Washington State Governor Christine Gregoire signed House Bill 2608 into law, amending both the Washington Consumer Loan Act and the Mortgage Broker Practices Act.
As a result, the Washington Consumer Loan Act will require licensing of mortgage servicers starting July 1, 2010. According to the bill, a mortgage servicer who, on behalf of a lender or investor, engages in the following activities will be required to hold a Consumer Loan License: (1) collecting or receiving payments on existing obligations due and owing to a lender or investor, (2) working with the borrower and a licensed lender or servicer to obtain information and make decisions regarding modifying the terms of an existing obligation, and (3) servicing reverse mortgage loans.
The bill defines service or servicing of a reverse mortgages loan as pursuant to an agreement with the owner of a reverse mortgage loan: Calculating, collecting, or receiving payments of interest or other amounts due; administering advances to the borrower; and providing account statements to the borrower or lender.
The amended Consumer Loan Act expands the scope of the term “Mortgage Loan Originator” to apply to any individual who, for compensation or gain, performs residential mortgage loan modification services or holds themselves out as being able to do so said the bill.
The definition of “Mortgage Loan Originator” under the Mortgage Broker Practices Act also is expanded to apply to individuals who directly or indirectly receive or expect to receive compensation or gain for performing loan modification services or who hold themselves out as being able to provide such services.
Mortgage Loan Originators acting under either act will be required to provide a written disclosure, approved by the Washington Department of Financial Institutions, prior to collecting any advance fees from a consumer with whom they will provide third party residential mortgage loan modification services. Each act caps the advance fees that may be collected at $750.
