To add a two dollar surcharge to the recording of each residential first-mortgage deed of trust. The profits from this surcharge will go to the new Mortgage Lending Fraud Prosecution Account. This account will provide funds to deter, investigate, and prosecute real estate fraud crimes. The bill stipulates that any deposits exceeding $700,000 each fiscal year will be transferred to the Washington Housing Trust Fund. See also Companion Senate Bill 5118.   Official Text and Analysis.

By Representative Hunter; Dale Miller, WA Association of Mortgage Brokers; and Denny Eliason, WA Banker's Association. They testified that Predatory mortgage lending is a major problem that impacts the lives of many people. There are sufficient laws in this state to address the problem, but there are insufficient financial resources available to prosecutors. The purpose of the bill is to provide a source of funding that will better enable local prosecutors to pursue cases of fraud related to the mortgage lending process. Such cases are complex and often expensive to prosecute and, in some instances, may cost as much as $250,000. As a result, many cases are simply not pursued. This bill addresses this problem and would enable many more cases to be prosecuted. Accordingly, this is an important consumer protection bill that will help solve the predatory lending problem.

By Karen Herr, Mason County Auditor's Office and Vern Spatz, Grays Harbor County Auditor and County Auditor's Association. They testified that county auditors are against the bill because it would be burdensome and expensive for them to implement the fee collection provisions. Workloads would be increased because it is often difficult to determine whether a particular deed is a "residential first mortgage deed of trust." This determination would sometimes involve researching the nature of the deed. The fees that would be retained by the county will not begin to defray the costs of this increased workload. Furthermore, far too many fees are already imposed at the time that deeds are recorded.

To lower the surcharge to $1 and require that it be charged upon the filing of any deed of trust rather than just "residential first mortgage deeds of trust." It also clarifies that the fund shall be used only for the criminal prosecution of fraud within the mortgage lending process. The substitute bill requires that the DFI report yearly to the Legislature regarding Account activity and provides that the provisions of the bill expire as of June 30, 2008.

Regarding mortgage lending fraud.

To eliminate the transfer of funds to the Housing Trust Fund and changes the bill expiration date to 2006. The original bill provided that all receipts into the account, in excess of $700,000, be transferred to the Housing Trust Fund, and also provided that the account expire in 2008.

(mortgage lending fraud).