Implementation of Amended Rules under the Consumer Loan Act
for Residential Mortgage Loan Servicers

Amended rules under the Consumer Loan Act for residential mortgage loan servicers became effective January 1, 2018. Included in the rule amendments are net worth and liquidity requirements for residential mortgage loan servicers.

Changes to surety bond requirements are contained in Washington Administrative Code (WAC) 208-620-320. Applicants or licensees only servicing residential mortgage loans are not required to have a surety bond unless the company elects to provide one in lieu of meeting the tangible net worth requirements in WAC 208-620-322.

The new net worth and liquidity requirements in WACs 208-620-321 and 208-620-322 require servicers with government or GSE loans in the servicing portfolio to meet the “highest standard of the entities for which they are approved.” Servicers of government or GSE residential loans should already be meeting these requirements. WAC 208-620-321 contains this information.

If a residential mortgage servicer’s portfolio is entirely comprised of non-government and/or non-GSE loans, WAC 208-620-322 applies. It requires tangible net worth based on the number of loans in a company’s nationwide servicing portfolio. The requirements range from $100,000 in tangible net worth for companies servicing 199 loans or less, to $1,000,000 for companies servicing 1,000 or more loans. Companies may provide a $1,000,000 surety bond in lieu of maintaining the tangible net worth. The liquidity requirement for these companies is .00035 times the nationwide unpaid principal balance of the servicing portfolio. Companies servicing 25 or fewer loans may apply to DFI for an adjustment or waiver of the tangible net worth requirement. Tangible net worth and liquidity are defined in WAC 208-620-322 linked above.

The Department is evaluating methods for servicing companies to report the required financial information. We may be able to leverage changes coming in NMLS 2.0, but that remains to be seen. Alternatively, we may collect financial information through future annual assessment reporting. Non-government and/or non-GSE servicers should self-evaluate their tangible net worth and liquidity, and contact DFI with questions or concerns.