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Question: I received some information from my document vendor pertaining to discount points charged in the State of Washington. Did the State of Washington recently make any changes to their definition of discount points?

Answer: No, but the Washington State Department of Financial Institutions (DFI) recently clarified this topic in its Spring 2026 Consumer Services Newsletter. In particular, the DFI noted that a violation of WAC 208-620-555(e) is a common exam finding.

WAC 208-620-555 indicates in relevant part:

Allowable loan fees and timing of collection.

(3) All loans.

(e) Discount points.

(i) You must not collect a fee from the borrower for lowering the interest rate unless the interest rate is actually reduced.

(ii) You must be able to show a definitive mathematical relationship between discount points paid and the interest rate obtained via a rate sheet or pricing engine that was in effect when the interest rate was locked.

(iii) Any applicable residential mortgage loan program add-on fees must be disclosed as part of the discount points.

The Common Exam Finding noted in the Newsletter stated:

Failure to Maintain Loan Pricing Records and Policies

Under WAC 208-620-555(e)(ii) licensees are required to show a definitive mathematical relationship between discount points paid and the interest rate obtained via a rate sheet or pricing engine that was in effect when the interest rate was locked. To demonstrate the mathematical relationship between the discount points paid and the rate obtained, licensees must maintain records of the rate sheet and pricing in effect when the rate was locked. Licensees should also maintain comprehensive loan pricing policies to document pricing, concession, and exception processes.

Mortgage lenders licensed in the State of Washington as Consumer Loan Companies must be mindful of this requirement and ensure that their pricing policies and procedures are in compliance.