WA Financial Regulator Seeks $4.2 Million Penalty Against Mortgage Servicer for Alleged Repeat Violations

The Washington Department of Financial Institutions (DFI) filed a Statement of Charges against a large nationwide mortgage servicer based on numerous alleged repeat violations of state and federal servicing laws.

The DFI alleges that it examined the mortgage servicer four times between 2018 and 2025, and each exam revealed numerous violations, including:

• Submission of inaccurate quarterly mortgage call reports;
• Incorrectly onboarding loans, which resulted in inaccuracies regarding loans’ private mortgage insurance, escrow, and/or delinquency status;
• Incorrectly applying or allocating payments;
• Errors in maintaining and managing escrow accounts, including purchasing force-placed insurance for borrowers who already had active property insurance policies;
• Not timely reconveying title after borrowers paid their loans in full;
• Using an unregistered trade name;
• Inadequate compliance management systems, including deficiencies in training, monitoring, or auditing processes;
• Failing to send response letters after receiving notices of error from borrowers;
• Sending inaccurate rate change notices for adjustable-rate mortgages;
• Not conducting complete and accurate escrow account analyses;
• Sending borrowers inaccurate or incomplete periodic mortgage statements;
• Making false statements to the DFI in reports and other information provided to the regulator;
• Failing to timely pay annual assessment fees to the DFI;
• Providing untimely or incomplete responses to the DFI in connection with consumer complaints; and
• Engaging in unfair or deceptive acts or practices, including not mediating in good faith during the foreclosure process, giving misleading or conflicting information to borrowers over the phone, and failing to maintain the security of borrowers’ private information.

The DFI is seeking approximately $4.2 million in fines and costs, as well as an order prohibiting the company from acquiring new mortgage servicing rights or originating new residential mortgages for properties in Washington state until all existing violations are remediated to the DFI’s satisfaction.