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Summer 2017 Newsletter
From the Field – Examination Update
So far in 2017, the examinations unit has completed 105 compliance examinations, including 49 consumer loan exams, 16 mortgage broker exams, 23 money transmitter exams, 12 check casher exams, and 5 escrow agent exams. All but nine of the 105 examinations resulted in a rating of three or better.
Other common consumer loan origination violations involve errors on the Closing Disclosure. Specifically, examiners are citing violations for missing seller paid costs and for failing to accurately complete the settlement agent contact information, in the “contact information” table. See federal Regulation Z for detailed requirements.
DFI’s laws and rules applicable to your industry are available on our web site and we endeavor to answer your regulatory questions as quickly and clearly as possible. Feel free to call or e-mail us with questions. The examination unit’s goal is to help you understand and comply with pertinent regulations.
Residential Mortgage Loan Servicing Update
The Department conducted 13 residential mortgage loan servicing examinations in the second quarter. Eleven of the exams were rated “2”, and two were rated “1”. One of the “1” rated exams had zero violations. Six of the exams were conducted off-site.
The three most common servicing violations are:
- Failure to Reconvey Title to Collateral Within 30 days of Payoff – This one makes the list nearly every quarter and is self-explanatory. It is a prohibited business practice per WAC 208-620-550(13).
- Failure to File Foreclosure Fairness Act Beneficiary Reporting Forms – RCW 61, Mortgages, Deeds of Trust, and Real Estate Contracts, required residential mortgage loan servicers to remit a lump sum quarterly to the Washington State Department of Commerce of $250 per recorded notice of trustee sale in the prior quarter (see RCW 61.24.173). The report and payment is due within 45 days of the prior quarter’s end, and goes into the foreclosure fairness account. The payment does not apply to amended notice off trustee sales. This requirement began in January 2011, and was originally for notices of default. Beginning on July 1, 2016 it changed to recorded notice of trustee sales. The reporting forms are found on The Department of Commerce's website. Click on the “Financial Institutions” button on the right side of the page and download the WORD document titled “Beneficiary Reporting Form and Instructions.” Examiners are checking company records for this reporting during examinations.
- Failure to Provide an Accurate Loan Modification Denial Letter – There are several requirements for the denial letter in WAC 208-620-900(6). They are: 1) Allow the borrower 30 days to appeal the denial; 2) Provide the denial reasons including the name of the investor if the denial is due to the terms of an agreement with the investor; and 3) If the denial is based on a net present value (NPV) model, you must provide the data inputs used to determine NPV.
Beginning January 1, 2018, the Department requires residential mortgage loan servicers that do not service GSE or government loans to meet minimum capital and liquidity standards. Companies that service GSE or government loans already have capital and liquidity standards set by the GSEs or government agencies. These requirements are specified in WAC 208-620-322, and apply to entities whose portfolios do not include any GSE or government loans.