Thanks to Jillayne Schlicke for posting this because I personally didn’t receive anyword from DFI (I do receive emails regarding the Mortgage Broker Commission meetings)…this one hits close to home as the company I work for, Mortgage Master, is a Correspondent Lender.   DFI did send an email to the President of our company however NOTHING was on their site when she told me about this.

So this is another shout out to all the mortgage brokers in Washington State, especially those impacted by SB 6471, which in my opinion seems to have been passed this quite conveniently by telling WAMB this would not impact mortgage brokers.   WRONG.  Mortgage brokers who have a warehouse line (correspondent lenders) are going to be dramatically impacted by this law.

Meeting Of The Mortgage Broker Commission To Discuss The Impacts Of SB 6471
May 7, 2008, at 1:00 p.m.
Renton Community Center, Banquet Room (100 max capacity)
1715 Maple Valley Highway
Renton, WA (Driving Directions)

Please attend and pass the word!

Did you receive the notice from DFI last Thursday regarding new licensing requirements impacting Correspondent Lenders?  Here’s a portion of the email I received from Deborah Bortner, Director of the Division of Consumer Services.

"Senate Bill 6471 (chapter 78, Laws of 2008), passed by legislature, and signed by the Governor on March 19, 2008, requires that all lenders doing business in Washington be licensed by the Department of Financial Institutions under the Consumer Loan ACT (CLA), chapter 31.04 RCW.  The law becomes effective June 12, 2008."

I’m still digesting all of this…it’s my understanding that if lenders wish to retain their status as a Correspondent Lender in Washington State, they will need to apply for (an expensive) Consumer Loan License.   Gee, I guess that means we can all do loans with double digit interest rates now–how is this helping the consumer?  It certainly doesn’t help lenders…it IS more money for the Evergreen State.

WAMB responded the following day via email:

Many of you received an email from the Department of Financial Institutions on Thursday regarding new licensing requirements for Washington State Lenders.  This email was a result of the passage of Senate Bill 6471 concerning consumer finance companies.  Please know we were not aware of this issue until we also received the notification by email from DFI yesterday.

During the legislation session we were made aware of Senate Bill 6471 and were told that the intent of this legislation was to require that all Consumer Finance Companies who were operating as Mortgage Brokers become licensed.  We were advised that it was not a mortgage broker concern.

Apparently the passage of this legislation has created some unintended consequences for brokers.  The legislation would require any mortgage broker with a correspondent line to also become licensed as a consumer finance company.  We know that if this legislation is put into effect on June 12, it will have an impact on a large segment of WAMB’s membership.   WAMB is working with the Mortgage Broker Commission to minimize these consequences through the Rules Process…."

Well my lending Brothers and Sisters, I highly recommend that you attend the next Mortgage Broker Commission Meeting…it’s sure to be a doozy and we, few and proud, Correspondents must be heard.

Mortgage Brokers Commission Meeting:  Tuesday, May 13, 2008 beginning at 9:00 a.m. – 11:00 a.m. at Bellevue City Hall’s Council Chambers.  Bellevue City Hall, 450 110th Avenue NE, Bellevue, WA 98009.   DFI wants you to fax your RSVP’s with your name, company name, address, phone & fax number to Elizabeth Stancil at 360-586-5068.  Here is a form you can use to RSVP: Download MortgageBrokersCommissionMeetingMay13.pdf

I hope to see you there.  RSVPs are needed by May 9, 2008.

Last Friday, Governor Gregoire signed SB 6381 into law giving fiduciary duties to mortgage brokers.  This new law does not apply to loan originators who work for bank-mortgage companies (like WaMU, Countrywide, Wells Fargo, Chase, Bank of America, etc).   

Here are some of the highlights of what the law spells out for loan originators who work for mortgage brokers:

• A mortgage broker must act in the borrowers best interest and in the utmost good faith towards the borrower
• A mortgage broker shall not accept, provide, or charge any undisclosed compensation or realize any undisclosed remuneration that inures to the benefit of the mortgage broker on an expenditure made for the borrower.
• A mortgage broker must carry out all lawful instructions provided by the borrower. 
• A mortgage broker must disclose to the borrower all material facts of which the mortgage broker has knowledge that might reasonably affect the borrowers rights, interest or ability to receive the borrower’s intended benefit from the residential mortgage loan.  
• A mortgage broker must provide an accounting to the borrower for all money…received from the borrower.

All of the above seems pretty straight forward to me and SHOULD all ready be happening when consumers work with a mortgage professional.  I have always put my clients best interest first–above mine.   The next two points are more surprising:

• A mortgage broker may contract for  or collect a fee for services rendered if the fee is disclosed to the borrower in advance of the provision of those services. 

This will allow mortgage brokers to charge a fee for consultation, credit repair, working on preapprovals.  This could change how a Washington State mortgage broker is paid and how much they charge in origination.    

• The fiduciary duty in this section does not require a mortgage broker to offer or obtain access to loan products and services other than those that are available to the mortgage broker at the time of the transaction.

I see this last point as a conflict with the entire bill.  What if the best loan for a consumer is FHA or VA and the mortgage broker does not have those loans available so they shoe-horn them into a loan they do have access to?  How is that acting in the clients best interest?  The other side of the coin is that if a mortgage broker has never provided a certain product (such as FHA or VA mortgages); how would they know if the consumer would be better off with these loans?

Note to Consumers and Real Estate Agents:  If you are a first time home buyer, have credit scores below 700 or are putting less than 20% down; ask your mortgage broker if they are able to provide FHA financing.  Those who have served our country should ask if VA financing is available. 

Jillayne Schlicke wrote an interesting post on this earlier this month at Rain City Guide.   This law is yet another reason why consumers may want to select a loan originator classified as a licensed loan originator working for a mortgage broker over a loan originator who works for mortgage-bank.

Dear Mrs. Porter:

Thank you for contacting me regarding the issue of subprime mortgages. It is good to hear from you.

As you know, in 2008 an estimated two million homeowners could lose their homes as a wave of interest-rate resets are expected on adjustable rate subprime mortgage loans. If nothing is done, this level of foreclosures will undoubtedly result in hundreds of billions of dollars in lost home equity, declining home values in communities across the country, and an overall decline in the U.S. economy. I have long been concerned about this situation. Last spring, as Chairman of the Transportation and Housing and Urban Development Appropriations Subcommittee, I held a hearing to analyze proposals to reform and modernize the Federal Housing Administration (FHA) and other potential remedies to help stem the tide of projected home foreclosures.

I am actively engaged with my colleagues to identify ways to prevent the projected wave of foreclosures from being realized in the coming years. I strongly support efforts between borrowers and lenders to forestall foreclosure, but I believe there are steps that Congress must take as well.

To help educate borrowers of their options to avoid foreclosure, I secured $180 million in the Fiscal Year 2008 Consolidated Appropriations bill to provide housing counseling services across the country. Housing counseling programs assist borrowers with mortgage modification and restructuring so they can avoid or mitigate the losses associated with foreclosure.

In addition, I was a key leader in pushing S. 2338, the FHA Modernization Act of 2007, sponsored by Sen. Christopher Dodd (D-CT), through the Senate. The FHA Modernization legislation provides the FHA new flexibility to tailor products to customers based on their credit rating, income, and relative risk. FHA modernization is a key component in addressing the subprime crisis because it will enable the FHA to offer safe, alternative mortgage options – as opposed to adjustable rate mortgages to borrowers.                                                                                                                             

As the 110th Congress progresses, I will carefully consider all legislation regarding mortgage reform, and will certainly keep your thoughts in mind. Thank you again for contacting me, and please don’t hesitate to share your thoughts in the future.

I hope all is well in Seattle.

According to this article in the Seattle PI, King County Tax Assessor Scott Noble is warning of possibly the largest property tax increase in Washington State’s history.

"This change … will produce the biggest property tax increase onto residential property owners in the history of the state of Washington," Noble said in an e-mailed warning last week to Finance Committee chairmen.

In King County alone, the change would shift as much as $200 million of taxes onto residential property owners, he said.

"In our budget-based property tax system, reductions of valuations will produce tax shifts onto other taxpayers, and my experience with advocates from our large commercial taxpayers suggests a large increase of appeals and lawsuits from these property owners who have sizable resources," Noble said in the e-mail.

House Bill 2977

Senate Bill 6517

Concerned?  You may want to contact your state representatives to express your concern, if any, of having your property taxes increased for the benefit of commercial business.