Washington Administrative Code › Title 208 - Financial Institutions, Department of (See also Titles 50, 419, and 460) › Chapter 208-660 - Mortgage brokers and loan originators-Licensing › RECORDS AND RESPONSIBILITIES › Section 208-660-500 - Prohibited practices

Current through Register Vol. 24-14, July 15, 2024
(1)
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.
(2)
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 are
				prohibited:
(a) Directly or indirectly
				employing any scheme, device, or artifice to defraud or mislead borrowers or
				lenders or to defraud any person.
(b) Engaging in any unfair or deceptive
				practice toward any person.
(c)
				Obtaining property by fraud or misrepresentation.
(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 for the borrower.
(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, loan
				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 disclosure.
(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.
(g)
				Making or funding a loan by any means other than table funding.
(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.
(i) Willfully filing a lien on property
				without a legal basis to do so.
(j)
				Coercing, intimidating, or threatening borrowers in any way with the intent of
				forcing them to complete a loan transaction.
(k) Failing to make disclosures to loan
				applicants and noninstitutional investors as required by RCW     19.146.030 and any
				other applicable state or federal law.
(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:
(i) A deceptive
				change of loan program from fixed to variable rate.
(ii) A deceptive increase in interest
				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 affecting the rate.
(iv) A deceptive increase in fees or other
				costs.
(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
				208-660-440(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.
(r) Failing to
				comply with the federal statutes and regulations in RCW
				    19.146.0201(11).
(s) Failing to pay
				third-party providers within the applicable timelines.
(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).
(v)
				Failing to comply with any provision of RCW     19.146.030 through 19.146.080 or
				any rule adopted under those sections.
(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 mortgage
				loan originator.
(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.