Mortgage Broker Terms
Advertising Material: any form of sales or promotional materials to be used in connection with the mortgage broker business (per WAC 208-660-010)
Affiliate: any person who controls, is controlled by, or is under common control with, another person. (per WAC 208-660-010) any person who directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with another person. (Per RCW 19.146.010)
Borrower: any person who consults with or retains a mortgage broker or loan originator in an effort to obtain or seek advice or information on obtaining or applying to obtain a residential mortgage loan for himself, herself, or persons including himself or herself, regardless of whether the person actually obtains such a loan. (per WAC 208-660-010) any person who consults with or retains a mortgage broker or loan originator in an effort to obtain or seek advice or information on obtaining or applying to obtain a residential mortgage loan for himself, herself, or persons including himself or herself, regardless of whether the person actually obtains such a loan. (Per RCW 19.146.010)
Application Deposit: a deposit in immediately available funds consisting of three hundred fifty dollars for each license applied for and one hundred seventy-five dollars for each branch office certificate applied for. For example, an applicant requesting a license and two branch office certificates must submit an application deposit of seven hundred dollars (calculated by adding three hundred fifty dollars to the product of two times one hundred seventy-five dollars). (per WAC 208-660-010)
Approved Examination: means a written examination approved by the director. (per WAC 208-660-010)
Approved Licensing or Continuing Education Course: means a licensing or continuing education course approved by the director. (per WAC 208-660-010)
Branch office: means a fixed physical location such as an office, separate from the principal place of business of the licensee, where the licensee holds itself out as a mortgage broker. (per WAC 208-660-010)
Branch office certificate: a branch office license issued by the director to engage in the mortgage broker business as the branch office indicated in the certificate, pursuant to RCW 19.146.265. (per WAC 208-660-010)
Certificate of passing an approved examination: a certificate signed by the examination administrator verifying that the individual performed with a satisfactory score or higher on an approved licensing examination. (per WAC 208-660-010)
Certificate of satisfactory completion of an approved CE course(RCW): a certificate signed by the course provider verifying that the individual has attended an approved continuing education course. (per WAC 208-660-010)
Computer Loan Information Systems: or "CLI system" means the real estate mortgage financing information system defined by rule of the director (Per RCW 19.146.010)
Consumer Protection Act: means chapter 19.86 RCW (per WAC 208-660-010)
Controls: A person "controls" an entity if the person, directly or indirectly through one or more intermediaries, alone or in concert with others, owns, controls, or holds the power to vote twenty-five percent or more of the outstanding stock or voting power of the controlled entity. (per WAC 208-660-010)
Convicted: A person is "convicted" of a crime, irrespective of the pronouncement or suspension of sentence, if the person:
- Is convicted of the crime in any jurisdiction;
- Is convicted of a crime which, if committed within this state would constitute such a crime under the laws of this state;
- Has plead guilty or no contest or nolo contendere or stipulated to facts that are sufficient to justify a finding of guilt to such a charge before a court or federal magistrate; or
- Has been found guilty of such a crime by the decision or judgment of a court or federal magistrate or by the verdict of a jury.(per WAC 208-660-010)
Department: the department of financial institutions. (per WAC 208-660-010 & RCW 19.146.010)
Designated Broker: a natural person designated by the applicant for a license or licensee who meets the experience, education, and examination requirements set forth in RCW 19.146.210 (e). (per WAC 208-660-010) a natural person designated by the applicant for a license or licensee who meets the experience, education, and examination requirements set forth in RCW 19.146.210(1)(e). (per RCW 19.146.010)
Director: the director of financial institutions. (per WAC 208-660-010 & RCW 19.146.010)
Employee: any natural person who has an employment relationship, acknowledged by both the employee and the mortgage broker; and is treated as an employee by the mortgage broker for purposes of compliance with federal income tax laws. (per WAC 208-660-010) an individual who has an employment relationship acknowledged by both the employee and the licensee, and the individual is treated as an employee by the licensee for purposes of compliance with federal income tax laws. (per RCW 19.146.010)
Equal Credit Opportunity Act: "ECOA" prohibits discrimination in lending.
Fair Credit Reporting Act: FCRA Stipulates the requirements of users of credit reports and disclosure to consumer.
Financial institution: a federally insured bank, savings bank, savings and loan association, or credit union, whether state or federally chartered, authorized to conduct business in this state. (per WAC 208-660-010)
Financial Misconduct: means without limitation: Any conduct prohibited by the Mortgage Broker Practices Act; any similar conduct prohibited by statutes governing mortgage brokers in other states; and any similar conduct prohibited by statutes governing other segments of the financial services industry, including but not limited to the Consumer Protection Act, statutes governing the conduct of securities broker dealers, financial advisers, escrow officers, title insurance companies, limited practice officers, trust companies, and other licensed or chartered financial service providers. (per WAC 208-660-010)
"Holds oneself out": A person "holds oneself out" by advertising or otherwise informing the public that the person engages in any of the activities indicated, including without limit through the use of business cards, stationery, brochures, rate lists or other promotional items. (per WAC 208-660-010)
Independent Contractor: or "person who independently contracts" means any person that: Expressly or impliedly contracts to perform mortgage broker activities for a licensee; with respect to its manner or means of performing the activities, is not subject to the licensee's right of control; and is not treated as an employee by the licensee for purposes of compliance with federal income tax laws. (per WAC 208-660-010) any person that expressly or impliedly contracts to perform mortgage brokering services for another and that with respect to its manner or means of performing the services is not subject to the other's right of control, and that is not treated as an employee by the other for purposes of compliance with federal income tax laws. (per RCW 19.146.010)
Investigation: an examination undertaken for the purpose of detection of violations of this chapter or securing information lawfully required under this chapter (per RCW 19.146.010)
License: a license issued by the director to engage in the mortgage broker business (per WAC 208-660-010)
Licensed location:
Loan originator: a natural person: who is a mortgage broker employee who performs any mortgage broker activities; or who is retained as an independent contractor by a mortgage broker, or represents a mortgage broker, in the performance of any mortgage broker activities. (per WAC 208-660-010) a person employed, either directly or indirectly, or retained as an independent contractor by a person required to be licensed as a mortgage broker, or a natural person who represents a person required to be licensed as a mortgage broker, in the performance of any act specified in subsection (12) of this section. (per RCW 19.146.010)
Lock-in agreement: an agreement with a borrower made by a mortgage broker or loan originator, in which the mortgage broker or loan originator agrees that, for a period of time, a specific interest rate or other financing terms will be the rate or terms upon which it will make a loan available to the borrower (per WAC 208-660-010) an agreement with a borrower made by a mortgage broker or loan originator, in which the mortgage broker or loan originator agrees that, for a period of time, a specific interest rate or other financing terms will be the rate or terms at which it will make a loan available to that borrower. (per RCW 19.146.010)
Material litigation: any conviction in the prior seven years for a felony, or for a gross misdemeanor involving dishonesty or financial misconduct, and any litigation pending at any time during the prior seven years that would be relevant to the director's ruling on an application for a license, including but not limited to, the following types of litigation: Criminal actions involving felony charges. Criminal or civil actions involving dishonesty or financial misconduct. (per WAC 208-660-010)
Mortgage Broker: any person that for compensation or gain, or in the expectation of compensation or gain: Makes a residential mortgage loan or assists a person in obtaining a residential mortgage loan; or holds himself or herself out as being able to do so. (per WAC 208-660-010) any person who for compensation or gain, or in the expectation of compensation or gain (a) makes a residential mortgage loan or assists a person in obtaining or applying to obtain a residential mortgage loan or (b) holds himself or herself out as being able to make a residential mortgage loan or assist a person in obtaining or applying to obtain a residential mortgage loan. (per RCW 19.146.010)
Mortgage Broker Practices Act: means chapter 19.146 RCW and chapter 208-660 WAC. (per WAC 208-660-010)
Out-of-state applicant or licensee: an applicant for a license or licensee that does not maintain a physical office within this state. (per WAC 208-660-010)
Person: a natural person, corporation, company, partnership, or association. (per WAC 208-660-010) a natural person, corporation, company, limited liability corporation, partnership, or association. (per RCW 19.146.010)
Prepaid escrowed costs of ownership: as used in RCW 19.146.030 (5), means any amounts prepaid by the borrower for the payment of taxes, property insurance, interim interest, and similar items in regard to the security property. (per WAC 208-660-010)
Principal: any person who controls, directly or indirectly through one or more intermediaries, alone or in concert with others, a ten percent or greater interest in a partnership, company, association or corporation, and the owner of a sole proprietorship. (per WAC 208-660-010)
RCW: Revised Code of Washington. (per WAC 208-660-010)
Real Estate Settlement Procedures Act: "RESPA"; Prohibits cost-increasing abusive practices such as kickbacks and referral fees and requires advance disclosure of settlement service costs.
Registered agent: a person or persons located within this state that is appointed to accept service of process for an out-of-state licensee. (per WAC 208-660-010)
Residential mortgage loan: any loan primarily for personal, family, or household use secured by a mortgage or deed of trust on residential real estate upon which is constructed or intended to be constructed a single family dwelling or multiple family dwelling of four or less units. (per WAC 208-660-010) any loan primarily for personal, family, or household use secured by a mortgage or deed of trust on residential real estate upon which is constructed or intended to be constructed a single family dwelling or multiple family dwelling of four or less units. (per RCW 19.146.010)
Subsidiary: a corporation, company, partnership, or association that is controlled by another. (per WAC 208-660-010)
Third-party provider: any third party, other than a mortgage broker or lender, that provides goods or services to the mortgage broker in connection with the preparation of a borrower's loan and includes, but is not limited to, credit reporting agencies, title insurance companies, appraisers, structural and pest inspectors, or escrow companies. However, "third-party provider" does include a third-party lender, to the extent it provides lock-in arrangements to the mortgage broker in connection with the preparation of a borrower's loan. (per WAC 208-660-010) any person other than a mortgage broker or lender who provides goods or services to the mortgage broker in connection with the preparation of the borrower's loan and includes, but is not limited to, credit reporting agencies, title companies, appraisers, structural and pest inspectors, or escrow companies. [1997 c 106 § 1; 1994 c 33 § 3; 1993 c 468 § 2; 1987 c 391 § 3.] (per RCW 19.146.010)
Transfer: a sale, transfer, assignment, or other disposition, whether by operation of law in a merger or otherwise. (per WAC 208-660-010)
Truth in Lending Act: "TIL" Requires disclosure of the cost of credit to the consumer and the terms of repayment.
Yield Spread Premiums ("YSP")
WAC: Washington Administrative Code
Regs "X", "Z", & "B": Federal Statutes. See the FDIC’s website: http://www.fdic.gov
Consumer Loan Definitions
Act: RCW 31.04 & WAC 208-620
Add-on method- RCW & WAC: the method of precomputing interest payable on a loan whereby the interest to be earned is added to the principal balance and the total plus any charges allowed under this chapter is stated as the loan amount, without further provision for the payment of interest except for failure to pay according to loan terms. The director may adopt by rule a more detailed explanation of the meaning and use of this method.
Affiliate: any person who controls, is controlled by, or is under common control with another.
Annual percentage interest rate: the rate of interest specified in the note.
Annual percentage rate: has the same meaning as defined in Regulation Z, 12 C.F.R. Section 226 et seq.
Bond substitute: unimpaired capital, surplus and qualified long-term subordinated debt.
Department: the department of financial institutions.
Director- RCW & WAC: the director of the department of financial institutions or his or her designated representative (WAC & RCW).
Filing: means filing, recording, releasing or reconveying mortgages, deeds of trust, security agreements or others documents, or transferring certificates of title to vehicles.
Insurance- RCW & WAC: life insurance, disability insurance, property insurance, insurance covering involuntary unemployment and such other insurance as may be authorized by the insurance commissioner in accordance with Title 48 RCW (WAC). Life insurance, disability insurance, property insurance, involuntary unemployment insurance, and such other insurance as may be authorized by the insurance commissioner (RCW).
License- RCW & WAC: a license issued under the authority of this chapter with respect to a single place of business. (WAC) a single license issued under the authority of this chapter with respect to a single place of business. (RCW)
Licensee- RCW & WAC: means a person to whom one or more licenses have been issued. (WAC); means a person who holds one or more current licenses.(RCW)
Live check: means a loan solicited through the mail in the form of a check, which, when endorsed by the payee, binds the payee to the terms of the loan agreement contained on the check.
Loan: means a sum of money lent at interest and includes both open-end and closed-end transactions.
Long-term subordinated debt: for the purposes required in RCW 31.04.045 outstanding promissory notes or other evidence of debt with initial maturity of at least seven years and remaining maturity of at least two years.
Out-of-state licensee: a licensed entity whose licensed location is outside the State of Washington
Person: individuals, partnerships, associations, trusts, corporations, and all other legal entities; includes individuals, partnerships, associations, trusts, corporations, and all other legal entities.
Principal amount: the loan amount advanced to or for the direct benefit of the borrower
Principal balance: the principal amount plus any allowable origination fee.
Records: books, accounts, papers, records and files, no matter in what format they are kept, which are used in conducting business under the act.
Senior officer: an officer of a consumer loan company at the vice-president level or above.
Simple interest method- RCW & WAC: the method of computing interest payable on a loan by applying the annual percentage interest rate or its periodic equivalent to the unpaid balance of the principal amount outstanding for the time outstanding. Each payment shall first be applied to any unpaid penalties, fees, or charges, then to accumulated interest, and last to the unpaid balance of the principal amount until paid in full. In using such method, interest shall not be payable in advance or compounded; means the method of computing interest payable on a loan by applying the annual percentage interest rate or its periodic equivalent to the unpaid balances of the principal of the loan outstanding for the time outstanding with each payment applied first to any unpaid penalties, fees, or charges, then to accumulated interest, and the remainder of the payment applied to the unpaid balance of the principal until paid in full. In using such method, interest shall not be payable in advance nor compounded. The director may adopt by rule a more detailed explanation of the meaning and use of this method.
State: state of Washington.
Escrow Definitions
Escrow: any transaction wherein any person or persons, for the purpose of effecting and closing the sale, purchase, exchange, transfer, encumbrance, or lease of real or personal property to another person or persons, delivers any written instrument, money, evidence of title to real or personal property, or other thing of value to a third person to be held by such third person until the happening of a specified event or the performance of a prescribed condition or conditions, when it is then to be delivered by such third person, in compliance with instructions under which he is to act, to a grantee, grantor, promisee, promisor, obligee, obligor, lessee, lessor, bailee, bailor, or any agent or employee thereof.
Escrow agent: any sole proprietorship, firm, association, partnership, or corporation engaged in the business of performing for compensation the duties of the third person referred to in RCW 18.44.500.
Controlling person: any person who owns or controls ten percent or more of the beneficial ownership of any escrow agent, regardless of the form of business organization employed and regardless of whether such interest stands in such person's true name or in the name of a nominee.
Cash deposit: funds deposited, in lieu of an errors and omissions policy, in an account in a recognized Washington state depository which account is maintained separate and apart from the escrow agent's own funds. The funds shall be deposited in such a manner to permit only the director to withdraw from the principal amount. The escrow agent may withdraw any interest accumulated to the account.
Closing: the transfer of title of real or personal property or execution of a real estate contract whichever event occurs first.
Completed escrow: a transaction in which the escrow agent has fully discharged its duties to the principals to the transaction. This includes obtaining all necessary documents, obtaining required signatures, completing reconveyance or title elimination, and disbursing funds to the principals to the transaction and to third parties as agreed by the principals in the escrow instructions or on the settlement form.
Securities: any stock, treasury bill, bond, debenture or collateral-trust certificate tendered in lieu of an errors and omissions policy. It does not mean or include any insurance or endowment policy, annuity contract or letter of credit.
Transfer of title: occurs at the time the seller executes a deed or bill of sale and such is delivered to the purchaser or recorded.
Unclaimed funds: those funds for which the rightful owner is unknown, or the location of payee is unknown, or stale-dated checks which have not been cashed.
Check Cashers & Check Sellers Definitions
Affiliate: any person who directly or indirectly through one or more intermediaries, controls, or is controlled by, or is in common control with another person.
Board director: a director of a corporation or a person occupying a similar status and performing a similar function with respect to an organization, whether incorporated or unincorporated.
Check casher: an individual, partnership, unincorporated association, or corporation that, for compensation, engages, in whole or in part, in the business of cashing checks, drafts, money orders, or other commercial paper serving the same purpose.
Check seller: an individual, partnership, unincorporated association, or corporation that, for compensation, engages, in whole or in part, in the business of selling checks, drafts, money orders, or other commercial paper serving the same purpose.
License: a license issued by the director to engage in the business of check cashing or check selling under the provision of RCW 31.45.
Licensee: a check casher or seller licensed by the director to engage in business in accordance with RCW 31.45. For purposes of the enforcement powers, including the power to issue cease and desist orders under RCW 31.45.110 , "licensee" also means a check casher or seller who fails to obtain the license required by RCW 31.45.
Small loan: a loan of up to five hundred dollars for a period of thirty-one days or less.
Monetary instrument: a check, draft, money order or other commercial paper serving the same purpose.
Person: a natural person, corporation, company, partnership, or association.
Principal: any person who controls, directly or indirectly through one or more intermediaries, alone or in concert with others, a ten percent or greater interest in a partnership, company, association or corporation, and the owner of a sole proprietorship.
Records: means books, accounts, papers, records and files, no matter in what format they are kept, which are used in conducting business under RCW 31.45.
Substitute security: bonds, notes, debentures, or other obligations of the United States or any agency or instrumentality thereof or guaranteed by the United States or of the state of Washington or of a municipality, county, school district, or instrumentality of the state of Washington or guaranteed by the state.
