District of Columbia Specific Laws and Regulations
This domain tests the District of Columbia overlay: who licenses mortgage activity, what DC's consumer-protection statutes add, and how DC closing costs and disclosures differ from neighboring jurisdictions.
Licensing and supervision
- The Department of Insurance, Securities and Banking (DISB), through its Mortgage Banking Division, licenses mortgage lenders, brokers, and mortgage loan originators; applications, renewals, and sponsorship run through NMLS.
- SAFE-based requirements include 20 hours of pre-licensing education, the national test, a background check, and 8 hours of annual continuing education that includes a District-specific component; entity licensees carry a surety bond.
- Originating without an active DC license or outside the sponsoring entity is prohibited, and reportable events must be disclosed.
DC consumer protections
- The Home Loan Protection Act restricts high-cost home loans: limits on balloon payments, negative amortization, prepayment penalties, and financed fees, plus escrow and pre-closing counseling requirements.
- DC requires written disclosure of broker and lender fees and written lock-in agreements stating the rate, points, expiration, and extension terms.
- DC's general usury provision caps simple interest at 24 percent per year, subject to statutory exceptions.
- Recordation and transfer taxes are collected at closing at DC rates, and reduced recordation programs exist for eligible first-time buyers.
Worked example
A borrower locks 6.25 percent for 45 days; the lock expires and the lender quotes 6.5 percent. Without a signed lock agreement showing the expiration date and extension policy, the file is weak on DC disclosure expectations and the borrower may dispute the change. If the loan also qualifies as a high-cost home loan, the closing requires a counseling certificate and cannot include a prepayment penalty.
Traps that cost marks
- Assuming federal SAFE compliance satisfies DC licensing and education requirements.
- Missing the District-specific continuing-education component at renewal.
- Treating DC recordation and transfer taxes as lender fees subject to zero tolerance - they are government charges with their own tolerance treatment.
- Applying Maryland or Virginia disclosure and fee rules to a DC property.
- Forgetting that counseling must precede closing on a high-cost DC home loan.