On August 10, the Washington DFI entered into a consent order with a mortgage services company resolving allegations that the company performed third-party residential mortgage loan processing and underwriting in Washington without the required consumer loan company license. The DFI alleged that the conduct violated the Washington Consumer Loan Act and the federal Secure and Fair Enforcement for Mortgage Licensing Act (SAFE Act). The company admitted the order’s findings and conclusions and agreed to pay a $75,000 fine and $2,815.60 investigation fee.
According to the consent order, the company had never been licensed by DFI as either a consumer loan company or mortgage broker company. Between approximately December 21, 2023, and July 29, 2025, it acted as a third-party processor and/or performed underwriting activities on at least 1,803 residential mortgage loans secured by Washington real property. The order highlights several licensing considerations:
- Unlicensed processing and underwriting. DFI alleged that the company’s activities required a consumer loan company license unless an exclusion under the Consumer Loan Act applied.
- Different licenses cover different functions. The order states that a mortgage broker license would permit the company to conduct third-party processing activities, but underwriting activities require a consumer loan company license.
- Continuing compliance obligations. In addition to the monetary payments, the company must cease and desist from violations of the Consumer Loan Act, related rules, and applicable federal requirements, and maintain records in accordance with the Act.
The order does not prevent the company from continuing to pursue its pending mortgage broker license application or another license from DFI.
Putting It Into Practice: State regulators continue to focus on whether companies performing discrete functions in the mortgage lifecycle hold the licenses required for those activities (previously discussed here and here). The Washington order is a reminder that licensing analysis should extend beyond loan origination to third-party processing, underwriting, and other outsourced functions. Mortgage lenders, brokers, processors, underwriters, and service providers should review their Washington activities, identify which entity performs each function, and confirm that all required licenses or exemptions are in place.