Mortgage Broker Examination Information
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Mortgage Broker Examination Findings
DFI examiners frequently encounter two practices that are of particular concern.
- Mortgage broker fees disclosed on line 801 of the Good Faith Estimate
- Occupancy fraud
Mortgage Broker Fees
Mortgage Brokers are required to disclose the mortgage broker fee on lines 808-811 of the good faith estimate (GFE). However, DFI examiners frequently find instances where mortgage brokers disclose the mortgage broker fee on line 801 of the GFE.
Will DFI request, direct, or order Mortgage Brokers to refund the mortgage broker fee if it is disclosed on the GFE on lines other than 808 through 811? Yes, when DFI examiners find a mortgage broker fee disclosed on the GFE on lines other than 808-811, DFI will request the Mortgage Broker to refund the borrower’s mortgage broker fee.
WAC 208-660-430(4)
(4) How do I disclose my mortgage broker fees on the good faith estimate and settlement statement? You must disclose or direct the disclosure of your fees on lines 808 through 811 of the good faith estimate and HUD-1/1A settlement statement or similar document.
WAC 208-660-430(13)
(13) What action may the department take if I disclose my mortgage broker fees on the good faith estimate and HUD-1/1A statement on lines other than 808 through 811? If you fail to disclose your mortgage broker fees as required, the department may request, direct, or order you to refund those fees to the borrower. For example, if you disclose your mortgage broker fees as loan origination fees or discount points, the department may find that is a deceptive practice and take action against you as indicated.
Occupancy Fraud
Occupancy fraud occurs when a mortgage broker misrepresents whether the borrower plans to live at the property securing a mortgage loan. DFI examiners discover this scheme while reviewing loan file documents.
What are the characteristics of occupancy fraud?
Occupancy fraud typically involves two or more overlapping applications for separate owner-occupied properties. In addition, occupancy fraud may also include some of these other characteristics:
- Both properties are within 50 miles of each other
- Same loan originator for each transaction
- Borrower’s income is different on each loan application
- The same credit report is used for both loan applications
- Different lenders for each transaction
- Exclusion of the refinance loan amount and payment on the loan application for the purchase transaction
- The refinance property is listed as a rental property on the loan application for the purchase transaction
- Cash-out amount from the refinance transaction is used as the down payment for the purchase transaction
- All loans close as owner-occupied
What will DFI do if it discovers occupancy fraud during an examination?
Evidence of occupancy fraud is referred to our Enforcement Unit for a possible enforcement action.
RCW 19.146.0201(1)
(1) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead borrowers or lenders or to defraud any person;
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