Mortgage Industry Update

Licensing Updates

License Types	As of July 2018	As of July 2017
Mortgage Broker Main Office	296	287
Mortgage Broker Branch Office	195	190
Consumer Loan Main Office	660	633
Consumer Loan Branch Office	2,559	2,354
MLOs - Active	15,362	15,102
MLOs - Inactive	3,080	2,609

Preparing for Renewals

Get a jump on renewals by taking action during the summer to ensure a smoother renewal in November.

What can be done now?

Complete the required continuing education (CE). Classes are available year round with plenty of space and less pressure than during the fall. July 15, all individuals who are not CE compliant will receive the annual CE reminder license item in NMLS. Companies and individuals can use this license item to track those who haven’t completed CE and aren’t eligible to renew. To find CE courses, view the NMLS Master Course Catalog.

Resolve all outstanding license items on your NMLS record. License items are requests from either regulators or the system to make a change to your individual record and must be addressed promptly. Unresolved license items slow the processing of renewal requests and can delay other requests. To check for license items, use the Individual License Status Quick Guide. If you believe a license item is resolved, email the person listed in the license item or CSLIcensing@dfi.wa.gov

Common findings from Mortgage Exam Team

Failure to Accurately Complete the Privacy Policy. Companies often use the model privacy form seeking to obtain the safe harbor. If you do this, you may only modify the form as described in Appendix A to Regulation P. Our examiners often find that model forms have not been completed as prescribed in Appendix A, they contain blanks, or contain inaccurate information. See Appendix A to Part 1016 – Model Privacy Form.

Failure to Complete the Rate Lock Agreement. Both the Mortgage Broker Practices Act and Consumer Loan Act require the rate lock agreement disclosure to state if the rate lock agreement is guaranteed. If a company other than your company guarantees the lock, you must provide the name of that company. Examiners are finding the guarantee language missing from rate lock agreements. WAC 208-660-430(3) and WAC 208-620-510(3).

Failure to develop an adequate Anti-Money Laundering policy. Many licensees have established anti-money laundering policies; however, they are not putting those policies into practice. For example, the policy will state that it will be tested annually, when in fact the policy has never been tested. See 31 CFR Part 1029.210.

Residential Mortgage Loan Servicing News

During the second quarter of 2018, the residential mortgage loan servicing team implemented a new, limited-scope desk review examination format for companies with small Washington State portfolios that rely on subservicers to perform day-to-day servicing functions. This examination format does not require the company to complete a questionnaire or submit servicing files for review.

Instead, examiners review MCR filings, company websites, registrations with the Washington State Department of Revenue and Secretary of State, complaints to the Department, and company financial statements. While not providing a rating, these examinations save the licensees time and money, while still providing examiners with useful information in the areas reviewed. The most common finding during the last quarter, identified in limited-scope and full-scope examinations, is failure to accurately file the Department’s annual report. There are two steps required to accurately report overall servicing activity for any given year: 1) Provide your Washington State servicing portfolio on January 1, and 2) Add all loans boarded during the year to the results of step one.

These two steps are the same whether a licensee is servicing their own loans, using a subservicer, or is a subservicer. Licensees must categorize the results of the two steps above into master servicing and/or subservicing activity. The remainder of the questions provide a breakdown of the portfolio including delinquencies, modifications, foreclosures, and agency servicing.

Most errors appear to be the result of licensees only reporting their servicing portfolio as of December 31. That is the information filed in the fourth quarter MCR, but not in the Department’s annual report. Licensees’ annual report to the Department is not the same as their fourth quarter MCR.

Tips from Licensing Staff

Below are some tips or reminders from our Licensing Staff:

• Keep contact information up to date and accurate – Recently, an increasing number of applications, especially MLOs, list email addresses either for former companies or typed incorrectly with extra or missing characters. The email address listed in NMLS is one of the primary ways the Department contacts licensees.
• Submitting a new MLO application along with sponsorship can save time. The application and sponsorship are processed together if they are submitted together. Applications without sponsorship get an inactive approval and then take at least a business day to activate once sponsorship is submitted.
• Attest and submit in order to file any changes on NMLS – Anytime a user makes an update to their record in NMLS, the changes save but are not submitted. To submit the new filing with the changes, the user must go to the bottom of the left navigation and click Attest & Submit. Only after the attestation is completed will the changes in the filing be reflected in NMLS.
• Only one disclosure explanation for each event – If you are asked to change or add something to an existing disclosure explanation, edit or amend that existing explanation. An increasing number of individuals are adding a new disclosure explanation only to add a document or supply more detail to the event.

Upcoming Dates

• July 15 - Annual CE Reminder License Item set
• August 14 - Q2 Mortgage Call Report Filing Deadline
• August 31 - Servicing Invoices Due