement within three business
days of the rate lock date. The rate lock agreement must
include the ((following:
(A) The length of the rate lock period;
(B) The expiration date of the rate lock;
(C) The rate of interest locked;
(D) If applicable, the index and a brief explanation of the type of index used, the margin, the maximum interest rate, and the date of the first interest rate adjustment; and
(E) Any other terms of the rate lock agreement)) items from this subsection (4)(e).
(((e))) (f) You must disclose payment of a rate lock fee
as a cost in Block 2 of the GFE. On the HUD-1, the cost of
the rate lock must be recorded on Line 802 and the credit must
be recorded in section 204-209 with "P.O.C. (borrower)"
recorded to the left of the borrower column.
(5) Residential mortgage loans -- Shared appreciation mortgages (SAM) or mortgages with shared appreciation provisions. Within three business days following receipt of a loan application for a shared appreciation mortgage, or a mortgage with a shared appreciation provision, in addition to the disclosures required by federal law or by this chapter, you must provide each borrower with a written disclosure containing at a minimum the following:
(a) The percentage of shared equity or shared appreciation you will receive (or a formula for determining it);
(b) The value the borrower will receive for sharing his or her equity or appreciation;
(c) The conditions that will trigger the borrower's duty to pay;
(d) The conditions that may cause the lender to terminate the mortgage or shared appreciation provision early;
(e) The procedure for including qualifying major home improvements in the home's basis (if any);
(f) Whether a prepayment penalty applies or other conditions applicable, if a borrower wishes to repay the loan early, including but not limited to, any date certain after which the borrower can repay the loan by paying back the lender's funds plus accrued equity; and
(g) The date on which the SAM terminates and the equity or appreciation becomes payable if no triggering event occurs.
(6) Loan modifications. You must immediately inform the borrower in writing if the owner of the loan requires additional information from the borrower, or if it becomes apparent that a residential mortgage loan modification is not possible.
(7) Each licensee must maintain in its files sufficient information to show compliance with state and federal law.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-510, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-510, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-510, filed 1/27/06, effective 2/27/06.]
(2) You must provide the initial disclosure summary to the borrower within three business days following your receipt of a complete loan application.
(3) You must redisclose material loan terms within three days of a significant change, or at least three days before closing, whichever is earlier.
(4) You may provide the disclosure summary in electronic form, in a manner consistent with the procedure for delivery of electronic disclosure under Regulation Z of the Truth in Lending Act, 12 C.F.R. Part 226, currently in effect, which implements the E-Sign Act of 2000, 15 U.S.C. Sec. 7001 et seq.
(5) The department has developed model forms that comply with this provision. See the department's web site. See also RCW 19.144.020 and WAC 208-600-200.
(6) Disclosure in compliance with the Real Estate Settlement Procedures Act, 12 U.S.C. Sec. 2601, and Regulation X, 12 C.F.R. 1024.7 (formerly 24 C.F.R. Sec. 3500.7) is considered compliance with the disclosure requirements of this section.
[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-511, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 78. 09-01-159, § 208-620-511, filed 12/23/08, effective 1/23/09.]
(1) Lend money with a note rate that does not exceed twenty-five percent per annum as determined by the simple interest method of calculating interest owed. This applies only to nonmortgage loans, junior lien mortgage loans, and to lenders that are not "creditors" under the Depository Institutions Deregulatory and Monetary Control Act when making first lien mortgage loans. The requirement for the simple interest method of calculating interest does not apply to reverse mortgages.
(2) Make open-end loans as authorized in RCW 31.04.115 provided that:
(a) The annual fee allowed in RCW 31.04.115(3) may not exceed fifty dollars; and
(b) The annual fee must be charged in advance as a lump sum. It must not be charged monthly and must not be financed.
(3) In accordance with Title 48 RCW, sell insurance covering real and personal property, covering the life or disability or both of the borrower, covering the involuntary unemployment of the borrower, or other insurance products approved by the Washington state office of the insurance commissioner.
(4) Service residential mortgage loans. See also WAC 208-620-320, 208-620-325, 208-620-550, 208-620-551, and 208-620-900.
(5) Provide third-party loan modification services for residential mortgage loans. See also WAC 208-620-320, 208-620-325, 208-620-545, 208-620-550, and 208-620-552.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-515, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-515, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040. 08-15-125, § 208-620-515, filed 7/22/08, effective 8/22/08. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-515, filed 1/27/06, effective 2/27/06.]
(1) General records. Each licensee must maintain the
books, accounts, records, papers, documents, files, and other
information relevant to a loan or servicing of a loan for a
minimum of twenty-five months, or the period of time required
by federal law, whichever is longer, after making the final
entry on that loan at a licensed location ((approved by the
director. Mortgage transaction documents have a different
retention period; see subsection (3)(a) of this section)).
(2) Advertising records. These records 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.
(3) Other specific records. The records required under subsection (1) of this section include, but are not limited to:
(a) All loan agreements or notes and all addendums, riders, or other documents that supplement the final loan agreements;
(b) All forms of loan applications, written or electronic (the Fannie Mae 1003 is an example);
(c) The initial rate sheet or other supporting rate information;
(d) The last rate sheet, or other supporting rate information, if there was a change in rates, terms, or conditions prior to settlement;
(e) Rate lock agreements and the supporting rate sheets or other rate supporting document;
(f) All written disclosures required by the act and federal laws and regulations. Some examples of federal law disclosures include, but are not limited to: The good faith estimate, truth in lending disclosures, Equal Credit Opportunity Act disclosures, affiliated business arrangement disclosures, and RESPA servicing disclosure statement;
(g) Documents and records of compensation paid to employees and independent contractors;
(h) An accounting of all funds received in connection with loans with supporting data;
(i) Settlement statements (the final HUD-1 or HUD-1A);
(j) 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;
(k) Records of any fees refunded to applicants for loans that did not close;
(l) All file correspondence and logs;
(m) All mortgage broker contracts with lenders and all other correspondence with the lenders; and
(n) All documents used to support the underwriting approval.
(4) Loan servicing documents. See subsection (1) of this section.
(5) Abandoned records. If you do not maintain your records as required, you are responsible for the costs of collection, storage, conversion to electronic format, or proper destruction of the records.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-520, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-520, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-520, filed 1/27/06, effective 2/27/06.]
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-545, filed 10/5/10, effective 11/5/10.]
(1) Failure to provide the exact pay-off amount as of a certain date within five business days after being requested in writing to do so by a borrower of record or their authorized representative;
(2) Failure to record a borrower's payment as received on the day it is delivered to any of the licensee's locations during its regular working hours;
(3) Soliciting or entering into a contract with a borrower that provides in substance that the licensee may earn a fee or commission through its "best efforts" to obtain a loan even though no loan is actually obtained for the borrower;
(4) Engaging 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. See also WAC 208-620-630;
(5) 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;
(6) Making any payment, directly or indirectly, or withholding or threatening to withhold any payment, 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;
(7) Leaving blanks on a document that is signed by the borrower or providing the borrower with documents with blanks;
(8) Failing to clearly disclose to a borrower whether the payment advertised or offered for a real estate loan includes amounts for taxes, insurance or other products sold to the borrower;
(9) 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, unless mail has been previously returned as undeliverable from the address, in order to verify that the asset is not otherwise insured;
(10) Willfully filing a lien on property without a legal basis to do so;
(11) Coercing, intimidating, or threatening borrowers in any way with the intent of forcing them to complete a loan transaction;
(12) Failing to reconvey title to collateral, if any, within thirty business days when the loan is paid in full unless conditions exist that make compliance unreasonable;
(13) Intentionally delaying the closing of a residential mortgage loan for the sole purpose of increasing interest, costs, fees, or charges payable by the borrower;
(14) Steering a borrower to a residential mortgage loan with less favorable terms than they qualify for in order to increase the compensation paid to the company or mortgage loan originator. An example is counseling, or directing a borrower to accept a residential mortgage loan product with a risk grade less favorable than the risk grade the borrower would qualify for based on the licensee or other regulated person's then current underwriting guidelines, prudently applied, considering the information available to the licensee or other regulated person, including the information provided by the borrower;
(15) Failing to indicate on all residential mortgage loan applications the company's unique identifier, the loan originator's unique identifier, and the date the application was taken;
(16) Receiving compensation or anything of value from any party for assisting in real estate "flopping." Flopping occurs during some short sales where the value of the property is misrepresented to the lender who then authorizes the sale of the property for less than market value. The property is then resold at market value or near market value for a profit. The failure to disclose the true value of the property to the lender constitutes fraud and is a violation of this chapter;
(17) Receiving compensation for making the loan and for brokering the loan in the same transaction.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-550, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-550, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040. 08-15-125, § 208-620-550, filed 7/22/08, effective 8/22/08. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-550, filed 1/27/06, effective 2/27/06.]
(((1))) (a) Waive his or her legal defenses,
counterclaims, and other legal rights against the servicer for
future acts;
(((2))) (b) Waive his or her right to contest a future
foreclosure;
(((3))) (c) Waive his or her right to receive notice
before the owner or servicer of the loan initiates foreclosure
proceedings;
(((4))) (d) Agree to pay charges not enumerated in any
agreement between the borrower and the lender, servicer, or
owner of the loan; or
(((5))) (e) Cease communication with the lender or
investor.
(((6))) (2) As to force placed insurance you are
((further)) prohibited from:
(a) Purchasing insurance on a property secured by a loan
you service without providing ((one or more)) two prior
written notices to the ((borrower's)) homeowner's last known
address ((in order to verify that the property is not
otherwise insured.
(b))) seeking verification of existing insurance coverage. The notices must state:
(i) How the homeowner provides proof there is insurance coverage in place;
(ii) That without proof of insurance the servicer may obtain coverage at the homeowner's expense, that such coverage may only protect the mortgage holder, and that the cost of the coverage may be higher than that the homeowner may be able to obtain privately;
(iii) That the homeowner may request the servicer to set up an escrow account to advance insurance payments and that upon establishment of an escrow account the servicer may charge the borrower the amount of the insurance payments advanced on the borrower's behalf respecting the mortgaged property including a cushion amount (see WAC 208-620-900 (4)(b));
(iv) The second written notice must be sent thirty days after the first written notice.
(b) Failing to advance payments to a property insurer regardless of the homeowner making a payment to the servicer when the homeowner has an escrow account for the payment of insurance.
(c) Purchasing force placed insurance at a price that is not commercially reasonable.
(d) Collecting private mortgage insurance beyond the date for which private mortgage insurance is no longer required. You must terminate force placed insurance within thirty days of receiving evidence from the homeowner of the existence of coverage. You must refund to the homeowner all premiums for force placed insurance collected during any period of time for which the homeowner's private insurance was in place.
(3) You are additionally prohibited from:
(a) Knowingly misapplying or recklessly applying loan payments to the outstanding balance of a loan.
(((c))) (b) Knowingly misapplying or recklessly applying
payments to escrow accounts.
(((d))) (c) Charging excessive or unreasonable fees to
provide loan payoff information.
(((e))) (d) Knowingly or recklessly providing inaccurate
information to a credit bureau, thereby harming a borrower's
creditworthiness.
(((f) Collecting private mortgage insurance beyond the
date for which private mortgage insurance in no longer
required.
(g))) (e) Knowingly or recklessly facilitating the illegal foreclosure of real property collateral.
(4) You are prohibited from referring a delinquent mortgage to foreclosure if you have received the homeowner's loan modification application and you have not evaluated the homeowner for all available loan modifications.
(5) You are prohibited from using any funds in a suspense account to pay your own fees for servicing.
(6) You are prohibited from pursuing any collection activities while a complete loan modification application is being reviewed or while the borrower is making payments pursuant to a trial or permanent modification. This prohibition includes activities conducted by others on your behalf.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-551, filed 10/5/10, effective 11/5/10.]
(1) Collecting an advance fee ((of more than seven
hundred fifty dollars)).
(2) ((Collecting an advance fee without a written fee
agreement)) Charging total fees in excess of usual and
customary charges, or total fees that are not reasonable in
light of the service provided when providing residential
mortgage loan modification services.
(3) Failing to provide a written fee agreement as prescribed by the director when providing residential mortgage modification services. See also WAC 208-620-545.
(((3))) (4) As a condition to providing loan modification
services requiring or encouraging a borrower to:
(a) Waive his or her legal defenses, counterclaims, and other legal rights against the servicer for future acts;
(b) Waive his or her right to contest a future foreclosure;
(c) Waive his or her right to receive notice before the owner or servicer of the loan initiates foreclosure proceedings;
(d) Agree to pay charges not enumerated in any agreement between the borrower and the lender, servicer, or owner of the loan; or
(e) Cease communication with the lender, investor, or loan servicer or stop or delay making regularly scheduled payments on an existing mortgage unless a mortgage loan modification is completely negotiated and executed with the lender or investor and the modification agreement itself provides for a cessation or delay in making regularly scheduled payments; or
(f) Enter into any contract or agreement to purchase a borrower's property.
(((4))) (5) You are further prohibited from failing in a
timely manner to:
(a) Communicate with or on behalf of the borrower;
(b) Act on any reasonable request from or take any reasonable action on behalf of a borrower.
(((5))) (6) Engaging in false or misleading advertising. In addition to WAC 208-620-630, examples of false or
misleading advertising include:
(a) Advertising which includes a "guarantee" unless there is a bona fide guarantee which will benefit a borrower.
(b) Advertising which makes it appear that a licensee has a special relationship with lenders when no such relationship exists.
(((6))) (7) Leading a borrower to believe that the
borrower's credit record will not be negatively affected by a
mortgage loan modification when the licensee has reason to
believe that the borrower's credit record may be negatively
affected by the mortgage loan modification.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-552, filed 10/5/10, effective 11/5/10.]
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-568, filed 10/5/10, effective 11/5/10.]
(1) Failing to pay. Fails to pay a fee due the department;
(2) Injunction or administrative action. Is or has been subject to an injunction or a civil or administrative action issued pursuant to the Consumer Loan Act, the Consumer Protection Act, the Mortgage Broker Practices Act or similar laws of this state or another state;
(3) Substantial unpaid debt. Has accumulated substantial unpaid debt;
(4) Violation of lending laws. Has been found in violation of another state's lending laws, securities laws, real estate laws or insurance laws resulting in substantial license limitations or significant fines, restitution, or both;
(5) Criminal charges. The person is the subject of a criminal felony charge, or a criminal misdemeanor charge involving dishonesty or financial misconduct;
(6) Bond canceled. Has had its surety bond canceled or revoked for cause;
(7) Deterioration of business. Has allowed the licensed consumer loan business to deteriorate into a condition which would result in denial of a new application for a license;
(8) Aiding unlicensed practice. Has aided or abetted an unlicensed person to practice in violation of the Consumer Loan Act or the Mortgage Broker Practices Act;
(9) Incompetence resulting in injury. Has demonstrated incompetence or negligence that results in financial harm to a person or that creates an unreasonable risk that a person may be harmed;
(10) Insolvency. Is insolvent in the sense that the value of the licensee's liabilities exceeds its assets or in the sense that the applicant or licensee cannot meet its obligations as they mature;
(11) Failure to comply. Has failed to comply with an order, directive, subpoena, or requirement of the director, or his or her designee, or with an assurance of discontinuance entered into with the director, or his or her designee;
(12) Misrepresentation or fraud. Has performed an act of misrepresentation or fraud in any aspect of the conduct of the lending or brokering business or profession;
(13) Failure to cooperate. Has failed to cooperate with the director, or his or her designee, including without limitation by:
(a) Not furnishing records requested by the director for purposes of conducting a lawful investigation for disciplinary actions or denial, suspension, or revocation of a license; or
(b) Not furnishing records requested by the director for purposes of conducting a lawful investigation into a complaint against the licensee filed with the department, or providing a full and complete written explanation of the circumstances of the complaint upon request by the director;
(14) Interference with investigation. Has interfered with a lawful investigation or disciplinary proceeding by willful misrepresentation of facts before the director or the 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.
[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-570, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-570, filed 1/27/06, effective 2/27/06.]
(2) The director may impose fines of up to one hundred dollars per day upon the licensee, its employees or loan originators, or other persons subject to this chapter for any violation of this chapter or for failure to comply with any order or subpoena issued by the director under this chapter.
(3) Each day's continuance of the violation is a separate and distinct offense.
(4) Testimony. The director or designees may require the attendance of and examine under oath all persons whose testimony may be required about the loans or the business or the subject matter of any investigation, examination, or hearing.
(((2))) (5) Production of records or copies. The
director or designee may require the production of books,
accounts, papers, records, files, and any other information
deemed relevant to the inquiry. The director may require the
production of original books, accounts, papers, records,
files, and other information; may require that such original
books, accounts, papers, records, files, and other information
be copied; or may make copies himself or herself or by
designee of such original books, accounts, papers, records,
files, or other information.
(((3))) (6) Subpoena authority. If a licensee or person
does not attend and testify, or does not produce the requested
books, accounts, papers, records, files, or other information,
then the director or designated persons may issue a subpoena
or subpoena duces tecum requiring attendance or compelling
production of the books, accounts, papers, records, files, or
other information.
[Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-610, filed 1/27/06, effective 2/27/06.]
(1) Underwriting standards. To ensure that underwriting standards are consistent with prudent lending practices, the underwriting standards should include, at a minimum, an analysis of borrower characteristics, loan product attributes, and the borrower's ability to repay the obligation.
(a) Analysis of borrower characteristics. The analysis must include tolerances for combining borrowers with certain characteristics with certain nontraditional loan products.
The criteria or range of reasonable tolerances should consider the characteristics listed in the 2001 Interagency Expanded Guidance for Subprime Lending Programs.
(b) Loan product attributes. Products with the following attributes, when combined with the borrower characteristics above result in higher risk. The risks are increased if borrowers are not adequately informed of the product features and risks.
• 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. 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. Loans made to subprime borrowers must not contain any provisions that may lead to negative amortization.
• Very high or no limits on how much the payment amount or the interest rate may increase.
• Limited or no documentation of the borrower's income. Stated income is only acceptable if there are mitigating factors that clearly minimize the need for direct verification of repayment capacity. Licensees generally must be able to readily document income using recent W-2 statements, pay stubs, or tax returns. An exception to this is when the loan product underwriting itself contemplates reduced documentation (for example, FHA loans).
• Substantial prepayment penalties or prepayment penalties that extend beyond sixty days prior to the date the interest rate will reset.
• Simultaneous second lien loans. When features are layered, mitigating factors should be present to support the underwriting decision and the borrower's repayment capacity.
(c) Ability to repay. For all nontraditional mortgage loan products, the analysis of a borrower's repayment capacity must include an evaluation of their ability to repay the debt by final maturity at the fully indexed rate, assuming a fully amortizing repayment schedule. In addition, for prime borrowers qualifying for loan products that permit negative amortization, the repayment analysis must be based on the initial loan amount plus any balance increase that may accrue from the negative amortization provision. The analysis should avoid over reliance on credit scores as a substitute for income verification. The higher a loan's credit risk, either from borrower characteristics or loan features, the more important it is to verify the borrower's income, assets, and outstanding liabilities.
(2) Risk management. The scope of the risk management activities should be determined by the volume of nontraditional mortgages originated or used as investment. Licensees that target subprime borrowers through tailored marketing, underwriting standards, and risk selection must ensure that such programs do not feature terms that could become predatory or abusive. Policy topics should include, at a minimum:
(a) Acceptable product attributes;
(b) Production, sales and securitization practices;
(c) Limits on risk layering. When features are layered, licensees should demonstrate that mitigating factors support the underwriting decision and the borrower's repayment capacity. Mitigating factors could include higher credit scores, lower LTV and DTI ratios, significant liquid assets, mortgage insurance, or other credit enhancements;
(d) Growth and volume limits by loan type;
(e) Performance measures. Incentive programs should not produce high concentrations of nontraditional products. Design performance measures and reporting systems that provide early warning for increased risk;
(f) Management reporting and quality control. Focus on the high risk lending activities. Monitor and document compliance with underwriting standards. Quality control should include regular audits of nontraditional loan products. Perform due diligence in establishing and maintaining relationships with third party originators. Third party originations must meet the underwriting standards. Document and respond in writing to all complaints. Take immediate remedial action which could include more thorough application reviews, more frequent reunderwriting, or terminating the third party originator;
(g) Secondary market activity. The risk management practices should be commensurate with the nature and volume of activity and should include contingency planning for response to reduced demand in the secondary market. Establish a policy on repurchase practices.
(3) 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. Specifically:
• 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.
• Licensees must apprise borrowers 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.
• If negative amortization is possible under the terms of a nontraditional mortgage product, borrowers must be advised of the potential for increasing principal balances and decreasing home equity as a consequence of the borrower making minimum payments.
• 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.
• Monthly statements must provide information that enables borrowers to make informed payment choices, including an explanation of each payment option available and the impact of that choice on loan balances. For example, the monthly payment statement must contain an explanation, if applicable, next to the minimum payment amount that making this payment would result in an increase to the borrower's principal loan balance.
(4) Control standards. (((a))) 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.
(((b) Reporting to DFI. In a separate written document,
as prescribed by the director and submitted with the
consolidated annual report, every licensee must submit
information regarding the offering of nontraditional mortgage
loan products as prescribed by rule.))
[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-613, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 78. 09-01-159, § 208-620-613, filed 12/23/08, effective 1/23/09.]
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-620, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-620, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-620, filed 1/27/06, effective 2/27/06.]
(1) Main or home page.
(a) The company's license name and NMLS unique identifier must be displayed on the licensee's main or home web page.
(b) If mortgage loan originators are named, their NMLS numbers must follow the names.
(c) The main or home page must also contain a link to the NMLS consumer access web site page for the company.
(2) Branch office web page - no DBA. Comply with subsection (1) of this section.
(3) Main or branch office web page - DBA. If the company
uses a DBA on a web page the web page must also contain the
main office license name, ((comply)) license number, be in
compliance with subsection (1)(b) of this section, and the web
page must contain a link to the NMLS consumer access web site
page for the company.
(4) Mortgage loan originator web page. If a loan
originator maintains a separate home or main page, ((the URL
address to the site must be a DBA of the licensee and)) the
licensee's name and license number must also appear on the web
page. The web page must also contain the loan originator's
NMLS number and a link to the NMLS consumer access web page
for the company.
(5) Compliance with other laws. Web site content used to solicit Washington consumers must comply with all relevant state and federal statutes for specific services and products advertised on the web site.
(6) Oversight. The company is responsible for web site content displayed on all company web pages used to solicit Washington consumers including main, branch, and mortgage loan originator web pages.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-622, filed 10/5/10, effective 11/5/10.]
(a) Characterizing products as "government loan programs," "government-supported loans," or other words that may mislead a consumer into believing that the government is guaranteeing, endorsing, or supporting the advertised loan product. Using the words "FHA loan," "VA loan," or words for other products that are in fact endorsed or sponsored by a federal, state, or local government entity is allowed.
(b) An official-looking emblem such as an eagle, the Statue of Liberty, or a crest or seal that resembles one used by any state or federal government agency.
(c) Envelopes designed to resemble official government mailings, such as IRS or U.S. Treasury envelopes, or other government mailers.
(d) Warnings or notices citing government codes or form numbers not required by the U.S. Postmaster to be shown on the mailing.
(e) The use of the term "official business," or similar language implying official or government business, without also including the name of the sender.
(f) Any suggestion or representation that the licensee is, or is affiliated with, a state or federal agency, municipality, bank, savings bank, trust company, savings and loan association, building and loan association, credit union, or other entity that it does not actually represent.
(2) When I am advertising interest rates, the act requires me to conspicuously disclose the annual percentage rate (APR) implied by the rate of interest. What does it mean to "conspicuously" disclose the APR? The required disclosures in your advertisement must be reasonably understandable. Consumers must be able to see, read, or hear, and understand the information. Many factors, including the size, duration, and location of the required disclosures, and the background or other information in the advertisement, can affect whether the information is clear and conspicuous. This requirement applies to all mandatory disclosures. The disclosure of the APR must be at least equivalent to any other rates disclosed in the advertisement.
(3) The act prohibits me from advertising an interest rate unless that rate is actually available at the time of the advertisement. How may I establish that an advertised interest rate was "actually available" at the time it was advertised? Whenever a specific interest rate is advertised, the licensee must retain a copy of supporting rate information, and the APR calculation for the advertised interest rate.
(4) Must I quote the annual percentage rate when discussing rates with a borrower? Yes. You must quote the annual percentage rate and other terms of the loan if you give an oral quote of an interest rate to the borrower. TILA's Regulation Z, 12 C.F.R., part 226.26 provides guidance for using the annual percentage rate in oral disclosures.
(5) May a licensee advertise rates or fees as the "lowest" or "best"? No. Rates described as "lowest," "best," or other similar words cannot be proven to be actually available at the time they are advertised. Therefore, they are a false or deceptive statement or representation prohibited by RCW 31.04.027.
(6) May I solicit using advertising that suggests or represents that I am affiliated with a state or federal agency, municipality, federally insured financial institution, trust company, building and loan association, when I am not; or that I am an entity other than who I am? No. It is an unfair and deceptive act or practice and a violation of the act for you to suggest or represent that you are affiliated with a state or federal agency, municipality, federally insured financial institution, trust company, building and loan association, or other entity you do not actually represent; or to suggest or represent that you are any entity other than who you are.
(7) If I advertise using a borrower's current loan information, what must I disclose about that information? When an advertisement includes information about a borrower's current loan that you did not obtain from a solicitation, application, or loan, you must provide the borrower with the name of the source of the information.
(8) Is it a violation to advertise that third-party
services are "free" when the licensee has paid for the
services? Yes. Advertising using the term "free," or any
other similar term or phrase that implies there is no cost to
the applicant is deceptive because you can recover the cost of
the purportedly "free" item through the negotiation process.
This is a violation of RCW 31.04.027 (2), (7), and (((10)))
(12). See the Federal Trade Commission's Guide Concerning Use
of the Word "Free" and Similar Representations, available at
http://www.ftc.gov/bcp/guides/free.htm, 16 C.F.R. § 251.1(g)
(2003).
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-630, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-630, filed 12/1/09, effective 1/1/10. Statutory Authority: RCW 43.320.040, 19.144.070, 2008 c 78. 09-01-159, § 208-620-630, filed 12/23/08, effective 1/23/09. Statutory Authority: RCW 43.320.040. 08-15-125, § 208-620-630, filed 7/22/08, effective 8/22/08. Statutory Authority: RCW 31.04.165, 31.04.015, 31.04.045, 31.04.075, 31.04.085, 31.04.093, 31.04.102, 31.04.115, 31.04.145, 31.04.155, and 31.04.175. 06-04-053, § 208-620-630, filed 1/27/06, effective 2/27/06.]
(2) How do I apply for a loan originator license? Your
application consists of filing an on-line application through
the ((NMLSR)) NMLS and providing Washington specific
requirements directly to DFI. You must pay an application fee
and filing fee through the ((NMLSR system)) NMLS.
(3) What are the eligibility requirements to become a licensed loan originator?
(a) Be eighteen years or older.
(b) Have a high school diploma, an equivalent to a high school diploma, or three years work experience in the industry.
(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.
(iii) In addition to supplying the application information, both you and the company intending to sponsor you must be in good standing with the department.
(c) Demonstrate financial responsibility. For the purposes of this section, an applicant has not demonstrated financial responsibility when the applicant shows disregard in the management of his or her financial condition. A determination that an individual has shown disregard in the management of his or her financial condition may include, but is not limited to, an assessment of: Your credit report, current outstanding judgments, except judgments solely as a result of medical expenses; current outstanding tax liens or judgments or other government liens or 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 receive a loan originator license if you have one hundred thousand dollars or more of tax liens against you at the time of application.
(d) Complete twenty hours of prelicensing education from
an ((NMLSR)) NMLS approved provider. See WAC 208-620-720.
(e) Pass a licensing test. You must take and pass the
((NMLSR)) NMLS tests that assess your knowledge of the
mortgage business and related regulations at the federal and
state level. See WAC 208-620-725.
(f) Complete prelicensing education. You must complete prelicensing education. See WAC 208-620-720.
(g) Submit an application. You must complete an
application through the ((NMLSR)) NMLS and provide information
directly to DFI. You must pay application and filing fees to
the ((NMLSR)) NMLS.
(h) Prove your identity. You must provide information to prove your identity.
(i) Provide a bond.
(i) If you are employed by a company that is exempt from licensing, or uses a bond substitute, you must obtain and maintain an individual bond based on the volume of your mortgage loan origination activity. By March 1st of each year, you must determine your required bond amount and provide DFI with proof of having an adequate bond. The bond must be in the following amount:
| 1. | Zero to twenty million in loans originated: | $20,000 |
| 2. | Twenty million to thirty million: | $30,000 |
| 3. | Thirty million to forty million: | $40,000 |
| 4. | Forty million and above: | $50,000 |
| 1. | Zero to fifty million in loans originated: | $10,000 |
| 2. | Fifty +: | $20,000 |
(4) 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. 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.
(c) Criminal history. You are not eligible for a loan originator license if you have been convicted of, or pled guilty or nolo contendere to a felony in a domestic, foreign, or military court:
(i) During the seven-year period preceding the date of the application for licensing and registration; or
(ii) At any time preceding the date of application, if the felony involved an act of fraud, dishonesty, breach of trust, or money laundering.
(5) What will happen if my loan originator license
application is incomplete? After submitting your on-line
application through the ((NMLSR)) NMLS and filing the required
information and documentation with the department, the
department will notify you of any application deficiencies.
(6) How do I withdraw my application for a loan originator license?
(a) Once you have submitted the on-line application
through ((NMLSR)) NMLS you may withdraw the application
through ((NMLSR)) NMLS. You will not receive a refund of the
((NMLSR)) NMLS filing fee or the amount the department uses to
investigate your license application.
(b) The withdrawal of your license application will not
affect any license suspension or revocation proceedings in
progress at the time you withdraw your application through the
((NMLSR)) NMLS.
(7) When will the department consider my loan originator license application to be abandoned? If you do not respond within fifteen days and as directed by the department, 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.
(8) What happens if the department denies my application for a loan originator license, and what are my rights if the license is denied? See WAC 208-620-615.
(9) 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.
(10) How do I change information on my loan originator
license? You must submit an amendment to your license through
the ((NMLSR)) NMLS. You may be charged a fee.
(11) What is an inactive loan originator license? When a licensed loan originator is not sponsored by a licensed or exempt entity, 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.
(12) 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.
(13) 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.
(14) 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.
(15) How do I activate my loan originator license? The
sponsoring company must submit a sponsorship request for your
license through the ((NMLSR)) NMLS. The department will
notify you and the sponsoring company if approved.
(16) 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 meet the minimum requirements to obtain a license under the S.A.F.E. Act to receive an interim license.
(17) 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.
(18) How do I renew my loan originator license?
(a) Before the license expiration date you must renew
your license through the ((NMLSR)) NMLS. Renewal consists of:
(i) Paying the annual assessment fee; and
(ii) Meeting the continuing education requirement. You will not have a continuing education requirement in the year in which you complete the core twenty hours of prelicensing education. See WAC 208-620-730.
(b) The renewed license is valid until it expires, or is surrendered, suspended or revoked.
(19) If I let my loan originator license expire, must I
apply to get a new license? If you complete all the
requirements for renewal ((before March 1st)) on or before the
last day of February each year, you may renew an existing
license. However, if you renew your license during this
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) of this section
for the license renewal requirements.
During this 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 by March 1st. If you fail to comply with the renewal request requirements you must apply for a new license.
(20) 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.
(21) 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.
(22) May I surrender my loan originator's license? Yes.
Only you may surrender your license before the license expires
through the ((NMLSR)) NMLS.
Surrendering your loan originator license does not change your civil or criminal liability, or your liability for any administrative actions arising from acts or omissions occurring before the license surrender.
(23) Must I display my loan originator license where I work as a loan originator? No. Neither you nor the 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) 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 license name. You
must also display the license number and name as it appears on
the license of the company you represent, on the web site.
(25) Must I include my loan originator license number on any documents? You must include your license number immediately following your name on solicitations, correspondence, business cards, advertisements, and residential mortgage loan applications.
(26) 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 company 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) 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."
(28) As a licensed mortgage loan originator, what are my reporting responsibilities? You must notify the director through amendment to the NMLS within ten business days to a change of:
(a) Answers to the NMLS generated disclosure questions;
(b) Sponsorship status;
(c) Residence address; or
(d) Any change in the information supplied to the director in your original application.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-710, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-710, filed 12/1/09, effective 1/1/10.]
(1) You must take and pass the ((NMLSR)) NMLS sponsored
loan originator test. The test has two parts; one on federal
law and regulation, and one on Washington specific law and
regulation. You must receive a score of seventy-five percent
or higher to pass the test.
(2) Where may I find information about the loan
originator test? The ((NMLSR)) NMLS web site will publish the
names and contact information of approved testing providers.
(3) How much does the loan originator test cost? Testing
costs are set by the test provider and the ((NMLSR)) NMLS and
may be modified from time to time. The ((NMLSR)) NMLS web
site will publish the current testing fee with the testing
provider contact information.
(4) How do I register to take the loan originator test?
Register through the ((NMLSR)) NMLS 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.
(6) After passing the ((NMLSR)) loan originator test,
will I have to take it again? If you fail to maintain a valid
license for a period of five years or longer you must retake
the test, not taking into account any time during which you
were a registered mortgage loan originator.
(7) How soon after failing the loan originator test may I
take it again? After taking and failing the test you must
wait thirty days before taking it again. After failing
((four)) three consecutive times, you must then wait at least
six months before taking the test again.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-725, filed 10/5/10, effective 11/5/10. Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-725, filed 12/1/09, effective 1/1/10.]
(2) 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.
(3) If I teach an approved continuing education course may I use my course as credit toward my annual loan originator continuing education requirement? Yes. As an instructor of an approved continuing education course, you may receive credit for your annually required loan originator 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.
(4) 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.
(5) 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 ((208-620-XXX)) 208-620-710 to renew your license if
you miss the December 31st renewal deadline.
(6) How will I know which courses and providers satisfy
the continuing education requirement? ((NMLSR)) NMLS will
publish information about approved continuing education
providers on their web site.
(7) How do I provide the department with proof of the continuing education courses I have completed?
(((a) For SAFE required courses,)) The course provider
will report your continuing education to the ((NMLSR)) NMLS
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.))
[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-730, filed 12/1/09, effective 1/1/10.]
[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-805, filed 12/1/09, effective 1/1/10.]
(a) Prepayment, in whole or in part, or the refinancing
of a reverse mortgage loan, must be permitted without penalty
at any time during the term of the reverse mortgage loan. For
the purposes of this subsection, penalty ((does not include))
means an amount of money charged to the borrower in addition
to any fees, payments, or other charges, not including
interest, that would have otherwise been due upon the reverse
mortgage being due and payable. However, when a reverse
mortgage lender has paid or waived all of the usual fees or
costs associated with a reverse mortgage loan, a prepayment
penalty may be imposed, provided the penalty does not exceed
the total amount of the usual fees or costs that were
initially absorbed or waived by the reverse mortgage lender.
(b) You may not impose a prepayment penalty under this subsection if the prepayment is caused by the occurrence of the death of the borrower.
(c) If a prepayment penalty is imposed under the circumstances described in (a) of this subsection you must disclose the prepayment penalty to the borrower.
(2) Interest rate. A reverse mortgage loan may provide for a fixed or adjustable interest rate or combination thereof, including compound interest, and may also provide for interest that is contingent on the value of the property upon execution of the loan or at maturity, or on changes in value between closing and maturity.
(3) Late advances. A late advance is a scheduled monthly advance that you do not mail or electronically transfer to the borrower on or before the first business day of the month, or within five business days of the date you receive the borrower's request, or such other regularly scheduled contractual date.
(a) If you make a late advance you must pay a late charge of ten percent of the entire amount that should have been advanced to the borrower.
(b) For each additional day you fail to make the advance, you must pay interest on the late advance at the interest rate stated in the loan documents. If the loan documents provide for an adjustable interest rate, the rate in effect when the late charge first accrues is used. You must pay late charges from your funds and they may not be added to the unpaid principal balance of the borrower's loan or in any other way collected from the borrower.
(c) You forfeit the right to interest and monthly servicing fees for any months you fail to make a timely advance.
(4) Loan acceleration. The reverse mortgage loan may become due and payable upon the occurrence of any one of the following events:
(a) The home securing the loan is sold or title to the home is otherwise transferred;
(b) All borrowers cease occupying the home as a principal residence, except as provided in subsection (5) of this section; or
(c) A defaulting event occurs which is specified in the loan documents.
(5) Repayment. Repayment of the reverse mortgage loan is subject to the following additional conditions:
(a) Temporary absences from the home not exceeding one hundred eighty consecutive days do not cause the mortgage to become due and payable;
(b) Extended absences from the home exceeding one hundred eighty consecutive days, but less than one year, do not cause the mortgage to become due and payable if the borrower has taken prior action that secures and protects the home in a satisfactory manner, as specified in the loan documents;
(c) Your right to collect reverse mortgage loan proceeds is subject to the applicable statute of limitations for written loan contracts. Notwithstanding any other provision of law, the statute of limitations commences on the date that the reverse mortgage loan becomes due and payable as provided in the loan agreement;
(d) If the borrower mortgaged one hundred percent of the full value of the house, the amount owed will be the lesser amount of:
(i) The fair market value of the house, minus the sale costs; or
(ii) The outstanding balance of the loan.
(e) If the borrower mortgaged less than one hundred percent of the full value of the house, the amount owed by the borrower must not be greater than the outstanding balance of the loan or the percentage of the fair market value (minus sale costs, as provided in the contract), whichever amount is less;
(f) The lender must enforce the debt only through the sale of the property and must not obtain a deficiency judgment against the borrower.
(6) Fee disclosure. Using conspicuous, bold sixteen-point or larger type, you must disclose in the loan agreement any interest rate or other fees to be charged during the period that commences on the date that the reverse mortgage loan becomes due and payable, and that ends when repayment in full is made.
(7) Deed of trust disclosure. The first page of any deed of trust securing a reverse mortgage loan must contain the following statement in sixteen-point boldface type: "This deed of trust secures a reverse mortgage loan."
(8) Ancillary products. You or any other party that participates in the origination of a reverse mortgage loan must not require an applicant for a reverse mortgage to purchase an annuity, insurance, or other financial product as a condition of obtaining a reverse mortgage loan. You or the broker of a reverse mortgage loan must not:
(a) Offer an annuity, insurance, or other financial product to the borrower prior to the closing of the reverse mortgage or before the expiration of the borrower's right to rescind the reverse mortgage agreement;
(b) Refer the borrower to anyone for the purchase of an annuity, insurance, or other financial product prior to the closing of the reverse mortgage or before the expiration of the borrower's right to rescind the reverse mortgage agreement;
(c) Provide marketing information or sales leads to anyone regarding the prospective borrower or receive any compensation for such an annuity, insurance, or other financial product sale or referral; or
(d) You or any other party that participates in the origination of a reverse mortgage loan must maintain safeguards, acceptable to the department of financial institutions, to ensure that you do not provide reverse mortgage borrowers with any other financial or insurance products and that individuals participating in the origination of a reverse mortgage loan have no ability or incentive to provide the borrower with any other financial or insurance product.
(9) Borrower counseling. Prior to accepting a final and complete application for a reverse mortgage loan or assessing any fees, you must refer the prospective borrower to an independent housing counseling agency approved by the federal department of Housing and Urban Development for counseling. The counseling must meet the standards and requirements established by the federal department of Housing and Urban Development for reverse mortgage counseling. You must provide the borrower with a list of at least five independent housing counseling agencies approved by the federal department of Housing and Urban Development, including at least two agencies that can provide counseling by telephone. Telephone counseling will only be used for counseling at the borrower's request. You must create and maintain a form that includes the borrower's signature for telephone counseling requests.
(10) Counseling certification. You must not accept a final and complete application for a reverse mortgage loan from a prospective applicant or assess any fees upon a prospective applicant without first receiving a certification from the applicant or the applicant's authorized representative that the applicant has received counseling from an agency as described in subsection (9) of this section. The certification must be signed by the borrower and the agency counselor, and must include the date of the counseling and the names, addresses, and telephone numbers of both the counselor and the borrower. Electronic facsimile copy of the housing counseling certification satisfies the requirements of this subsection. You must maintain the certification in an accurate, reproducible, and accessible format for the term of the reverse mortgage plus three years.
(11) Minimum age. You may not make a reverse mortgage loan to any Washington state resident unless that resident is a minimum of sixty years of age as of the date of execution of the loan.
(12) Advances. Except for the initial disbursement of moneys to the closing agent, you must issue advances directly to the borrower, or his or her legal representative, and not to an intermediary or third party.
(13) Rescission rights. The borrower in a proprietary reverse mortgage transaction has the same right to rescind the transaction as provided in the Truth in Lending Act, Regulation Z, 12 C.F.R. Sec. 226.
(14) Property appraisals. Prior to execution of the loan and at the end of the loan term, you must obtain an independent appraisal of the property value, or use the current year's tax assessment valuation of the property. You must provide copies of these appraisals to the borrower within five days of the borrower's written request, provided the borrower has paid for the appraisal.
[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-820, filed 12/1/09, effective 1/1/10.]
(2) A copy of each proprietary loan product contract.
(3) A copy of all disclosures provided to borrowers for all proprietary reverse mortgage products.
(4) A copy of the projected total cost of credit disclosure provided to borrowers. The projected total cost of credit disclosure must reflect at a minimum the following factors, as applicable:
(a) All costs and charges to the consumer;
(b) All advances to and for the benefit of the consumer;
(c) Any shared appreciation or equity in the dwelling that you are entitled to receive under the contract to receive;
(d) Any limitation on the consumer's liability (such as nonrecourse limits and equity conservation agreements);
(e) Each of the assumed annual appreciation rates for the dwelling:
(i) Zero percent;
(ii) Four percent;
(iii) Eight percent;
(f) Each of the following assumed loan periods:
(i) Two years;
(ii) The actuarial life expectancy of the consumer to become obligated on the reverse mortgage transaction (as of the consumer's most recent birthday). If there is more than one consumer, the period must be the actuarial life expectancy of the youngest consumer as of that consumer's most recent birthday;
(g) Reserved.
(5) Your complaint processing policies and procedures.
(6) A copy of all notes and mortgages used in proprietary reverse mortgage loan transactions.
(7) If third party originators are used, copies of all due diligence policies and procedures for their use and copies of all compensation and incentive policies and procedures.
(8) A copy of your underwriting policies.
(9) A description of your title search methods.
(10) A copy of your policy for paying subsequent liens.
(11) A copy of your appraisal practices.
(12) A copy of audited financial statements and unaudited balance sheet and income statement for the most recent end quarter for the last two years of audited financial statements. If you are relying on your parent company's capital to satisfy WAC 208-620-810(2), you must also include the parent company's last two years of audited financial statements and the most recent end quarter unaudited balance sheet and income statement.
[Statutory Authority: RCW 43.320.040, 31.04.165, 2009 c 120, and 2009 c 149. 09-24-090, § 208-620-825, filed 12/1/09, effective 1/1/10.]
(1) Other applicable laws, regulations, and programs. Comply with the following:
(a) Chapters 61.24 and 19.148 RCW and any other applicable state or federal law, regulation, and program. Any conflict that arises between this chapter and chapter 19.148 RCW will be resolved in favor of this chapter.
(b) Comply with ((applicable federal laws or regulations
when servicing a residential mortgage loan)) the federal
Servicemembers Civil Relief Act.
(((b) Comply with applicable federal laws or regulations
when servicing a residential mortgage loan guaranteed or
insured by a government program.
(c) Comply with applicable federal laws or regulations when servicing a residential mortgage loan guaranteed or insured by Fannie Mae or Freddie Mac.
(d))) (c) A violation of an applicable state or federal
law ((or)), regulation, or program is a violation of this act.
(2) ((Comply with chapter 19.148 RCW.
(3) You must assess fees to a borrower's account within forty-five days of the date on which the fee was incurred. You must clearly and conspicuously explain the fee in a statement mailed to the borrower at the borrower's last known address no more than thirty days after assessing the fee.
(4)(a) You must accept and credit all amounts received within one business day of receipt when the borrower has made the payment to the address where instructed, provided that the borrower has provided sufficient information to credit the account. If you use the scheduled method of accounting, any regularly scheduled payment made prior to the scheduled due date must be credited no later than the due date.
(b) You may enter into a written contract with the borrower whereby you hold funds of a certain type or sent by a certain method for a period of time until the funds are available.
(5) You must notify the borrower if a payment is received but not credited. You must mail the notification to the borrower within ten business days by mail at the borrower's last known address. The notification must identify the reason the payment was not credited or treated as credited to the account, as well as any actions the borrower must take to make the residential mortgage loan current.
(6))) Servicing and ownership transfers or sales.
(a) As to acquiring servicing rights from another servicer you must:
(i) Continue processing loan modification requests and honoring trial and permanent modifications;
(ii) Designate the homeowner as a third-party intended beneficiary in any subsequent contract for transfer or sale, unless doing so would violate another state law or federal HAMP or GSE modification programs requirements; and
(b) As to transferring or selling the servicing of loans with pending modification requests or trial or permanent modifications you must:
(i) Inform the successor servicer if a loan modification is pending;
(ii) Obligate the successor servicer to accept and continue processing loan modification requests and to honor trial and permanent loan modification agreements; and
(iii) Designate the homeowner as a third-party intended beneficiary in any contract for transfer or sale, unless doing so would violate state law or federal HAMP or GSE modification programs requirements.
(3) Payment processing and fees.
(a) You must accept and credit all amounts received within one business day of receipt when the borrower has made the payment to the address where instructed, provided, that the borrower has provided sufficient information to credit the account. If you use the scheduled method of accounting, any regularly scheduled payment made prior to the scheduled due date must be credited no later than the due date. You must apply the payment as specified in the loan documents.
(b) You may enter into a written contract with the borrower whereby you hold funds of a certain type or sent by a certain method for a period of time until the funds are available before crediting them to the borrower's account.
(c) You must notify the borrower if a payment is received but not credited and instead placed in a suspense account. You must mail the notification to the borrower within ten business days by mail at the borrower's last known address. The notification must identify the reason the payment was not credited or treated as credited to the account, as well as any actions the borrower must take to make the residential mortgage loan current. If you provide monthly or more frequent statements that include this information you are not required to provide the information in a notice in addition to the monthly or more frequent statement. In the event of a conflict between this subsection (3)(c) or (d) of this section immediately following or both, and the requirements of an applicable bankruptcy court order, compliance with the bankruptcy court requirements are considered compliance with the subsections.
(d) When the suspense account contains enough money to make a full payment, you must apply that payment to the mortgage as of the date the full amount became available in the suspense account.
(e) You must assess any incurred fees to a borrower's account within forty-five days of the date on which the fee was incurred. You must clearly and conspicuously explain the fee in a statement mailed to the borrower at the borrower's last known address no more than thirty days after assessing the fee. If you provide monthly or more frequent statements that include this information you are not required to provide the information in a notice in addition to the monthly or more frequent statement.
(f) If you provide monthly or more frequent statements that include the information required under this subsection, you have until January 1, 2013, to program theses changes. On and after January 1, 2013, you must be in compliance with this subsection.
(4) Maintenance of the escrow account.
(a)(i) If you collect escrow amounts held for the borrower for payment of insurance, taxes, or other charges with respect to the property, you must collect and make all payments from the escrow account and, to the extent you have control, ensure that no late penalties are assessed or other negative consequences result for the borrower.
(ii) At least annually, or upon the borrower's request, you must inform the borrower in writing of the amount of reserve required in an escrow account. The notice must also advise the borrower of any fees the borrower will incur for not maintaining the reserve amount or fees the borrower will incur if you advance escrow amounts on the borrower's behalf and then collect the amounts from the borrower. You must comply with (a)(ii) of this subsection beginning on January 1, 2013.
(b) You may enter into a written agreement with the
borrower whereby you are not required to make escrow payments
unless funds are available in the escrow account. The
agreement must include language that puts the borrower on
notice that the borrower is responsible for the payment of the
escrow amounts if a sufficient amount is not maintained in the
escrow account. ((See also subsection (1)(c) of this
section.))
(c) You must notify the borrower within ten business days
of any change to the escrow account other than the changes
brought about by the borrower's regularly scheduled payment.
Examples of changes requiring notification include, but are
not limited to, a reduction in the required ((cushion))
reserve amount for the account, or a change in the property's
tax assessment.
(((7))) (5) Borrower requests for information.
(a) You must make a reasonable attempt to comply with a borrower's request for information about the residential mortgage loan account, including a request for information about loss mitigation, and to respond to any dispute initiated by the borrower about the loan account. A reasonable attempt includes, but is not limited to:
(((a))) (i) Maintaining written or electronic records of
each written request for information ((regarding a dispute or
error)) involving the borrower's account until the residential
mortgage loan is paid in full, sold, or otherwise satisfied;
(((b))) (ii) Providing a written statement to the
borrower within fifteen business days of receipt of a written
request from the borrower, or by following the response
timelines for any loss mitigation program. The borrower's
request must include the name and account number, if any, of
the borrower, a statement that the account is or may be in
error, and sufficient detail regarding the information sought
by the borrower to permit the servicer to comply.
(((8))) (b) You must provide at a minimum the following
information to a borrower's request described in subsection
(((7))) (5) of this section:
(((a))) (i) Whether the account is current or, if the
account is not current, an explanation of the default and the
date the account went into default;
(((b))) (ii) The current balance due on the residential
mortgage loan, including the principal due, the amount of
funds, if any, held in a suspense account, the amount of the
escrow balance known to the servicer, if any, and whether
there are any escrow deficiencies or shortages known to the
servicer;
(((c))) (iii) The identity, address, and other relevant
information about the current holder, owner, or assignee of
the residential mortgage loan; and
(((d))) (iv) The telephone number and mailing address of
((a)) an individual servicer representative with the
information and authority to answer questions and resolve
disputes and to act as a single point of contact for the
homeowner. This individual servicer representative must have
the authority and ability to perform the following duties:
(A) Explain loss mitigation options and requirements;
(B) Track documents submitted by the homeowner and documents provided to the homeowner;
(C) Inform the homeowner of the status of their loss mitigation process;
(D) Ensure the homeowner is considered for all loss mitigation options; and
(E) Access individuals with the authority to delay or stop foreclosure proceedings.
You must comply with (b)(iv) of this subsection beginning on January 1, 2013.
(((e))) (c) You may charge a fee for preparing and
furnishing the statement described in this subsection not
exceeding thirty dollars per statement.
(((f))) (d) You must promptly correct any errors and
refund any fees assessed to the borrower resulting from an
error you made.
(((g))) (e) If the content of your response meets the
requirements under RESPA for a response to a qualified written
request, you will be deemed in compliance with the content
requirements of this subsection. You must still comply with
(d) of this subsection.
(((9))) (f) In addition to the statement described in
((subsection (6))) (a) of this ((section)) subsection, a
borrower may request more detailed information from a
servicer, and the servicer must provide the information within
fifteen business days of receipt of a written request from the
borrower. The request must include the name and account
number, if any, of the borrower, a statement that the account
is or may be in error, and provide sufficient detail to the
servicer regarding information sought by the borrower. If
requested by the borrower, this statement must also include:
(((a))) (i) A copy of the original note, or if
unavailable, an affidavit of lost note, with all endorsements;
and
(((b))) (ii) A statement that identifies and itemizes all
fees and charges assessed under the loan servicing transaction
and provides a full payment history identifying in a clear and
conspicuous manner all of the debits, credits, application of
and disbursement of all payments received from or for the
benefit of the borrower, and other activity on the residential
mortgage loan including escrow account activity and suspense
account activity, if any.
(((c))) (iii) The period of the account history shall
cover at a minimum the two-year period prior to the date of
the receipt of the request for information. If the servicer
has not serviced the residential mortgage loan for the entire
two-year time period, the servicer must provide the
information going back to the date on which the servicer began
servicing the home loan and identify the previous servicer, if
known. If the servicer claims that any delinquent or
outstanding sums are owed on the home loan prior to the
two-year period or the period during which the servicer has
serviced the residential mortgage loan, the servicer must
provide an account history beginning with the month that the
servicer claims any outstanding sums are owed on the
residential mortgage loan up to the date of the request for
the information.
(((d))) (iv) If the borrower requests this statement, you
must provide it free of charge; but the borrower is only
entitled to one free statement annually. If the borrower
requests more than one statement annually, you may charge
thirty dollars for the second and subsequent statements.
(((10) If a borrower's property goes into foreclosure and
the foreclosure sale occurs, you must notify the borrower
within three business days of sale of the completion of the
sale. You must mail the notification to the borrower's last
known address provided to you. If the notification is
returned to you because the address is deficient in some
manner, you must post the notification of the foreclosure sale
on the property itself within three days of the notification
being returned to you.))
(6) Loss mitigation.
(a) You must comply with all timelines and requirements for the federal HAMP or GSE modification programs if applicable, including denials and dual tracking prohibitions. If not using a HAMP or GSE loan modification program, you must:
(i) Develop an electronic system, or add to an existing system, the ability for borrowers to check the status of their loan modification, at no cost. The system must also allow communication from housing counselors. The system must be updated every ten business days. You have until April 1, 2013, to develop the system described in (a)(i) of this subsection. On and after April 1, 2013, you must be in compliance with (a)(i) of this subsection.
(ii) Review and make a determination on a borrower's completed loan modification application within thirty days of receipt.
(iii) Provide in the loan modification denial notice the reasons for denial and an opportunity for the homeowner to rebut the denial within thirty days. If the denial is due to the terms of an agreement between you and an investor, you must provide the name of the investor and a summary of the reason for the denial. If the denial is based on a net present value (NPV) model, you must provide the data inputs used to determine the NPV. Any loan modification denials must be reviewed internally by an independent evaluation process within thirty days of the denial determination or the mailing of the notice of denial to the borrower, whichever occurs earlier. See (b) of this subsection for additional requirements on borrower appeals.
(iv) Review and consider any complete loan modification application before referring a delinquent loan to foreclosure.
(v) Give a homeowner ten business days from your notice to them to correct any deficiencies in their loan modification application.
(vi) Stop the foreclosure from proceeding further if you receive a complete loan modification application. See (a)(viii) and (ix) of this subsection.
(vii) If the borrower accepts a loan modification verbally, in writing, or by making the first trial payment, you must suspend the foreclosure proceeding until such time as the borrower may fail to perform the terms of the loan modification.
(viii) Review and consider a complete loan modification application if received prior to thirty-seven days before a scheduled foreclosure sale. If you offer the borrower a loan modification, you must delay a pending foreclosure sale to provide the borrower with fourteen days in which to accept or deny the loan modification offer. If the borrower accepts a loan modification, you must suspend the foreclosure proceeding until such time as the borrower may fail to perform the terms of the loan modification.
(ix) Perform an expedited review of any complete loan modification application submitted between thirty-seven and fifteen days before the scheduled foreclosure sale. If you offer the borrower a loan modification, you must delay a pending foreclosure sale to provide the borrower with fourteen days in which to accept or deny the loan modification offer. If the borrower accepts a loan modification, you must suspend the foreclosure proceeding until such time as the borrower may fail to perform the terms of the loan modification.
(b) As to borrower appeals of loan modification denials you must:
(i) Give the borrower thirty days from your written notice of denial to request an appeal unless the denial is due to:
(A) An ineligible mortgage;
(B) An ineligible property;
(C) The borrower did not accept the offer; or
(D) The loan was previously modified.
(ii) Give the borrower the opportunity to obtain a full appraisal for purposes of contesting appraisal data used in a denial based on NPV.
(iii) Respond to the borrower's appeal within thirty days of receipt.
(iv) Provide the borrower with a description of any other loss mitigation option available if you uphold the denial.
(c) When a loan modification is granted, you must provide the borrower with a copy of the fully executed loan modification agreement within thirty days of receipt of the signed agreement from the borrower. A loan modification granted orally must be reduced to a written document with a summary of all of the terms and must be provided to the borrower within thirty days of approval of the loan modification.
(d) You must maintain adequate staffing levels and systems to comply with this section, including staffing and systems to track and maintain loan modification documents submitted by homeowners.
(e) You must make public all necessary information to inform homeowners about and allow homeowners to apply for your proprietary first and second lien modifications.
(f) You must make public all necessary information to inform homeowners about your short sale requirements.
(g) You must allow a homeowner to apply for and receive a short sale determination before the homeowner puts a house on the market.
(7) Foreclosure.
(a) Before you refer a loan to foreclosure, you must document in the loan file evidence to substantiate the borrower's default and your right to foreclose. The file must also contain loan ownership information.
(b) If a borrower's property goes into foreclosure and the foreclosure sale occurs, you must notify the borrower within three business days of sale of the completion of the sale. You must mail the notification to the borrower's last known address provided to you.
(8) Contracting with other parties. You must adopt written policies and procedures for the oversight of third-party providers including, but not limited to, foreclosure trustees, foreclosure firms, subservicers, agents, subsidiaries, and affiliates. You must maintain the policies and procedures as part of your books and records and must provide them to the department when directed to do so.
(9) See also WAC 208-620-551.
[Statutory Authority: RCW 43.320.040, 31.04.165 and 2010 c 35. 10-20-122, § 208-620-900, filed 10/5/10, effective 11/5/10.]
The following sections of the Washington Administrative Code are repealed:
| WAC 208-620-395 | Do I need to display my license in my place of business? |
| WAC 208-620-432 | Will the filing of the fourth quarter call report satisfy the consolidated annual report (CAR) requirement of WAC 208-620-430? |