Prior to January of last year a loan officer originating the loan for your clients could have been a convicted felon just out of prison after serving time for identity theft.
Ok. Wasn’t that insane?
So, finally our Department of Financial Institutions was instrumental in getting our legislators in Olympia to pass the amendments to the Mortgage Brokers Practies Act. Now to originate a mortgage loan in Washington State, all loan officers must be tested, fingerprinted, submit to a criminal and background check, pay a fee, and get a license. The test is not ready yet. Loan officers will only be allowed to take loan applications for one mortgage broker at a time and clearly identify the mortgage broker on the application. Contracts between loan originator and borrower must be in writing and are binding on the mortgage broker.
There are always loopholes. What if a loan officer finds a bank in another state to originate loans for. There is a loophole that loan officers for banks don’t have to have a license…. and …. they don’t have to disclose all the fees and commissions that they earn on the HUD statement.
Questions to ask your loan officer:
- Are you licensed in the State of Washington.
- How much do you charge my clients in the way of commissions and fees to originate a loan… above 2% to 2.5% would be a red flag.
- Do you disclose all the fees and commissions including what is paid P.O.C., on the “back end,” as a Rebate, or a yield Spread Premium. Do you disclose them on the Good Faith Estimate as well as the HUD. (Remember “bankers” don’t have to disclose.. choose loan officers carefully.”
- If there are changes in the loan terms, do you give the borrower a new Good Faith Estimate when those changes are made or at closing with the documents?
Those are just a few of the Questions I would ask a Loan Officer before I worked with him/her. Take note.
You can read all about the Mortgage Brokers Practices Act and about disciplinary actions taken against loan officers and mortgage companies at www.dfi.wa.gov.
