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LoanOriginationServicingDefinitionslaws.docx | Real Estate Broker | Mortgage Broker
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Western Kentucky Homes March 2011
Sales Presentation 6
Rev Mortage Ssrn
AmSouth Bank Loan Comparison
2014] Effective Date of Rule: January 1, 2014.
Purpose: Amending the rules in chapter 208-660 WAC to implement the Mortgage Broker Practices Act, chapter 19.146 RCW, as
amended by chapter 30, Laws of 2013, and to generally amend the rules for clarity and consistency. The rules are being adopted
pursuant to OFM Guidance 3.a. and e. Citation of Existing Rules Affected by this Order: Amending WAC 208-660-006, 208-660-007,
208-660-195, 208-660-250, 208-660-350, 208-660-400, 208-660-430, 208660-440, 208-660-446, 208-660-450, 208-660-500, 208-660510, and 208-660-520.
1. WAC 208-660-350(23), proposed language amended to clarify when mortgage loan originators must use their license number.
2. WAC 208-660-350(25), proposed language amended to clarify and provide exceptions as to how mortgage loan originators must
use their license name.
3. WAC 208-660-446(3), proposed language amended to clarify that a mortgage loan originator's license number must closely follow
5. WAC 208-660-510 (4)(d), proposed language amended to clarify that if an examiner requests documents during an examination,
the licensee must provide the requested documents.
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards:
New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0,
Amended 1,
Amended 13,
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0,
Amended 12,
Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
WAC 208-660-006
Definitions. What definitions are applicable to these rules? Unless the context clearly requires otherwise, the definitions in this
section apply throughout these rules. "Act" means the Mortgage Broker Practices Act, chapter 19.146 RCW.
"Advertising material" means any form of sales or promotional materials used in connection with the mortgage broker 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 directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under
common control with another person.
"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 in writing or
electronically submitted, including 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
"Appraisal" means the act or process of developing an opinion of value, the act pertaining to an appraisal-related function, or any
verbal or written opinion of value offered by an appraiser. The opinion of value by the appraiser includes any communication that is
offered as a single point, a value range, a possible value range, exclusion of a value, or a minimum value.
"Borrower" means any person who consults with or retains a mortgage broker or loan originator in an effort to obtain or seek advice
or information on obtaining or applying to obtain a residential mortgage loan, or residential mortgage loan modification, for himself,
herself, or persons including himself or herself, regardless of whether the person actually obtains such a loan or loan modification.
"Branch office" means a fixed physical location such as an office, separate from the principal place of business of the licensee,
where the licensee holds itself out as a mortgage broker.
"Branch office license" means a branch office license issued by the director allowing the licensee to conduct a mortgage broker
business at the location indicated on the license.
"Certificate of passing an approved examination" means a certificate signed by the testing administrator verifying that the individual
performed with a satisfactory score or higher.
"Certificate of satisfactory completion of an approved continuing education course" means a certificate signed by the course
provider verifying that the individual has attended an approved continuing education course.
"Compensation or gain" means remuneration, benefits, or an increase in something having monetary value, including, but not limited
to, moneys, things, discounts, salaries, commissions, fees, duplicate payments of a charge, stock, dividends, distributions of
partnership profits, franchise royalties, credits representing moneys that may be paid at a future date, the opportunity to participate
in a money-making program, retained or increased earnings, increased equity in a parent or subsidiary entity, special or unusual
bank or financing terms, services of all types at special or free rates, sales or rentals at special prices or rates, lease or rental
payments based in whole or in part on the amount of business referred, trips and payments of another person's expenses, or
reduction in credit against an existing obligation.
"Compensation or gain" is not evaluated solely on a loan by loan basis. For example, a realtor advertising that buyers using their
services will receive free loan origination assistance is doing so in the anticipation of "compensation or gain" through increased real
"Computer loan information systems" or "CLI system" means a real estate mortgage financing information system that facilitates the
provision of information to consumers by a mortgage broker, loan originator, lender, real estate agent, or other person regarding
interest rates and other loan terms available from different lenders. For purposes of this definition, the CLI system includes computer
hardware or software, an internet-based system, or any combination of these, which provides information to consumers about
residential mortgage interest rates and other loan terms which are available from another person.
"Computer loan information system provider" or "CLI provider" is any person who provides a computer loan information service,
either directly, or as an owner-operator of a CLI system, or both.
"Control" including the terms "controls," "is controlled by," or "is under common control" means the power, directly or indirectly, to
direct or cause the direction of the management or policies of a person, whether through ownership of the business, by contract, or
otherwise. A person is presumed to control another person if such person is:
A general partner, officer, director, or employer of another person;
Directly or indirectly or acting in concert with others, or through one or more subsidiaries, owns, holds with power to vote, or holds
proxies representing, more than twenty percent of the voting interests of another person; or
Has similar status or function in the business as a person in this definition. "Convicted of a crime," irrespective of the
pronouncement or suspension of sentence, means a person:
Has been convicted of the crime in any jurisdiction;
Has been convicted of a crime which, if committed within this state would constitute a crime under the laws of this state;
Has plead guilty or no contest or nolo contendere or stipulated to facts that are sufficient to justify a finding of guilt to such a charge
before a court or federal magistrate; or
Has been found guilty of a crime by the decision or judgment of a state or federal judge or magistrate, or by the verdict of a jury.
"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.
"Designated broker" means a natural person designated as the person responsible for activities of the licensed mortgage broker in
conducting the business of a mortgage broker under this chapter and who meets the experience and examination requirements set
forth in RCW 19.146.210 (1)(e).
"Discount points" or "points" mean a fee paid by a borrower to a lender to reduce the interest rate of a residential mortgage loan.
Pursuant to Regulation X, discount points are to be reflected on the good faith estimate and settlement statement as a dollar
"Division of consumer services" means the division of consumer services within the department of financial institutions, or such
other division within the department delegated by the director to oversee implementation of the act and these rules.
"Dwelling" means the same as in Regulation Z implementing the Truth in Lending Act which is a residential structure that contains
one to four units, whether or not that structure is attached to real property. The term includes an individual condominium unit,
cooperative unit, mobile or manufactured home, and trailer, if it is used as a residence. See 12 C.F.R. 1026.2.
"Employee" means an individual who has an employment relationship with a mortgage broker, and the individual is treated as an
employee by the mortgage broker for purposes of compliance with federal income tax laws.
"Examination" or "compliance examination" means the examination performed by the division of consumer services, or such other
division within the department delegated by the director to oversee implementation of the act and these rules to determine whether
the licensee is in compliance with applicable laws and regulations.
"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 and
Consumer Financial Protection Bureau. Federal statutes and regulations used in these rules are:
"Alternative Mortgage Transaction Parity Act" means the Alternative Mortgage Transaction Parity Act (AMTPA), 12 U.S.C.
Sec. 3801 et seq.
"Equal Credit Opportunity Act" means the Equal Credit Opportunity Act (ECOA), 15 U.S.C. Sec. 1691 et seq., Regulation
B, 12 C.F.R. Part 202.
"Federal Trade Commission Act" means the Federal Trade Commission Act, 15 U.S.C. Sec. 41-58.
"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 Equity Loan Consumer Protection Act" means the Home Equity Loan Consumer Protection Act, 15 U.S.C. Sec.
1637 and 1647.
"Home Mortgage Disclosure Act" means the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. Sec. 28012810, Regulation C, 12 C.F.R. Part 203.
"Home Ownership and Equity Protection Act" means the Home Ownership and Equity Protection Act (HOEPA), 15 U.S.C.
"Homeowners Protection Act" means the Homeowners Protection Act of 1998 (HPA), 12 U.S.C. Sec. 4901 et seq.
"Real Estate Settlement Procedures Act " means the Real Estate Settlement Procedures Act (RESPA), 12 U.S.C. Sec. 2601
et seq., Regulation X, 24 C.F.R. Part 3500 et seq.
"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), P.L. 110-289, effective July 30, 2008.
"Telemarketing and Consumer Fraud and Abuse Prevention Act " means the Telemarketing and Consumer Fraud and
Abuse Prevention Act, 15 U.S.C. Sec. 6101-6108, Telephone Sales Rule, 16 C.F.R. Part 310.
"Truth in Lending Act" means the Truth in Lending Act (TILA), 15 U.S.C. Sec. 1601 et seq., Regulation Z, 12 C.F.R. Part 226
"Federally insured financial institution" means a savings bank, savings and loan association, or credit union, whether state or
federally chartered, or a federally insured bank, authorized to conduct business in this state.
Any conduct prohibited by the act;
Any conduct prohibited by statutes governing mortgage brokers in other states, or the United States, if such conduct would
constitute a violation of the act;
Any conduct prohibited by statutes governing other segments of the financial services industry, including but not limited to the
Consumer Protection Act, statutes governing the conduct of securities broker dealers, financial advisers, escrow officers, title
insurance companies, limited practice officers, trust companies, and other licensed or chartered financial service providers; or
Any conduct commonly known as white collar crime, including, but not limited to, embezzlement, identity theft, mail or wire fraud,
insider trading, money laundering, check fraud, or similar crimes. (
("Independent contractor" means any person that expressly or impliedly contracts to perform mortgage brokering services for
another and that with respect to its manner or means of performing the services is not subject to the other's right of control, and that
is not treated as an employee by the other for purposes of compliance with federal income tax laws. The following factors may be
considered to determine if a person is an independent contractor:
"License number" means the NMLS unique identifier displayed as prescribed by the director. Some examples of the way you may
display your license number are: NMLS ID 12345, NMLS 12345, NMLS #12345, MB-12345, or MLO12345.
A mortgage broker licensed by the director; or
The principal(s) or designated broker of a mortgage broker; or
A loan originator licensed by the director; or
Any person subject to licensing under RCW 19.146.-200; or
Any person acting as a mortgage broker or loan originator subject to any provisions of the act.
"Loan originator or mortgage loan originator" means a natural person who for direct or indirect compensation or gain, or in the
expectation of direct or indirect compensation or gain:
Takes a residential mortgage loan application for a mortgage broker; or
Offers or negotiates terms of a mortgage loan, including short sale transactions.
"Loan originator" also includes a person who holds themselves out to the public as able to perform any of the activities described
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 mortgage broker or loan originator, including the use of business cards, stationery, brochures,
rate lists, or other promotional items.
For purposes of further defining "loan originator," "taking a residential mortgage loan application" includes soliciting, accepting,
or offering to accept an application for a residential mortgage loan or assisting a borrower or offering to assist a borrower in the
preparation of a residential mortgage loan application.
"Loan originator" also includes a natural person who for direct or indirect compensation or gain or in the expectation of direct or
indirect compensation or gain performs residential mortgage loan modification services.
"Loan originator" does not mean persons performing purely administrative or clerical tasks for a mortgage broker.
For the purposes of this subsection, "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 borrower to obtain information necessary
for the processing of a 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.
"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, 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.
For purposes of this chapter, the term "real estate brokerage activity" means any activity that involves offering or providing real
estate brokerage services to the public, including:
(c) 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 any such transaction;
(d) 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
"Loan originator" 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.
The definition of loan originator 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 licensed individually as loan originators.
"Loan originator licensee" means a natural person who is licensed as a loan originator or is subject to licensing under RCW
19.146.200 or who is acting as a loan originator subject to any provisions of the act.
"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 19.146 RCW. The job responsibilities
may include the receipt, collection and distribution of information common for the processing of a loan. The loan processor may also
communicate with a borrower to obtain the information necessary for the processing of a loan, provided that such communication
does not include offering or negotiating loan rates or terms, or counseling borrowers about loan rates or terms)) See WAC 208-660106.
"Material litigation" means any litigation that would be relevant to the director's ruling on an application for a license including, but
not limited to, criminal or civil action involving dishonesty or financial misconduct.
"Mortgage broker" means any person who for compensation or gain, or in the expectation of compensation or gain
(a) assists a person in obtaining or applying to obtain a residential mortgage loan or
(b) holds himself or herself out as being able to assist a person in obtaining or applying to obtain a residential mortgage loan. A
mortgage broker either prepares a residential mortgage loan for funding by another entity or table-funds the residential mortgage
See the definition of "table funding." (These are the two activities allowed under the MBPA.) For purposes of this definition, a person
"assists a person in obtaining or applying to obtain a residential mortgage loan" by, among other things, counseling on loan terms
(rates, fees, other costs), preparing loan packages, or collecting enough information on behalf of the consumer to anticipate a credit
decision under Regulation X, 24 C.F.R. Part 3500, Section 3500 (2)(b).
For purposes of this definition, a person "holds himself or herself out" by advertising or otherwise informing the public that they
engage in any of the activities of a mortgage broker or loan originator, including the use of business cards, stationery, brochures,
rate sheets, or other promotional items.
"Mortgage broker" also includes any person who for direct or indirect compensation or gain or in the expectation of direct or indirect
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 broker licensee" means a person that is licensed as a mortgage broker or is subject to licensing under RCW 19.146.200
or is acting as a mortgage broker subject to any provisions of the act.
"NMLS" means a 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
"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.
"Prepaid escrowed costs of ownership," as used in RCW 19.146.030(4), means any amounts prepaid by the borrower for the
payment of taxes, property insurance, interim interest, and similar items in regard to the property used as security for the loan.
"Principal" means any person who controls, directly or indirectly through one or more intermediaries, or alone or in concert with
others, a ten percent or greater interest in a partnership, company, association, or corporation, and the owner of a sole
"Rate lock agreement" means an agreement with a borrower made by a mortgage broker ((or)), loan originator, or lender in
which the mortgage broker ((or)), loan originator, or lender agrees that, for a period of time, a specific interest rate or other
financing terms will be the rate or terms at which it will make a loan available to that borrower.
"Registered mortgage loan originator" means any individual who meets the definition of mortgage loan originator and is an
(a) 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
"Residential mortgage loan" means any loan primarily for personal, family, or household use secured by a mortgage or deed
of trust on residential real estate upon which is constructed or intended to be constructed a single family dwelling or multiple family
dwelling of four or less units.
For purposes of this definition, a loan "primarily for personal, family, or household use" includes loan applications for a finance
or refinance of a primary residence for any purpose, loan applications on second homes, and loan applications on non owner
occupied residential real estate provided the licensee has knowledge that proceeds of the loan are intended to be used primarily for
"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 real estate" is real property upon which is constructed or intended to be constructed, a single family dwelling or multiple
family dwelling of four or less units. Residential real estate includes, but is not limited to:
A single family home;
A fourplex;
A single condominium in a condominium complex;
A single unit within a cooperative;
A fractile, fee simple interest in any of the above.
Residential real estate does not include:
An apartment building or dwelling of five or more units; or
A single piece of real estate with five or more single family dwellings unless each dwelling is capable of being financed
independently of the other dwellings.
"S.A.F.E. Act" means the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, or Title V of the Housing and Economic
Recovery Act of 2008 (HERA), P.L. 110-289, effective July 30, 2008; and Regulation G, 12 C.F.R. Part 1007; and Regulation H, 12
C.F.R. Part 1008.
"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. The mortgage broker originates the loan and closes the loan in its own
name with funds provided contemporaneously by a lender to whom the closed loan is assigned.
"Third-party provider" means any person other than a mortgage broker or lender who provides goods or services to the mortgage
broker 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. A lender is considered a third party only when
the lender provides lock-in arrangements to the mortgage broker in connection with the preparation of a borrower's loan.
"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.
"Underwriting" means a lender's detailed credit analysis preceding the offering or making of a loan. The analysis may be based on
information furnished by the borrower (employment history, salary, financial statements), the borrower's credit history from a
credit report, the lender's evaluation of the borrower's credit needs and ability to pay, and an assessment of the collateral for
the loan. While mortgage brokers may have access to various automated underwriting systems to facilitate an evaluation of the
borrower's qualifications, the mortgage broker who qualifies or approves a borrower in this manner is not the underwriter of
the loan and cannot charge a fee for underwriting the loan. Third-party charges the mortgage broker incurs in using or
accessing an automated system to qualify or approve a borrower may, like other third-party expenses, be passed on to the
"Unique identifier" means a number or other identifier assigned by protocols established by the NMLS. AMENDATORY SECTION
(Amending WSR 12-18-048, filed 8/29/12, effective 11/1/12) WAC 208-660-007
(1) What does good standing mean?
For the purposes of the act and these rules, good standing means that the applicant, licensee, or other person subject to the act
demonstrates financial responsibility, character, and general fitness sufficient to command the confidence of the community and to
warrant a belief that the business will be operated honestly, fairly, and efficiently within the purposes of the act and these rules. In
determining good standing the director will consider the following factors, and any other evidence relevant to good standing as
defined in this rule:
(c) Whether the mortgage broker licensee has filed and maintained the required surety bond or had its surety bond canceled or
revoked for cause.
(e) Whether the applicant, licensee, or other person subject to the act has had any license, or any authorization or ability to do
business under any similar statute of this or any other state, suspended, revoked, or restricted within the prior five years.
(f) Whether the applicant, licensee, or other person subject to the act has been convicted of, or pled guilty or nolo contendere to, in a
domestic, foreign, or military court to:
(iii) A felony that involved an act of fraud, dishonesty, breach of trust, or money laundering at any time preceding the
(g) Whether the licensee or other person subject to the act, is, or has been subject to a cease and desist order or an injunction
issued pursuant to the act, or the Consumer Protection Act, or has been found through an administrative, civil, or criminal
proceeding to have violated the provisions of the act or rules, or the Consumer Protection Act, chapter 19.86 RCW.
(h) Whether the director has filed a statement of charges, or there is an outstanding order by the director to cease and desist against
the licensee or other person subject to the act.
(i) Whether there is documented evidence of serious or significant complaints filed against the licensee, or other person subject to
the act, and the licensee or other person subject to the act has been notified of the complaints and been given the opportunity to
(j) Whether the licensee has allowed the licensed mortgage broker business to deteriorate into a condition that would result in denial
of a new application for a license.
(k) Whether the licensee, or other person subject to the act has failed to comply with an order, directive, subpoena, or requirement
of the director or director's designee, or with an assurance of discontinuance entered into with the director or director's designee.
(l) Whether the licensee or other person subject to the act has interfered with an investigation or disciplinary proceeding
by willful misrepresentation of facts before the director or 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
(2) Under what circumstances may the department conduct a good standing review of an applicant, mortgage broker
licensee, designated broker, or exempt mortgage broker? The department may conduct a good standing review when:
(b) Processing an application for appointment of a different designated broker (both the licensed mortgage
broker, including those individuals to whom the license was granted, and the proposed designated broker must meet good
(3) When will an applicant, licensee, or other person subject to the act receive notice from the department of their failure
to meet a determination of good standing? If the department conducts a good standing review, the department will notify
the applicant, licensee, or other person subject to the act that they have failed to meet the department's good standing
requirement within ten business days of the department's receipt of any application or request that requires a
determination of good standing.
See subsection (2) of this section. For purposes of the notice required by this section, a statement of charges filed and
served on the licensee is sufficient notice of a lack of good standing.
(4) What recourse does an applicant, licensee, or other person subject to the act have when the department has
determined that they are not in good standing? The applicant, licensee, or other person subject to the act may request a
brief adjudicative proceeding under the Administrative Procedure Act, chapter 34.05 RCW, to challenge the department's
determination. See WAC 208-660-009.
NEW SECTION WAC 208-660-106
How does the department interpret the definition of loan processor in RCW 19.146.010 (12)?
"Loan processor" or "underwriter" means an individual who performs clerical or support duties as an employee (not as an
independent contractor) of a person licensed or exempt from licensing and at the direction of and subject to the supervision and
instruction of an individual licensed, or exempt from licensing, under this chapter. The job responsibilities may include the receipt,
collection and distribution of information common for the processing of a loan. The loan processor may also communicate
with a borrower to obtain the information necessary for the processing of a loan, provided that such communication does not
include offering or negotiating loan rates or terms, or counseling borrowers about loan rates or terms.
A loan processor or underwriter engaged as an independent contractor by a licensee must hold a mortgage loan originator
WAC 208-660-195 Mortgage brokersBranch offices.
(1) May I open branch offices under my mortgage broker license? Yes. A licensed mortgage broker may submit license
application(s) to the department through the NMLS to establish branch office(s) under the existing mortgage broker license. Each
branch office must be licensed and must pay an annual license fee. See WAC 208-660-550, Department fees and costs.
(2) If my branch offices are under separate ownership, does that limit my liability for their activities? No. Licensed mortgage brokers
are responsible for the activity and violations at their branch offices regardless of the structure or label given the branch offices.
Licensure of a branch office creates a direct line of responsibility from the main office to the branch.
(3) If my branch offices are under separate ownership, what level of supervision must I maintain? Because branch offices,
regardless of their business structure, are not independent from your license and surety bond, you are responsible for the conduct of
anyone conducting business under your license. You must have a written supervisory plan. The details of the plan, and how you
implement the plan for your branch offices, must take into account the number of branch offices, their location, and the number of
individuals working at the branch offices. You must maintain your written supervisory plan as part of your business books and
(4) How do I apply for a mortgage broker branch office license? As the licensed mortgage broker, you must apply for a branch office
license through the NMLS and receive approval from the department before operating from any location other than your licensed
location. You must be in good standing. You will have to pay application and annual assessment fees for the branch office(s). See
WAC 208-660-550, Department fees and costs.
(a) Whether the mortgage broker is in good standing. See WAC 208-660-007. (b) Whether the physical address listed in the
application can be verified as a branch office location.
(6) If I am an internet company, how do I display my license? You must display your license information, as it appears on your
license, including any or all business names, and the license number, on your web site. The information must also include a list of
the states in which you are licensed.
(7) How do I change information on my mortgage broker branch office license? You must file a license amendment through the
(8) Does my branch office license expire? The license expires annually. The expiration date is shown on the license. If the license is
an interim license, it may expire in less than one year.
(9) How do I renew my mortgage broker branch office license? (a) Before the expiration date, the licensed mortgage broker must
submit an online renewal and pay the branch office annual assessment fee through the NMLS. (b) The renewed mortgage broker
branch office license is valid for the term listed on the license or until surrendered, suspended, or revoked.
(10) If my mortgage broker branch office license expires, must I apply for a new license? If you complete all the requirements for
renewal by 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 branch office license, you must pay an additional fifty
percent of your annual assessment for that branch. See subsection (9) 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 until your
license has been renewed. If you fail to comply with the renewal request requirements by February 28th, each year, you must apply
(11) If my mortgage broker branch office license has expired, may I still conduct my mortgage broker business from that location?
No. Once the mortgage broker branch office license has expired, you must not conduct any business under the act that requires a
license until you renew your license.
(12) If my mortgage broker main office license expires, may I still conduct my mortgage broker business from a branch office? No.
Once the mortgage broker main office license expires, you must not conduct any business under the act that requires a license from
any location until you renew the main office license.
(13) May I add a trade name (or "DBA") to my mortgage broker branch office license? Yes. You may add a trade name, or "DBA"
name, to the mortgage broker branch office license if you first apply to the department, in a form prescribed by the director, and
receive department approval. The branch office trade name must at all times be identified as connected with the mortgage broker's
license name as it appears on the mortgage broker license. When the department has approved the trade name, you must conduct
business under that trade name in at least one of the two following ways:
(b) Use the branch office trade name and mortgage broker ((branch)) main office license number together. (c) See WAC 208-660180(10).
(14) How must I identify my mortgage broker branch office(s)? The branch office must be prominently identified as a branch or
division of the licensed mortgage broker so as not to appear to be an independent enterprise.
(15) Does my branch office have to be a physical location? Yes. The physical location may be at a commercial or residential address
but does not have to be in Washington. See WAC 208-660-420, Out-of-state mortgage brokers and loan originators.
(16) Must I have a branch manager? No. Although you may appoint one, the act does not require a branch manager. You and the
designated broker are responsible for the business conducted at all locations.
(17) If I appoint a branch manager, must he or she be licensed? If the branch manager performs any of the functions of a mortgage
broker or loan originator, he or she must be licensed. If they do not perform those functions, they must not be paid a commission or
salary based upon the number of transactions close
(18) Must I have a designated broker at each branch? No. You may have only one designated broker who is responsible for the
mortgage broker business at all locations.
(19) If I want to move my licensed company under the sponsorship of another mortgage broker, what must be completed before the
licensed loan originators can start transacting business under the sponsorship of the other mortgage broker? The loan originators
may begin doing business when the other mortgage broker has filed for approval of a new branch office with the NMLS, has
sponsored each of the licensed loan originators through the NMLS and you have filed the trust account paperwork with the
department, you may transact business under the new mortgage broker for up to thirty days without a new license. must also
provide a copy of the resignation letter to the licensed mortgage broker. The department will terminate your appointment thirty-one
days after receiving your resignation letter.
(7) What are my responsibilities when I sell my business? (a) At least thirty days prior to the effective date of sale, you must notify
the department of the pending sale by completing the following: Notify the department in writing and provide requested information.
At the effective date of sale, update and file all required information through the NMLS for your main and any branch offices,
including updating information about the location of your books and records. (b) You must give written notice to borrowers whose
applications or loans are in process, advising them of the change in ownership. (c) You must give written notice to third party
providers that have or will provide services on loans in process, and all third-party providers you owe money to, bringing accounts
payable current. (d) You must reconcile the trust account and return any funds to the borrowers or others to whom they belong, or
transfer funds into a new trust account at the borrower's direction. If excess funds still remain and are unclaimed, follow the
procedures provided by the department of revenue's unclaimed property division.
(8) Must I notify the department if I cease doing business in this state? Yes. You must notify the department within twenty days after
you cease doing business in the state by updating your MU1 record through the NMLS.
(9) Must I notify the department of changes to my trust account? Yes. You must notify the department within five business days of
any change in the status, location, account number, or other particulars of your trust account, made by you or the federally insured
financial institution where the trust account is maintained. A change in your trust account includes the addition of a trust account.
(10) What must I do if my licensed mortgage broker company files for bankruptcy? (a) Notify the director within ten business days
after filing the bankruptcy. (b) Respond to the department's request for information about the bankruptcy.
(11) If I am a designated broker and file for personal bankruptcy, what are my reporting responsibilities? A designated broker must
notify the department in writing within ten business days of filing for bankruptcy protection.
(12) If I am a designated broker and file for personal bankruptcy, what action may the department take? The director may require the
licensed mortgage broker to replace you with another designated broker.
(13) If I am a loan originator and file for personal bankruptcy, what are my reporting responsibilities? A licensed loan originator must
notify the director in writing within ten business days of filing for bankruptcy protection.
(14) If I am a loan originator and file for personal bankruptcy, what action may the department take? Depending on the
circumstances, the director may revoke or condition your license.
(15) When may I apply for a license after surrendering one due to my personal bankruptcy filing? If you surrendered your license,
you may apply for a license at any time. However, the department may deny your license application for three years after the
bankruptcy has been discharged provided that no new bankruptcies have occurred or are in progress.
(16) Who in the mortgage broker company must notify the department if they are charged with or convicted of a crime?
Licensees, whether on active or inactive license status, must notify the department in writing within ten business days of being:
(a) Charged by indictment or information with any felony, or a gross misdemeanor involving dishonesty or financial misconduct in
any jurisdiction. (b) Convicted of any felony, or any gross misdemeanor involving dishonesty or financial misconduct in any
jurisdiction. (c) Convicted of any felony involving fraud, dishonesty, breach of trust, or money laundering in any jurisdiction. (d)
Convicted outside of Washington for any crime that if charged in Washington would constitute a felony, or gross misdemeanor for
dishonesty or financial misconduct.
(17) Who in the mortgage broker company must notify the department if they are the subject of an administrative enforcement
action? Licensees, whether holding active or inactive licenses, must notify the department in writing within ten business days of the
occurrence if:
What disclosures must I make to borrowers and when? (a) Within three business days of receiving a borrower's loan
application, or receiving money from a borrower for third-party provider services, you, as a mortgage broker or loan
originator on behalf of a mortgage broker, must make all disclosures required by RCW 19.146.030 (1), (2), (3), and
19.144.020. The one page disclosure summary required by RCW 19.144.020 must be dated when provided to the
borrower. The disclosures must be in a form acceptable to the director. (b) If a lender is providing disclosures to the
borrower, you must maintain copies of those disclosures; failure to do so would result in a violation.
What is the disclosure required under RCW 19.146.030(1)? A full written disclosure containing an itemization and
explanation of all fees and costs that the borrower is required to pay in connection with obtaining a residential
mortgage loan, and specifying the fee or fees which inure to the benefit of the mortgage broker. A good faith estimate
of a fee or cost must be provided if the exact amount of the fee or cost is not determinable. This subsection does not
require disclosure of the distribution or breakdown of loan fees, discount, or points between the mortgage broker and any
lender or investor. The specific content of the disclosure required under RCW 19.146.030(1) is identified in RCW
19.146.030(2).
What is the disclosure required under RCW 19.146.030(2)? Mortgage brokers must disclose the following content:
(a) The annual percentage rate, finance charge, amount financed, total amount of all payments, number of
payments, amount of each payment, amount of points or prepaid interest and the conditions and terms under
which any loan terms may change between the time of disclosure and closing of the loan; and if a variable rate,
the circumstances under which the rate may increase, any limitation on the increase, the effect of an increase,
and an example of the payment terms resulting from an increase. Disclosure in compliance with the requirements of
the Truth-in-Lending Act and Regulation Z, as now or hereafter amended, is considered compliance with the disclosure
content requirements of this subsection; however, RCW 19.146.030(1) governs the delivery requirement of these
(b) The itemized costs of any credit report, appraisal, title report, title insurance policy, mortgage insurance,
escrow fee, property tax, insurance, structural or pest inspection, and any other third-party provider's costs
associated with the residential mortgage loan. Disclosure through good faith estimates of settlement services and
special information booklets in compliance with the requirements of RESPA and Regulation X, as now or hereafter
amended, is considered compliance with the disclosure content requirements of this subsection; however, RCW
19.146.030(1) governs the delivery requirement of these disclosures;
(c) ((If the rate is locked, the cost, terms, duration, and conditions of the rate lock agreement, whether and under what
conditions any lock-in fees are refundable to the borrower, and whether the lock-in agreement is guaranteed by the
mortgage broker or lender (see subsection (7) of this section);
(d))) If a rate lock agreement has been entered into, you must disclose to the borrower whether the rate lock
agreement is guaranteed and if so, if guaranteed by a company other than your company, you must provide the
name of that company, whether and under what conditions any rate lock fees are refundable to the borrower and:
(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
(d) If the borrower wants to lock the rate after the initial disclosure, you must provide a rate lock agreement within three
business days of the rate lock date that includes the items from (b) of this subsection;
(e) 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;
(g) A statement that if the borrower is unable to obtain a loan for any reason, the mortgage broker must, within five days of
a written request by the borrower, give copies of any appraisal, title report, or credit report paid for by the borrower, to the
borrower, and transmit the appraisal, title report, or credit report to any other mortgage broker or lender to whom the
borrower directs the documents to be sent; and
(h) A statement providing that moneys paid by the borrower to the mortgage broker for third-party provider services are
held in a trust account and any moneys remaining after payment to third-party providers will be refunded. If the mortgage
broker does not collect trust funds of any kind, the disclosure is not required.
What is the disclosure required under RCW 19.144.020? (a) You must provide the borrower with a clear, brief, one page
summary to help borrowers understand their loan terms. The disclosure summary must be provided on one page separate
from any other documents and must use clear, simple, plain language terms that are reasonably understandable to the
average person. (b) 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 this disclosure requirement.
(5) How do I disclose the ((yield spread premium (YSP) from the lender)) lender's credit or charge for the interest rate? (a) You
must disclose the ((YSP)) credit or charge for the interest rate as a dollar amount credited to the borrower on the GFE. (b) You
must direct the settlement service provider to disclose the ((YSP)) credit or charge for the interest rate on line 802 on the HUD1 or equivalent settlement statement. The ((YSP)) amount must be expressed as a dollar amount. (c) Failure to properly
disclose the ((yield spread premium (YSP))) credit or charge for the interest rate is a violation of RCW 19.146.0201
(6) and (11), and RESPA. (6) Are there additional disclosure requirements related to interest rate locks? Yes. ((Pursuant to
RCW 19.146.030(3), if subsequent to the written disclosure being provided under this section, a mortgage broker or loan
originator enters into a rate lock agreement with a borrower or represents to the borrower that the borrower has entered into a
rate lock agreement, then within three business days the mortgage broker or loan originator must deliver or send by first-class
mail to the borrower the rate lock agreement described in subsection (3)(c) of this section.)) You must provide the borrower a
new rate lock agreement within three business days of a change in the locked interest rate. The new rate lock agreement must
include all the terms required under subsection (3)(c) of this section. Changes to a locked interest rate can only occur for valid
reasons such as changes in loan to value, credit scores or other loan factors directly affecting pricing. Lock extensions and
relocks are also valid reasons for changes to a previously locked interest rate.
(7) What must I disclose to the borrower if they do not choose to enter into a rate lock agreement? 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 good faith estimate required by RESPA is deemed compliance with this
Will a rate lock agreement always guarantee the interest rate and terms? No. A rate lock agreement may or may not be
guaranteed by the mortgage broker or lender. The rate lock agreement must clearly state whether the rate lock agreement is
guaranteed by the mortgage broker or lender.
How do I disclose the payment of a rate lock fee? In a table funded transaction, 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)).
(10) Are there any model forms that suffice for the disclosure content under RCW 19.146.030(2)? Yes. The following model forms
are acceptable forms of disclosure:
(a) For RCW 19.146.030 (2)(a), mortgage brokers are encouraged to use the federal truth-in-lending disclosure form for mortgage
loan transactions provided under the Truth-in-Lending Act and Regulation Z, as now or hereafter amended. However, the federal
truth-in-lending disclosure only suffices for the content of disclosures under RCW 19.146.030 (2)(a). The delivery of disclosures is
governed by RCW 19.146.030(1). (b) For RCW 19.146.030 (2)(b), mortgage brokers are encouraged to use the federal good faith
estimate disclosure form provided under the Real Estate Settlement Procedures Act and Regulation X, as now or hereafter
amended. However, the federal good faith estimate disclosure only suffices for the content of disclosures under RCW 19.146.030
(2)(b). The delivery of disclosures is governed by RCW 19.146.030 (1). (c) For RCW 19.146.030 (2)(c), (d), (e), (f) and (3), the
department encourages mortgage brokers to use the department published model disclosure forms that can be found on the
May my mortgage broker fees increase following the disclosures required under RCW 19.146.030(1)? Pursuant to RCW
19.146.030(4), a mortgage broker must not charge any fee that inures to the benefit of the mortgage broker if it exceeds
the fee disclosed on the initial written good faith estimate disclosure required in RCW 19.146.030 (1) and (2)(b), unless:
(b) The mortgage broker has provided to the borrower, no less than three business days prior to the signing of the loan
closing documents, a clear written explanation of the fee and the reason for charging a fee exceeding that which was
Are there any situations in which fees that benefit the mortgage broker can increase without additional disclosure? Yes,
there are two possible situations where an increase in the fees benefiting the mortgage broker may increase without the
requirement to provide additional disclosures. These situations are:
(a) The additional disclosure is not required if the borrower's closing costs, excluding prepaid escrowed costs of
ownership, on the final settlement statement do not exceed the total closing costs, excluding prepaid escrowed
costs of ownership, in the most recent good faith estimate provided to the borrower. For purposes of this section
"prepaid escrowed costs of ownership" mean any amounts prepaid by the borrower for the payment of taxes,
property insurance, interim interest, and similar items in regard to the property used as security for the loan; or
(b) The fee or set of fees that benefit the mortgage broker are disclosed as a percentage of the loan amount
and the increase in fees results from an increase in the loan amount, provided that:
(ii) The fee or set of fees that are calculated as a percentage of the loan amount have been disclosed
on the initial written disclosure as both a percentage of the loan amount and as a dollar amount
based upon the assumed loan amount used in the initial written disclosure; and
(iii) The total aggregate increase in the fee or set of fees that benefit the mortgage broker as a result
of the increase in loan amount is less than seven hundred fifty dollars. This section does not apply to
the disclosure required in RCW 19.144.020.
What action may the department take if I improperly disclose my mortgage broker fees on the good faith estimate and
HUD-1/1A statement? If you fail to disclose your mortgage broker fees as required, the department may request, direct, or
order you to refund those fees to the borrower if the result of that disclosure resulted in confusion or deception to the
May the department take action against a mortgage broker when mortgage broker fees are disclosed incorrectly on the
HUD-1/1A and the incorrect disclosure was made by an independent escrow agent, title company, or lender? If the
mortgage broker can show the department that they disclosed their fees correctly on the good faith estimate, and have
instructed the independent escrow agent, title company, or lender to disclose the fees correctly on the HUD-1/1A, and the
independent escrow agent, title company, or lender has not followed the instructions, the department may not take action
against the mortgage broker.
What action may the department take if I fail to provide additional disclosures as required under RCW 19.146.030(4)?
Generally, the department may request, direct, or order you to refund fees.
How will the department determine whether to request, direct or order me to refund fees to the borrowers?
Generally, the department will make its determination by answering the following questions:
(a) Has an initial good faith estimate disclosure of costs been provided to the borrower in accordance with RCW
19.146.030 (1) and (2)(b)?
(b) Were any subsequent good faith estimate disclosures of costs provided to the borrower no less than three business
clear written explanation of the change? Was the changedue to a valid change of circumstance as allowed under RESPA?
(d) Did the total costs, excluding prepaid escrowed costs of ownership, on the final settlement statement exceed the total
closing costs, excluding prepaid escrowed costs of ownership, in the most recent good faith estimate provided to the
borrower no less than three business days prior to the signing of the loan closing documents?
(e) If the costs at closing did exceed the most recent disclosure of costs was the need to charge the fee reasonably
foreseeable at the time the written disclosure was provided?
(f) If the costs at closing did exceed the most recent disclosure of costs did the mortgage broker provide a clear written
explanation of the fee and the reason for charging a fee exceeding that which was previously disclosed, no less than three
business days prior to the signing of the loan closing documents?
If I failed to provide the initial good faith estimate or TILA disclosure under RCW 19.146.030 (1) and (2)(a) and (b) what
action may the department take? If you have not provided the initial good faith estimate or TILA disclosure as required, including
both delivery and content requirements, the department may request, direct or order you to refund to the borrower fees that inured
If I received trust funds from a borrower, but failed to provide the disclosures as required in RCW 19.146.030 (1) and (2),
what action may the department take? If you did not provide the disclosures as required, including both delivery and content
requirements, the department may request, direct, or order you to refund to the borrower any trust funds they have paid regardless
of whether you have already expended those trust funds on third-party providers.
Under what circumstances must I re-disclose the initial disclosures required under the act? Generally, any loan
terms or conditions that change must be re-disclosed to the borrower no less than three business days prior to the
signing of the loan closing documents. Some examples are:
(a) Adjustable rate loan terms, including index, margin, and any changes to the fixed period. (b) The initial fixed period. (c) Any
balloon payment requirements. (d) Interest only options and any changes to the options. (e) Lien position of the loan. (f) Terms and
the number of months or years for amortization purposes. (g) Prepayment penalty terms and conditions. (h) Any other term or
condition that may be specific to a certain loan product.
If a loan application is canceled or denied within three days of application must I provide the disclosures required under
RCW 19.146.030? If you have not used any borrower trust funds and those funds have been returned to the borrower in
conformance with these rules, the disclosures pursuant to RCW 19.146.030 are not required.
Is a mortgage broker that table funds a loan exempt from disclosures? No. A mortgage broker must provide all
disclosures required by the act, and disclose all fees as required by Regulation X, regardless of the funding mechanism used in the
What must I provide to the borrower if I am unable to complete a loan for them and they have paid for services from
third-party providers? If you are unable to complete a loan for the borrower for any reason, and if the borrower has paid you for
third-party provider services, and the borrower makes a written request to you, you must provide the borrower with copies of the
product from any third party provider, including, but not limited to, an appraisal, title report, or credit report. You must
provide the copies within five business days of the borrower's request. The borrower may also request that you provide the originals
of the documents to another mortgage broker or lender of the borrower's choice. By furnishing the originals to another mortgage
broker or lender, you are conveying the right to use the documents to the other broker or lender. You must, upon request by the
other broker or lender, provide written evidence of the conveyance. You must provide the originals to the mortgage broker or lender
within five business days of the borrower's request.
Must I provide a written fee agreement when I provide residential mortgage loan modification services? Yes. You must
provide a written fee agreement as prescribed by the director when providing residential mortgage modification services. You must
provide a copy of the signed fee agreement to the consumer and you must keep a copy as part of your books and records.
Am I responsible for ensuring that my advertising material is accurate, reliable, and in compliance with the act? Yes. Each
mortgage broker is responsible for ensuring the accuracy and reliability of the advertising material.
A licensee is prohibited from advertising with envelopes ((or)), stationery, or internet pages that contain an official-looking
emblem designed to resemble a government ((mailing)) agency or that suggest an affiliation that does not exist. What are some
examples of emblems or government-like names, language, or nonexistent affiliations that will violate the state and federal
advertising laws? Some examples include, but are not limited to:
(a) 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. (b) Envelopes or internet pages designed to resemble official government mailings or internet locations,
such as IRS or U.S. Treasury ((envelopes)), or other government ((mailers)) agencies. (c) Warnings or notices citing government
codes or form numbers not required by the U.S. Postmaster to be shown on the mailing. (d) The use of the term "official business,"
or similar language implying official or government business, without also including the name of the sender
(e) Any suggestion or representation that the solicitor is affiliated with any agency, bank, or other entity that it does not actually
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
19.146.0201 (2), (7), and (11). See the Federal Trade Commission's Guide Concerning Use of the Word "Free" and Similar
Representations (16 C.F.R. 251.1(g) (2003)) available at http://www.ftc.gov/bcp/
guides/free.htm.
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
advertisements must be reasonably understandable. Consumers must be able to 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. The disclosure of the APR must be as prominent or
more prominent than any other rates disclosed in the advertisement, regardless of the form of the advertisement.
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 mortgage broker must retain a copy of the lender's "rate sheet," or other supporting rate
information, and the APR calculation for the advertised interest rate.
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.
May a mortgage broker or loan originator advertise rates or fees as the "lowest" or "best"? No. Rates or fees 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 19.146.0201(7).
When I ((advertise, or)) present a business card to a potential borrower, must I make the disclosures required under ((the
act and these rules)) RCW 19.146.030? No. You are not required to make those disclosures until you accept a residential mortgage
loan application, or until you assist a borrower in preparing an application.
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.
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:
(c) The information disclosed in (a) and (b) of this subsection must be in the same size type font as the rest of the information in the
When I advertise using the internet or any electronic form (including, but not limited to, text messages), is there specific content
advertisements must contain?
Yes. You must provide the following language, in addition to any other, on your web pages or in any medium where you hold
yourself out as being able to provide the services:
Main or home page. (a) The company's license name and ((NMLS unique identifier)) license number must be displayed
on the licensee's main or home web page. (b) If loan originators are named, their ((NMLS)) license
numbers must closely 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.
(a) Branch office web page - No DBA. Comply with subsection (1) of this section. (b) Main office, or branch office web
page - DBA. If the company uses a DBA on a web page the web page must contain the main office license name, and the
information in 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.
(3) 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 sponsoring licensee's name and license number must appear on the web page.
The web page must also contain the loan originator's ((NMLS)) license name and license number closely following their
name and a link to the NMLS consumer access web page for the company. An example of closely following is: Your
license name followed by your title (if you use one) followed by your license number. See the definition of license number
for examples of ways to display your license number. See WAC 208-660-350(25).
(4) Compliance with other laws. Web site content used to solicit Washington consumers must comply with all relevant
Washington state and federal statutes for specific services and products advertised on the web site
(5) Oversight. The company is responsible for web site content displayed on all web pages used to solicit Washington
consumers including main, branch, and loan originators' web pages.
What business books and records must I keep to comply with the act? The following books and records for your
business must be available to the department. (a) Mortgage transaction documents.
(ii) The initial rate sheet or other supporting rate information. The last rate sheet, or other supporting rate
information, if there was a change in rates, terms, or conditions prior to settlement;
(iii) ((The last rate sheet, or other supporting rate information, if there was a change in rates, terms, or
conditions prior to settlement;)) Correspondence with third parties requesting documents necessary to the
transaction (and copies of the documents received as a result of that correspondence) including, but not
limited to, credit, appraisal, title, verifications of employment and deposits, automated underwriting results,
and any other notes or documents used to collect borrower and loan information to originate the loan;
(iv) All written disclosures required by the act and federal laws and regulations. Some examples of federal
law disclosures are: The good faith estimate, truth in lending disclosures, Equal Credit Opportunity Act
disclosures, affiliated business arrangement disclosures, and RESPA servicing disclosure statement;
(vi) An accounting of all funds received in connection with loans, including a trust account statement with
(vii) Rate lock agreements and the supporting rate sheets or other rate supporting document; (viii)
Settlement statements (the final HUD-1 or HUD-1A);
(ix) 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)) credit or charge for the
interest rate, loan type and terms;
(b) Advertisements. All advertisements placed by or at the request of the mortgage broker that mention rates or fees, and the
corresponding rate sheets for the advertised rates. The copies must 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. The record of each advertisement must include the date or dates of publication, the name of
the publisher if advertised by newsprint, radio, television or telephone information line, or in the case of a flyer, the dates,
methods and areas of distribution.
(d) Other. All other books, accounts, records, papers, documents, files, and other information relating to the mortgage broker
operation. Examples include, but are not limited to, personnel files, company policy and procedure documents, training
materials, records evidencing compliance with applicable federal laws and regulations, and complaint correspondence and
supporting documents. ((See also the department's Mortgage Broker Examination Manual, available on the department web
site.))
What books and records must I keep for my trust account? See WAC 208-660-410, Trust accounting.
How long must I keep my books and records to comply with the act? (a) You must keep the books, accounts,
records, papers, documents, files, and other information relating to the mortgage broker operation for a minimum
of ((twenty-five months)) three years. (b) You must keep the mortgage transaction documents described in
subsection (1)(a) of this section for a minimum of three years. It may be a prudent business practice to keep
your books and records longer. For example, if a consumer's loan becomes an adjustable rate mortgage, the
consumer may become unhappy that the terms of their mortgage have changed and file a complaint against you.
The department must begin an investigation into the complaint. If you do not have the records to show proof of
proper disclosures and all other compliance with state and federal laws, the department may rely solely on
the consumer's records as evidence in the case.
Where must I keep my business records? (a) You must keep all books and records in a location that is on file with
and readily available to the department during normal business hours. In the event of a department examination, the
location must have the work space and resources that are conducive to business operations. A readily available
location may include places of business, personal residences, computers, safes, or vaults. See WAC 208-660400(8) for the reporting requirements if the address changes. (b) If your usual business location is outside of
Washington, you may either maintain the books and records at a readily available location in Washington, or
pay the department's expenses to travel to the location to examine the books and records stored out-ofstate. Travel costs may include, but are not limited to, transportation costs, meals, and lodging.
May I keep my books and records electronically? Yes. You may keep the required records described in subsection
(1) of this section by electronic display equipment if you can meet all of the following requirements:
(b) The records must be stored exclusively in a non-rewritable and non-erasable format;
(c) The hardware or software needed to display the records must be maintained during the required retention period
under subsection (3) of this section. If the department requests the books and records in hard copy, you must provide
it in that form and within the time frame requested or directed by the department.
Abandoned records. If you do not maintain your records as required, you are responsible for the costs of collection,
storage, conversion to electronic format, and proper destruction of the records.
What may I request of an appraiser? You may request an area or market survey. While there are no strict definitions of
these terms, generally they refer to general information regarding a region, area, or plat. The information usually includes
the high, low and average sales price, numbers of properties available for sale or that have been sold within a set period,
marketing times, days on market, absorption rate or the mixture of different property types in the specified area, among
other possible components. An area survey does not contain sufficient information or is not so defining as to allow an
appraiser or reader to determine the value of a specified property or property type.
How may I discuss property values with an appraiser, prior to the appraisal, without the discussion constituting improperly
influencing the appraiser? You may inform the appraiser of your opinion of value, the borrower's opinion of value, or the
list or sales price of the property. You are prohibited from telling the appraiser the value you need or that is required for
your loan to be successful.
(3) What business practices are prohibited? The following business practices
(a) Directly or indirectly employing any scheme, device, or artifice to defraud or mislead borrowers or lenders or
to defraud any person.
(d) Soliciting or entering into a contract with a borrower that provides in substance that the mortgage broker may earn a
fee or commission through the mortgage broker's "best efforts" to obtain a loan even though no loan is actually obtained
(e) Charging discount points on a loan which does not result in a reduction of the interest rate. Some examples of
discount point misrepresentations are:
(i) A mortgage broker or lender charging discount points on the good faith estimate or settlement statement
payable to the mortgage broker or any party that is not the actual lender on the resident mortgage loan.
(ii) Charging loan fees or mortgage broker fees that are represented to the borrower as discount points when
such fees do not actually reduce the rate on the loan, or reflecting loan origination fees or mortgage broker fees
as discount points.
(iii) Charging discount points that are not mathematically determinable as the same direct reduction of the rate
available to any two borrowers with the same program and underwriting characteristics on the same date of
(f) Failing to clearly and conspicuously disclose whether a payment advertised or offered for a residential
mortgage loan includes amounts for taxes, insurance, or other products sold to the borrower. This prohibition
includes the practice of misrepresenting, either orally, in writing, or in any advertising materials, a loan payment
that includes only principal and interest as a loan payment that includes principal, interest, tax, and insurance.
(h) 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. This includes leaving blanks on a document and instructing the
borrower to sign the document with the blanks or providing the borrower with documents with blanks. You are not
prohibited from marking some information blanks with "N/A" if the information is not applicable to the transaction.
(j) Coercing, intimidating, or threatening borrowers in any way with the intent of forcing them to complete a loan
(k) Failing to make disclosures to loan applicants and non-institutional investors as required by RCW 19.146.030 and any
(l) 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.
(m) Engage in bait and switch advertising. Bait and switch means a deceptive
practice of soliciting or promising a loan at favorable terms, but later "switching"
or providing a loan at less favorable terms. While bait and switch will be
determined by the facts of a case, the following examples, alone or in
combination, may exhibit a bait and switch practice:
A deceptive change of loan program from fixed to variable rate.
(iii) The misrepresentation of discount points. This may include discount points that have a different rate buydown effect than promised, or origination fees that a borrower has been led to believe are discount points
(v) A deceptive disclosure of monthly payment amount. This practice may involve soliciting a loan with
payments that do not include monthly amounts for taxes and insurance or other reserved items, while
leading the borrower to believe that such amounts are included.
(vi) Additional undisclosed terms such as prepayment penalties or balloon payments, or deceiving borrowers
about the effect of disclosed terms.
(vii) Additional layers of financing not previously disclosed that serve to increase the overall cost to the
borrower. This practice may involve the surprise combination of first and second mortgages to achieve
the originally promised loan amount.
(viii) Leading borrowers to believe that subsequent events will be possible or practical when in fact it is known
that the events will not be possible or practical.
(ix) Advertising or offering rates, programs, or terms that are not actually available at the time. See WAC 208660-440(5).
(n) Engage 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.
(o) Negligently making any false statement or knowingly and willfully make any omission of material fact in connection
with any reports filed by a mortgage broker or in connection with any investigation conducted by the department.
(p) Making any payment, directly or indirectly, 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.
(q) Advertising a rate of interest without clearly and conspicuously disclosing the annual percentage rate implied
by the rate of interest.
(t) Collecting or charging, or attempting to collect or charge, or use or propose any agreement purporting to collect or
charge any fees prohibited by the act.
(u) Acting as a loan originator and real estate broker or salesperson, or acting as a loan originator in a manner
that violates RCW 19.146.0201(14).
(w) Intentionally delay closing of a residential mortgage loan for the sole purpose of increasing interest, costs,
fees, or charges payable by the borrower.
(x) Steering a borrower to less favorable terms in order to increase the compensation paid to the company or
(y) Receiving compensation or any thing 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.
(z) Abandoning 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.
What additional practices are prohibited when providing residential mortgage loan modification services? You are
(b) 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;
(c) Failing to provide a written fee agreement as prescribed by the director when providing residential mortgage
modification services. See also WAC 208-660-430(23);
(i) Sign a waiver of his or her legal defenses, counterclaims, and other legal rights against the servicer for future
(iii) Waive his or her right to receive notice before the owner or servicer of the loan initiates foreclosure
(iv) Agree to pay charges not enumerated in any agreement between the borrower and the lender, servicer, or
owner of the loan;
(v) 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
(g) Engaging in false or misleading advertising. In addition to WAC 208-620-630, examples of false or misleading
(ii) Advertising which makes it appear that a licensee has a special relationship with lenders when no such relationship
(h) 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
What federal guidance has the director adopted for use by the department in determining if a violation under subsection
(3)(b) of this section has occurred? The director has adopted the following documents:
(a) The Conference of State Bank Supervisors and American Association of Residential Mortgage Regulators "Guidance
on Nontraditional Mortgage Product Risks" (released November 14, 2006); and
(b) The Conference of State Bank Supervisors, American Association of Residential Mortgage Regulators, and
WSR 13-24-023 Washington State Register, Issue 13-24 National Association of Consumer Credit Administrators
"Statement on Subprime Mortgage Lending," effective July 10, 2007 (published in the Federal Register at Vol. 72, No.
What must I do to comply with the federal guidelines on nontraditional mortgage loan product risks and statement on
subprime lending? You must adopt written policies and procedures implementing the federal guidelines that are applicable
to your mortgage broker business. The policies and procedures must be maintained as a part of your books and records
When I develop policies and procedures to implement the federal guidelines, what topics must be included? The policies
and procedures must include, at a minimum, the following:
(a) 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. 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.
Borrowers must be advised 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. For example, loan
products with 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 must be adequately described to the borrower. 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.
Borrowers must be advised as to the maximum amount their monthly payment may be if the interest rate increases to its
maximum rate under the terms of the loan.
Borrowers must be advised as to the maximum interest rate that can occur under the terms of the loan.
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. (b) Control standards. 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
May I charge a loan origination fee or discount points when I originate but do not make a loan? No. You may not charge a
loan origination fee or discount points as described in Regulation X, Part 3500, Appendix A.
What mortgage broker fees may I charge? You may charge a mortgage broker fee that was agreed upon between you
and the borrower as stated on a good faith estimate disclosure form or similar document provided that such fee is
disclosed in compliance with the act and these rules.
How do I disclose my mortgage broker fees on the good faith estimate and settlement statement? You must
disclose or direct the disclosure of your fees on the good faith estimate and HUD-1/1A Settlement Statement or
May I charge the borrower a fee that exceeds the fee I initially disclosed to the borrower? Pursuant to RCW
19.146.030(4), you may not charge any fee that benefits you if it exceeds the fee you initially disclosed unless there is a
valid change of circumstance as allowed under RESPA and:
(b) You have provided to the borrower, no less than three business days prior to the signing of the loan closing
documents, a clear written explanation of the fee and the reason for charging a fee exceeding that which was previously
See WAC 208-660-430 for specific details, disclosures, and exceptions implementing RCW 19.146.030(4) No Ads
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