Washington Recent Updates
Washington recently made various updates to multiple code sections.
Definitions
For updates to various definitions please refer to the following code sections: WAC 208-620-010, WAC 208-620-011 and for reverse mortgages under WAC 208-620-800 and WAC 208-620-820.
WAC 208-620-104 Exemptions from licensing as a consumer loan company
A person is exempt if they are, “selling property they own, that does not contain a dwelling, when the property serves as security for the financing. The exemption is not available to individuals subject to the federal S.A.F.E. Act or any person in the business of constructing or acting as a contractor for the construction of residential dwellings.” Also, loans to immediate family members and individuals who extend credit on the sale of their primary dwelling are exempt.
WAC 208-620-105 Exemptions from licensing as a mortgage loan originator
Changes to this section include, “registered mortgage loan originators or any individual required to be registered while employed by a covered financial institution as defined in regulation G, 12 C.F.R. Sec.” And also, “Individuals employed by a licensed residential mortgage loan servicing company engaging in activities related to servicing, unless licensing is required by federal law or regulation.”
WAC 208-620-231 Consumer loan licenses to service residential mortgage loans secured by Washington residential real estate/Washington residents
Changes to the section replaced “companies” with the term “persons.”
WAC 208-620-232 Residential mortgage loans made without being licensed at the company level
This applies when 5 or less residential mortgage loans are made in a calendar year. The section also lists conditions that must be met if someone is eligible for a waiver.
WAC 208-620-234 Companies that provide loan processing or underwriting services on residential mortgage loans licensed under the Consumer Loan Act
This code section now states that, “alternatively, the company may license under the Mortgage Broker Practices Act, chapter 19.146 RCW.”
WAC 208-620-240 Application of the Consumer Loan Act to all loans brokered or madeAll loans that are brokered or made to Washington residents are subject to the act.
WAC 208-620-271 Licenses to assist a homeowner with a residential mortgage loan modification
Anyone who offers third-party loan modification services for compensation or gain must be licensed.
WAC 208-620-300 Operating a business from more than one location
A branch office application must be submitted through the NMLS for each office, residential mortgage loan servicing location, or direct solicitation location. Operations cannot commence without a license.
WAC 208-620-301 Persons who make mortgage loans and employ managers
Managers must be licensed as an originator if they take a residential mortgage loan application in Washington, negotiate the terms or conditions of a residential mortgage loan on Washington property, or hold themselves out as being able to conduct those activities. Also, they must work from a licensed location.
A license, from any state, is also required for managers who supervise loan originators, processors and underwriters. Note, Washington licensed loan originators must work from a licensed location. Also, the code section requires a written supervisory plan.
WAC 208-620-310 Offices that only provide underwriting and other back-office services
A license is not required for these locations because there is only incidental borrower contact. However, if a location employs a licensed mortgage loan originator, it must be licensed in addition to the company’s main office.
WAC 208-620-328 Reporting of loan origination and residential mortgage loan servicing volume
Reporting occurs as instituted by the director.
WAC 208-620-371 Employment of someone to work with Washington residents/property who has been convicted of a gross misdemeanor or felony, or who has had a lending-related license revoked or suspended
This is not permitted in Washington.
WAC 208-620-400 Shared office space
Office space can be shared with another business but the location must comply with any applicable regulations related to referral fees.
WAC 208-620-420 Business name
Business must be conducted in a company’s name as entered in the NMLS.
WAC 208-620-490 Reporting responsibilities when something of significance happens to a businessUpdates to this section include post notification for a change of primary company contact, change in a response to NMLS disclosure questions and data breaches.
WAC 208-620-505 Applicable laws
The list of applicable federal and state laws, regulations and programs that pertain to lending, brokering or servicing residential mortgages specifically has be amended to include the Mortgage Acts and Practices – Advertising statute, Regulation N, 12 C.F.R. Part 1014.
WAC 208-620-510 Disclosure obligations to consumers
Loans that do not fall under the TILA-RESPA rule require continued used the federal Good Faith Estimate, HUD-1, and Truth in Lending disclosures. The integrated TILA-RESPA disclosures can be used but they cannot replace the older disclosures. Note, additional disclosures are required under RCW 19.144.020 for residential loans.
WAC 208-620-515 Authority after a license
Once a license has been issued lenders have authority to engage in lending activities.
WAC 208-620-520 Maintenance of records under the Consumer Loan Act
Records must be maintained for at least three years or a time period specified by federal law, if longer. These records include general, advertising and other more specific types of records.
WAC 208-620-531 Business resumption plan
A company must draft a written plan that documents the actions that will be taken after an event that damages or destroys its records.
WAC 208-620-532 Records disposal
This code section explains that licensees must have written policies and procedures for record destruction.
WAC 208-620-550 Prohibited business practices
This code section now includes, “making, in any manner, any false or deceptive statement or representation with regard to the rates, points, or other financing terms or conditions for a residential mortgage loan. An example is advertising a discounted rate without clearly and conspicuously disclosing in the advertisement the cost of the discount to the borrower and that the rate is discounted.” It also applies to, “servicing a usurious loan.”
WAC 208-620-555 Fees allowed under the Consumer Loan Act
Changes to this code include fees for the cost of the credit report and it outlines specific guidelines pertaining to discount points.
WAC 208-620-571 Information security program required by the federal Safeguards Rule implementing the Gramm-Leach-Bliley Act
Applicants and licensees must have a written program that fits the nature of their company’s size, complexity, activities and information at issue. It provides a minimum standard for the program and requirements for customer notices.
WAC 208-620-572 Consumer financial information privacy under the Gramm-Leach-Bliley Act (GLBA) and Regulation P
Licensees must comply with both of these regulations unless there is an applicable exemption. This code section outlines minimal notification requirements.
WAC 208-620-573 Notice to consumers of data breach
Customers must be informed of any data breach.
WAC 208-620-580 Periodic examinations
Licensees will be visited periodically by examiners. Records pertaining to the business are subject to examination.
WAC 208-620-590 Charges for examinations
An examination costs $69.01 per hour and must be paid within 30 days after receiving an invoice.
WAC 208-620-610 Investigations of violations of the Consumer Loan Act
Some examples include testimony, production or copies of records and subpoenas.
WAC 208-620-620 Identification of a business in advertisements
Advertisements must use the business name as entered in the NMLS or an approved DBA name if the advertisement includes the main office name as entered in the NMLS and license number. Websites and addresses are covered under WAC 208-620-621 and 208-620-622.
WAC 208-620-630 Advertising restrictions
Advertising restrictions include the prohibition of advertising with envelopes, stationery or an electronic format that implies there is an affiliation that does not exist. There are also specific restrictions pertaining to the advertisement of APR and interest rates.
WAC 208-620-640 Federal laws that must be complied with when advertising any loan subject to the Consumer Loan Act
Some of these regulations include the Truth in Lending Act, the Real Estate Settlement Procedures Act, the Federal Trade Commission Act and the Equal Credit Opportunity Act.
WAC 208-620-710 Mortgage loan originator licensing
Originators must be licensed. Please refer to the code section for rules regarding eligibility, transfers, inactivity, etc.
WAC 208-620-900 Requirements for servicing residential mortgage loans
The loss mitigation requirements of this code section have been modified. Please refer to the code section for the specific changes.
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