Mortgage Broker Regulatory Enforcement

Mortgage brokers alleged to have violated any of the applicable statutes or regulations that DFI administers can face liability from two primary avenues: DFI enforcement actions and private civil lawsuits | litigation.  This page pertains to DFI enforcement actions.

DFI Enforcement Actions
Upon receiving a complaint that a mortgage broker violated a Washington State law or regulation, DFI will first institute an investigation that may result in an enforcement action that is litigated in according to Washington’s Administrative Procedure Act.  Since the financial crisis of 2007-08, DFI has increased the frequency with which has instituted enforcement actions against mortgage brokers. Whereas in 2003, DFI entered a total of 4 Orders for violations of the Mortgage Brokers Practices Act, and 18 Orders in 2005, DFI entered over 115 such orders in 2009 and more than 140 orders in 2010.

If DFI finds the licensee violated statutes or regulations alleged, penalties may include having to pay restitution, along with monetary fines, costs of prosecution, and investigation costs that may be substantial. The amount of restitution, fines, and costs DFI has levied following an enforcement action ranges from a few hundred or a thousand dollars.

to hundreds of thousands of dollars

In addition, Surrender of a mortgage broker license and a prohibition from participating in mortgage brokering or consumer lending permanently or for a specified for a period of time.

In some instances, fines or portions of fines may be stayed pending compliance with other conditions DFI has imposed.

In other cases, DFI has referred matters for criminal prosecution that has resulted in an offending broker being criminally charged.

A Broker or a Broker’s agent who is facing an action, whether in the form of a DFI investigation or enforcement action or a private civil action should not ignore the first notice they receive of the action. Such actions rarely, if ever, disappear on their own. It is important that a mortgage broker or anyone working with a mortgage broker respond to such allegations promptly and with the help of an experienced attorney. In many cases, an early and well thought out response can prevent an investigation from escalating to an enforcement action or can prevent a dispute from becoming a lawsuit.

Ari Brown has litigated a variety of issues involving lending, mortgage origination and disclosures, loan servicing, broker and lender liabilities, and debt collection for more than twenty years. Cases he has litigated have informed application of the Mortgage Broker Practices Act; the Consumer Loan Act; Escrow Agent Registration Act and Washington Consumer Protection Act. Years of litigating cases pertaining to banking and lending practices both on individual bases and as class actions have informed Mr. Brown’s approach to dealing with alleged violations and has heightened his ability to mitigate common mistakes and to help financial licensees avoid actions that DFI may perceive as misconduct.   Case decisions he has litigated regarding mortgage origination, loan servicing, lending, or debt collection issues include:

  • Anderson v. Wells Fargo Home Mortg., Inc., 259 F. Supp. 2d 1143 (W.D. Wash. 2003). A case regarding faulty mortgage broker disclosures and liability under the Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act (TILA), Washington Mortgage Broker Practices Act (MBPA), and the Washington Consumer Protection Act (CPA).
  • Brazier v. Sec. Pac. Mortg., Inc., 245 F. Supp. 2d 1136 (W.D. Wash. 2003). Among the first federal court decisions to apply alleged violations of the Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act (TILA) to the Washington Mortgage Broker Practices Act (MBPA) and Washington Consumer Protection Act (CPA).
  • Cornejo v. Channel Lending Co., 2005 WL 668388, (W.D. Wash. 2005). A case involving violations of the Washington Mortgage Broker Practices Act (“MBPA”) and its application to a mortgage broker surety bond.
  • Pierce v. NovaStar Mortg., Inc., 238 F.R.D. 624 (W.D. Wash. 2006). Class action regarding company-wide loan origination policies and practices alleged to violate the Washington Consumer Loan Act (CLA), Real Estate Settlement Procedures Act (RESPA), Truth in Lending Act (TILA), and Washington Consumer Protection Act (CPA).
  • Blaylock v. First Am. Title Ins. Co., 504 F. Supp. 2d 1091 (W.D. Wash. 2007). Pertaining to title insurance and allegations that practices violate the Real Estate Settlement Procedures Act (RESPA).
  • Miran v. Am. One Fin. Inc., (W.D. Wash. 2008). A case regarding practices by escrow agents in the mortgage origination process.
  • Sampson v. Wells Fargo Home Mortg., Inc., 2010 WL 5397240 (C.D. Cal. 2010). Regarding mortgage modifications and foreclosure practices under the Home Affordable Modification Program (HAMP).
  • George v. Urb. Settlement Servs., 2017 WL 4222620, at *1 (D. Colo. Sept. 21, 2017). Regarding home mortgage modification practices under the Home Affordable Modification Program (HAMP).
  • Carrillo v. Wells Fargo Bank, N.A., 2019 WL 3927369 (E.D.N.Y. 2019). Regarding allegations of deceptively marketed mortgage loan programs.
  • Jammeh v. HNN Assocs., LLC, 2020 WL 5407864 (W.D. Wash. 2020). Regarding allegations of deceptive collection practices in rental agreements.

Robert Rhodes works with Mr. Brown on an as-needed basis. He has handled hundreds of administrative and licensing investigations and enforcement actions in various forums. He often draws on his extensive background in criminal and whistleblower law that occasionally becomes useful.  Other team members are available as necessary.