Newrez LLC Cease and Desist Order - 29 Consumer Loan Act Violations

Consumer Services Division Case Number C-25-3919 Statements of Charges allege wrongdoing by a company or individual. DFI issues Statements of Charges to tell the company or individual:

• They have been investigated
• DFI is making allegations against them
• What the allegations are
• What consequences could follow DFI informs the company or individual of their rights at this time. The company or individual can respond to the Charges. They also have the right to contest the Charges at an administrative hearing.

Questions? You can contact the Consumer Services Division, Enforcement unit at (360) 902-8703 or csenforcecomplaints@dfi.wa.gov. Please remember that we cannot provide financial or legal advice to members of the public. We also cannot release confidential information.

03/31/2026 March 31, 2026 Date issued Number Newrez LLC, NMLS #3031 Name

STATE OF WASHINGTON DIVISION OF CONSUMER SERVICES

1 Act of Washington by: STATEMENT OF CHARGES and NOTICE OF INTENT TO ENTER AN 2 LLC, ORDER TO CEASE AND DESIST, ORDER #3031, AFFIRMATIVE ACTION, IMPOSE FINE, 3 COLLECT INVESTIGATION FEE and RECOVER COSTS AND EXPENSES 4 5

INTRODUCTION

6 Pursuant to RCW 31.04.093 and RCW 31.04.165, the Director of the Department of 7 Financial Institutions of the State of Washington (Director) is responsible for the administration 8 of chapter 31.04 RCW, the Consumer Loan Act (Act). After having conducted an investigation 9 pursuant to RCW 31.04.145, and based upon the facts available as of the date of this Statement 10 of Charges, the Director, through his designee, Consumer Services Division Director Ali Higgs, 11 institutes this proceeding and finds as follows: 12

1. FACTUAL ALLEGATIONS 1.1 Respondent. Newrez LLC (Respondent) was licensed by the Department of Financial

14 Institutions of the State of Washington (Department) to conduct business as a consumer loan 15 company on or about June 1, 2011, and continues to be licensed to date. 16

1.2 Violations Cited in Prior Examinations. Between 2018 and 2021, the Department

17 conducted three examinations in which it cited Respondent for numerous violations of the Act, 18 including: 19

• Incorrectly applying payments;
  IN THE MATTER OF DETERMINING No. C-25-3919-26-SC01 20 Whether there has been a violation of the • Not maintaining escrow accounts; Consumer Loan 21 NEWREZ 22 NMLS Respondent.

• Inadequate compliance management system;

• Not providing a required written response to a borrower; and

• Incomplete and inadequate periodic statements, among other various violations.
  1.3 2025 Examination. In 2025, the Department conducted an examination where

2 Respondent was cited for numerous violations of the Act, which included those set forth below. 3

1.4 Inaccurate Mortgage Call Reports. Respondent is required to file accurate and

4 complete call reports as prescribed by the Nationwide Multistate Licensing System (NMLS). 1 5 Respondent did not file accurate call reports for Quarters 2, 3, and 4 of 2023, and Quarters 1, 2, 6 3, and 4 of 2024. 7

1.5 Incorrectly Onboarding Loans. Between about January 18, 2022, through September

8 1, 2025, Respondent did not onboard at least nine Washington loans correctly. For example, 9 Respondent erroneously added private mortgage insurance on a loan, erroneously reported a 10 borrower 30 days late, and erroneously added an escrow account to a loan. 11

1.6 Incorrectly Applying Payments. Between about August 4, 2023, through December 19,

12 2024, Respondent did not properly apply payments to at least nine Washington loans. For 13 example, Respondent did not allocate a loan recast fee, erroneously applied a payment as an 14 interest-only payment, and erroneously applied a set of payments as a principal curtailment. This 15 is a repeated violation from prior examinations. 16

1.7 Not Maintaining Escrow Accounts. Between about February 14, 2021, and March 28,

17 2025, Respondent did not maintain and service escrow accounts for at least seventy-one 18 Washington loans. For example, in at least sixty-two Washington loans Respondent purchased 19 forced-placed insurance for borrowers who had active insurance policies. On other Washington 20

21 The Nationwide Multistate Licensing System & Registry is a multistate licensing system developed and 1 maintained by the Conference of State Bank Supervisors for licensing and registration.

loans, Respondent disbursed a duplicate forced-placed insurance premium payment, disbursed a premium for a non-escrowed insurance policy, and did not timely cancel a forced-placed insurance policy. This is a repeated violation from prior examinations. 1

1.8 Not Providing a Reconveyance of Title. Between about February 6, 2023, through June

2 12, 2023, Respondent did not timely reconvey the title for a Washington property after the 3 Washington borrower paid their loan in full. 4

1.9 Unregistered Trade Name. Between about September 5, 2024, through March 18,

5 2025, Respondent used the name "Newrez Mortgage LLC" in at least four Washington loan files. 6 Respondent did not apply for or obtain Director approval for this trade name. 7

1.10 Inadequate Compliance Management System. Between about February 1, 2023,

8 through March 31, 2025, Respondent did not maintain an adequate compliance management 9 system because it had inadequate training, monitoring, or auditing processes. This is exemplified 10 by the numerous repeated violations noted above and is also a repeated violation from previous 11 examinations. 12

1.11 Not Providing Required Written Response to a Borrower. Between about August 10,

13 2024, through September 17, 2025, Respondent did not send a formal response letter after 14 receiving a Notice of Error from at least two Washington borrowers. This is a repeated violation 15 from prior examinations. 16

1.12 Inaccurate Adjustable-Rate Mortgage Interest Rate Change Notice. Between about

17 August 22, 2024, and October 16, 2024, Respondent did not provide an accurate adjustable-rate 18 mortgage interest rate change notice for at least one Washington borrower. The notice 19 Respondent sent to the borrower stated the interest rate was 7.75 percent, not 7.375 percent. 20

21 22

1.13 Incomplete and Inaccurate Escrow Account Analysis. Between about November 4,

2024, and March 31, 2025, Respondent did not provide a complete and accurate escrow account analysis for at least one Washington borrower. 1

1.14 Incomplete and Inaccurate Periodic Statements. Between about July 19, 2022, and

2 April 18, 2025, Respondent did not provide complete and accurate periodic statements to at least 3 sixteen Washington borrowers. For example, Respondent did not provide borrowers with the 4 date after which the interest rate may next change on the periodic statements; did not provide a 5 borrower with a list of all the account transaction activities that occurred since the last statement; 6 or did not accurately disclose information in the Explanation of Amount Due section of the 7 periodic statement. This is a repeated violation from prior examinations. 8

1.15 False Statements. In 2023 and 2024, Respondent made several false statements to the

9 Department. For example, between about November 24, 2023, to May 16, 2024, Respondent 10 made at least one false statement to the Department when Respondent gave the Department 11 incorrect debt-to-income calculations during several of the Department's follow-up information 12 requests. Also, on or about March 2, 2024, Respondent reported no residential mortgage 13 servicing for Washington borrowers in its 2023 annual report. However, Respondent's Q4 2023 14 Mortgage Call Report (MCR) shows it serviced an Unpaid Balance (UPB) of over $32 billion for 15 Washington borrowers. Respondent filed an amended report later in March 2024 which differed 16 from information in its MCRs and financial statements. Respondent filed a second amendment 17 in June 2024 which again reported zero Washington servicing. 18

1.16 Untimely Payment of Annual Assessment. Respondent did not pay the annual

19 assessment fee for 2023 on or before March 1, 2024. Respondent paid the annual assessment fee 20 for 2023 on or about February 25, 2025. 21 22

1.17 Untimely Responses to the Department. Between about December 13, 2023, and

February 12, 2026, Respondent did not provide timely and complete responses to the Department's requests for documents and explanations in at least fourteen complaints. 1

1.18 Unfair or Deceptive Acts or Practices. Between about November 15, 2022, and

2 January 7, 2026, Respondent engaged in unfair or deceptive acts or practices against at least 3 twenty-nine Washington borrowers through complaints received by the Department, which 4 included: 5

• Not mediating in good faith during the foreclosure process;

• Giving misleading or conflicting information to Washington borrowers over the phone
  7 regarding escrows, appraisals, and Home Equity Lines of Credit; 8

• Not timely closing a Home Equity Line of Credit;

• An assigned Single Point of Contact not responding to a borrower;

• Sending a letter of default to a Washington borrower on a closed loan;

• Not sending documents to a Washington borrower's representative; and

• Not at all times maintaining the security of Washington borrowers' private information,
  13 among other unfair or deceptive acts or practices. 14

1.19 On-Going Investigation. The Department's investigation into the alleged violations of

15 the Act by Respondent continues to date. 16

1. GROUNDS FOR ENTRY OF ORDER 2.1 Responsibility for Conduct of Employees. Pursuant to RCW 31.04.027(1)(b), RCW

18 31.04.165, and WAC 208-620-372, a consumer loan company is responsible for any conduct 19 violating the act or these rules by any person employed, or engaged as an independent contractor, 20 to work in the business covered by your license. 21 22

2.2 Unfair or Deceptive Practice. Based on the Factual Allegations set forth in Section 1.4-

1.18 above, Respondent is in apparent violation of RCW 31.04.027(1)(b) for directly or indirectly engaging in any unfair or deceptive practice toward any person. 1

2.3 Mortgage Call Reports. Based on the Factual Allegations set forth in Section 1.4

2 above, Respondent is in apparent violation of RCW 31.04.277 and WAC 208-620-431 for failing 3 to file accurate call reports through the NMLS. 4

2.4 Onboarding Loans. Based on the Factual Allegations set forth in Section 1.5 above,

5 Respondent is in apparent violation of WAC 208-620-551(3)(d), (7), and (9) by knowingly or 6 recklessly improperly onboarding a residential mortgage loan into your loan servicing system. 7

2.5 Applying Payments. Based on the Factual Allegations set forth in Section 1.6 above,

8 Respondent is in apparent violation of WAC 208-620-551(3)(a) by knowingly misapplying or 9 recklessly applying loan payments to the outstanding balance of a loan. 10

2.6 Maintain Escrow Accounts. Based on the Factual Allegations set forth in Section 1.7

11 above, Respondent is in apparent violation of RCW 31.04.290(1)(c) and (e), WAC 208-620- 12 550(2), and WAC 208-620-551(2)(c) by not promptly correcting any errors and refund any fees 13 assessed to the borrower resulting from Respondent's error. 14

2.7 Reconveyance of Title to Collateral. Based on the Factual Allegations set forth in

15 Section 1.8 above, Respondent is in apparent violation of WAC 208-620-550(13) by failing to 16 reconvey title to collateral, if any, within sixty business days when the loan is paid in full. 17

2.8 Unregistered Trade Name. Based on the Factual Allegations set forth in Section 1.9

18 above, Respondent is in apparent violation of WAC 208-620-420 for not applying for or 19 obtaining approval of the Director for a trade name, and for using a trade name without also 20 using the main office name or main office license number. 21 22

2.9 Adequate Compliance Management System. Based on the Factual Allegations set

forth in Section 1.10 above, Respondent is in apparent violation of WAC 208-620-585 for not having an adequate compliance management system. 1

2.10 Required Written Response to a Borrower. Based on the Factual Allegations set forth

2 in Section 1.11 above, Respondent is in apparent violation of RCW 31.04.290(1), RCW 3 31.04.027(1)(m), and 12 C.F.R. Section 1024.35(e)(1)(i) and (e)(3)(i)(C) by not responding to a 4 notice of error. 5

2.11 Accurate Adjustable-Rate Mortgage Interest Rate Change Notice. Based on the

6 Factual Allegations set forth in Section 1.12 above, Respondent is in apparent violation of RCW 7 31.04.027(1)(m) and 12 C.F.R. Section 1026.20(c)(2)(ii)(A) and (B) by not providing an 8 accurate adjustable-rate mortgage interest rate change notice. 9

2.12 Complete and Accurate Escrow Account Analysis. Based on the Factual Allegations

10 set forth in Section 1.13 above, Respondent is in apparent violation of RCW 31.04.027(1)(m) 11 and 12 C.F.R. Section 1024.17(i)(l) by not completing an accurate escrow account analysis. 12

2.13 Complete and Accurate Periodic Statements. Based on the Factual Allegations set

13 forth in Section 1.14 above, Respondent is in apparent violation of RCW 31.04.027(1)(m) and 12 14 C.F.R. Section 1026.41(d)(1)(iii), (2)(iii), (4), (7)(iii) and (v) by not completing accurate periodic 15 statements. 16

2.14 False Statements to the Department. Based on the Factual Allegations set forth in

17 Section 1.15 above, Respondent is in apparent violation of RCW 31.04.027(1)(h) and WAC 208- 18 620-550(6) for negligently making any false statement or knowingly and willfully making any 19 omission of material fact in connection with any reports filed with the Department by a licensee 20 or in connection with any investigation conducted by the Department. 21 22

2.15 Requirement to Pay Annual Assessment Fee. Based on the Factual Allegations set

forth in paragraph 1.16 above, Respondent is in apparent violation of RCW 31.04.085(1), RCW 31.04.155, and WAC 208-620-430 for failing pay the correct annual assessment fee for 2023 on 1 or before March 1, 2024. 2

2.16 Timely and Complete Responses to the Department. Based on the Factual Allegations

3 set forth in Section 1.17 above, Respondent is in apparent violation of RCW 31.04.145 for not 4 responding to a directive, subpoena, or any other lawful means the production of original books, 5 accounts, papers, records, files, and other information, by not providing timely and complete 6 responses to the Department. 7

1. AUTHORITY TO IMPOSE SANCTIONS 3.1 Authority to Issue an Order to Cease and Desist. Pursuant to RCW 31.04.093(5)(a),

9 the Director may issue an order directing a licensee, its employee or loan originator, or other 10 person subject to the Act to cease and desist from conducting business in a manner that is 11 injurious to the public or violates any provision of the Act. 12

3.2 Authority to Order Affirmative Action. Pursuant to RCW 31.04.093(5)(b), the

13 Director may issue an order directing a licensee or other person subject to the Act to take such 14 affirmative action as is necessary to comply with the Act. 15

3.3 Authority to Impose Fine. Pursuant to RCW 31.04.093(4)(a), the Director may impose

16 fines of up to one hundred dollars per day, per violation, upon the licensee, its employee or loan 17 originator, or any other person subject to the Act for any violation of the Act. 18

3.4 Authority to Charge Investigation Fee. Pursuant to RCW 31.04.145(3) and WAC 208-

19 620-610(7), every licensee investigated by the Director or the Director's designee shall pay for 20 the cost of the investigation, calculated at the rate of $69.01 per staff hour devoted to the 21 22

investigation.

3.5 Authority to Recover Costs and Expenses. Pursuant to RCW 31.04.205(2), the

Director may recover the state's costs and expenses for prosecuting violations of the Act. 1

1. NOTICE OF INTENT TO ENTER ORDER 2 Respondent's violations of the provisions of chapter 31.04 RCW and chapter 208-620 3 WAC, as set forth in the above Factual Allegations, Grounds for Entry of Order, and Authority 4 to Impose Sanctions, constitute a basis for the entry of an Order under RCW 31.04.093, RCW 5 31.04.165, RCW 31.04.202, and RCW 31.04.205. Therefore, it is the Director's intent to 6 ORDER that: 7

4.1 Respondent Newrez LLC cease and desist from conducting business in a manner

that is injurious to the public or violates any provision of the Act, including 8 violations cited in this Statement of Charges. 9

4.2 Respondent Newrez LLC shall take the following affirmative actions:

1. Cease from acquiring new mortgage servicing rights for residential mortgage
   loans for properties located in Washington State and from acquiring or 11 originating new residential mortgage loans for properties located in Washington State until Respondent provides evidence to the Department's 12 satisfaction that it has taken all necessary steps to remediate all violations cited in this Statement of Charges. 13

2. Cooperate with the Department and provide timely and complete responses 14
   and full access to all information and records. 15

3. Provide training to all employees who communicate with Washington
   consumers. The training must be designed to ensure that the employees are 16 giving accurate information to Washington consumers, including information regarding escrow accounts and closures, documents needed by heirs to inherit 17 a property, and closure of home equity lines of credit. Respondent must provide proof of the training and copies of the training materials to the 18 Department. 19 The affirmative actions do not prohibit Respondent from continuing to service residential mortgage loans related to properties located in 20 Washington State; from returning, remitting, or transferring funds it owes to loan borrowers, holders, or investors; or from funding or otherwise 21 22

processing loans that, as of the date of this order, are in Respondent's pipeline.

4.3 Respondent Newrez LLC pay a fine that as of the date of this Statement of

Charges, totals $4,175,000.00. 1

4.4 Respondent Newrez LLC pay an investigation fee that as of the date of this

Statement of Charges totals $14,888.90. 2

4.6 Respondent Newrez LLC pay the Department's costs and expenses for 3 prosecuting violations of the Act in an amount to be determined at hearing or by declaration with supporting documentation in event of default by Respondent 4 Newrez LLC. 5 / / 6 / / 7 / / 8 / / 9 / / 10 / / 11 / / 12 / / 13 / / 14 / / 15 / / 16 / / 17 / / 18 / / 19 / / 20 / / 21 22

1. AUTHORITY AND PROCEDURE This Statement of Charges and Notice of Intent to Enter an Order to Cease and Desist, Order Affirmative Action, Impose Fine, Collect Investigation Fee, and Recover Costs and 1 Expenses (Statement of Charges) is entered pursuant to the provisions of RCW 31.04.093, RCW 2 31.04.165, RCW 31.04.202, and RCW 31.04.205, and is subject to the provisions of chapter 3 34.05 RCW (The Administrative Procedure Act). Respondent may make a written request for a 4 hearing as set forth in the NOTICE OF OPPORTUNITY TO DEFEND AND OPPORTUNITY 5 FOR HEARING accompanying this Statement of Charges. 6 Dated this 31st day of March, 2026. 7 _ _______________ ALI HIGGS, Director 8 Department of Financial Institutions 9 Presented by: 10 _ _________ MEGAN GUTHRIE 11 Financial Legal Examiner 12 13 14 _______________________________ TANNER CLARK 15 Financial Legal Examiner 16 Approved by: 17 18 _______________________________ KENDALL FREED 19 Enforcement Chief 20 21 22