Washington Enacts New Consumer Loan Act Provisions Related to Mortgage Servicing
The Washington Department of Financial Institutions, Division of Consumer Services, adopted amendments to the rules under its Consumer Loan Act revising various roles and duties of parties that invest in, own, and/or service residential mortgage loans. The new rules will become effective on September 1, 2018.
Major changes include, but are not limited to:
- Enumerating and defining the various persons regulated by the Washington Consumer Loan Act in connection with their servicing of a loan, including:
- Master servicers—persons responsible for ongoing servicing administration either by directly servicing or through servicing agreements with licensed or exempt subservicers. However, the Director of the Washington Department of Financial Institutions may issue a license waiver to a master servicer servicing or administrating the servicing of fewer than twenty-five loans;
- Listing the various persons not regulated in connection with the servicing of a loan, including:
- Investors—persons holding securities or other types of instruments backed by pools of residential mortgage loans. Investors are not servicers, master servicers, or subservicers; and
- Note buyers—persons who purchase mortgage loans without servicing rights and who are not servicers, master servicers, or subservicers;
- Amending statutory language to require out-of-state licensees to keep their books and records location information updated in the NMLS and provide the Director with access to said books and records;
- Adding in-depth instructions regarding how to calculate the annual assessment of a party’s residential mortgage activity in Washington for conventional and reverse mortgages;
- Specifying what reporting requirements residential mortgage loan servicers must meet in order to close their companies or surrender their licenses;
- Articulating a new millage amount for servicing and dividing the assessment activities assessed for reverse mortgages under origination and servicing, as applicable;
- Requiring residential mortgage loan servicers servicing for a GSE to notify the Department through the NMLS within 10 days of the occurrence of their GSE capital requirements falling below the required minimum;
- Extending the time frame required for residential mortgage loan servicers servicing for a GSE to notify the Department of termination from the GSE from 10 days to 20 days;
- Amending the requirement to notify the Department about breach of contract, waiver, or nonperformance to only require notice if the issue remains unresolved for more than 90 days; and
- Extending the requirement to respond to written requests from borrowers from 15 business days of receipt of the request to 30 business days.
