Washington tightens state rules for mortgage servicers, with a twist
Most servicers in the state of Washington are about to be more tightly regulated, in line with a broader trend, but certain investors in servicing-released loans will gain exemptions.
Under the new amendments to the Consumer Loan Act effective Sept. 1, servicers must inform the state's Department of Financial Institutions if their capital falls below GSE requirements. They also must notify DFI if they lose a government-sponsored enterprise approval, or change where records are kept.
The amended regulations also add exemptions for investors in instruments backed by pools of residential mortgages, as well as "note buyers" who purchase servicing-released mortgages, if they aren't otherwise regulated entities.
But with the exception of a license waiver available for master servicers overseeing less than 25 loans, the amended regulations in Washington specify that master servicers working with subservicers or directly servicing loans, as well as subservicers, must be licensed.
There has been a move toward tighter state regulation of servicing, and broader licensing requirements for servicers, as federal deregulation has gone into effect.
"Certain minor changes" in Washington's amended rules "appear to be intended for conformity with federal requirements," according to a report by law firm Ballard Spahr. But the regulation still retains some inconsistency.
For example, while the amendments change the 15-day timeline for written requests for information to 30 days in one section, in line with federal requirements, they still specify in another section that "the servicer must provide … information with 15 business days of receipt of a written request."