A reminder for licensees who originate junior lien mortgages. A junior lien mortgage or second mortgage is a loan that is subordinate to a primary mortgage, such as a home equity loan.
For those companies that originate junior lien mortgages, it is important to be mindful of the fee restrictions implemented under the Consumer Loan Act, chapter 31.04 RCW. Specifically, WAC 208-620-560(4) prohibits companies from collecting a document preparation fee, processing fee, administrative fee, application fee, or a courier fee on junior lien mortgages unless the fee is paid to an unrelated third party and agreed to in writing in advance by the borrower.
As part of the examination process, examiners review fees charged to borrowers for compliance with the Act. Prohibited fees charged to borrowers on junior lien loans can result in refunds to borrowers.