DFI initiated an enforcement action against Nationwide Biweekly Administration, Inc., a company that transmits mortgage payments on behalf of Washington homeowners
OLYMPIA – August 27, 2013 – (RealEstateRama) — The Washington State Department of Financial Institutions (DFI) announced today that it issued a Statement of Charges against Nationwide Biweekly Administration, Inc. (Nationwide), a company that accepts and transmits mortgage payments on behalf of Washington homeowners.
DFI contends that Nationwide operated without holding the required license as a money transmitter and made misleading statements to consumers leading them to believe that they would save money by having Nationwide repay their mortgage for them. As Nationwide was unlicensed, consumers were not protected by the required bonding, investments and the periodic examinations required under the Uniform Money Services Act, found in RCW 19.230. DFI seeks to impose a $150,000 fine against Nationwide as well as restitution of all fees collected by Nationwide.
“Companies transmitting mortgage payments are uniquely positioned to cause injury to borrowers by failing to transmit borrower funds or mishandling mortgage payments, the consequences of which can be very serious to the borrower,” DFI’s Division of Consumer Services’ Director, Deborah Bortner, said. “It is critical that money transmitters handling mortgage payments comply with the law, especially our state’s licensing requirements, because such requirements are in place to add a layer of consumer protection.”
In its charges, DFI alleges that Nationwide’s advertising was deceptive and misled consumers as to whom the company represented and how often their payments would be transmitted. Consumers should use caution when dealing with any company offering to transmit mortgage payments on their behalf, and verify that any such company is licensed to do so.
“Before signing up with a mortgage payment transmitter,” DFI Director, Scott Jarvis, added, “it is critical borrowers take time to understand the costs and benefits of the program offered and determine whether the company is properly licensed. Unlicensed money transmitters pose a serious risk to the public.”
DFI received a number of complaints from consumers stating that they believed Nationwide was affiliated with their lenders or with government agencies, when in fact it was not. Consumers also complained that they did not understand the fees charged for the payment program, or the frequency with which their mortgage payments would be transmitted.
Many companies contact homeowners and offer to transmit mortgage payments to their lenders on a biweekly basis rather than a monthly basis. Doing so may allow homeowners to save money on interest payments over the life of their loans. However, these companies may in fact transmit payments less frequently, resulting in reduced savings to homeowners.
Note: The Uniform Money Services Act authorizes the Director to file charges against companies believed to have violated the Act. The charges are not a finding or order that the respondents have actually violated the Act; all named respondents have the right to request an administrative hearing on the charges.
Link to verify money transmitter licenses: https://fortress.wa.gov/dfi/licenselu/dfi/licenseLU/LicenseLLU.aspx
Statement of Charges
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877-746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the Web and social media to provide financial education information: http://www.twitter.com/FinEd4All, www.twitter.com/DFIConsumers, www.finlit.blogspot.com, www.youtube.com/user/WADFI, www.homeownership.wa.gov.
About Division of Consumer Services
www.dfi.wa.gov/cs ▪ 360-902-8703 ▪ 877-746-4334, x 8703
The mission of the Division of Consumer Services is to protect consumers from illegal and fraudulent lending practices. The division accomplishes its mission through licensing, licensee examinations, investigations, and enforcing selected state and federal statutes and rules. Consumer Services regulates the business activities of consumer loan companies, mortgage brokers, money transmitters and currency exchangers, as well as check cashers and sellers, also known as “payday lenders.” The Division is entirely self-supporting, with funding provided by licensing, auditing, and policing of regulated businesses and individuals. No money is received from the state General Fund or other public revenue source.
Lyn Peters, Director of Communications
PH (360) 902-8731 lyn.peters (at) dfi.wa (dot) gov
Deborah Bortner, Director Division of Consumer Services
PH 360-902-0511, deborah.bortner (at) dfi.wa (dot) gov