Senate Bill Report — HB 1104, Extending the Mortgage Lending Fraud Prosecution Account (March 16, 2021)

Summary

Senate Bill Report on HB 1104, as of March 16, 2021, prepared for the Senate Committee on Business, Financial Services & Trade, with committee activity listed for 3/16/21. Its brief description is extending the operation of the mortgage lending fraud prosecution account until June 30, 2027. The report states that the expiration date for the account and the surcharge on deeds of trust is extended until June 30, 2027, and that the bill contains an emergency clause and takes effect immediately. It lists Passed House: 2/25/21, 97-1 and Fiscal Note: Available, and includes a Staff Summary of Public Testimony with Representative Cindy Ryu, Prime Sponsor, among those testifying.

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Full text

                            SENATE BILL REPORT
                                  HB 1104

                                      As of March 16, 2021

Title: An act relating to extending the operation of the mortgage lending fraud prosecution
     account until June 30, 2027.

Brief Description: Extending the operation of the mortgage lending fraud prosecution account
     until June 30, 2027.

Sponsors: Representatives Ryu and Kloba; by request of Department of Financial Institutions.

Brief History: Passed House: 2/25/21, 97-1.
     Committee Activity: Business, Financial Services & Trade: 3/16/21.


                                     Brief Summary of Bill
           • Extends the operation of the Mortgage Lending Fraud Prosecution
             Account until June 30, 2027.
           • Extends the surcharge for prosecution of mortgage lending fraud until
             June 30, 2027.


SENATE COMMITTEE ON BUSINESS, FINANCIAL SERVICES & TRADE

     Staff: Clinton McCarthy (786-7319)

     Background: The Mortgage Lending Fraud Prosecution Account will expire on June 30,
     2021. The account is in the custody of the state treasurer, and only the director of the
     Department of Financial Institutions or the director's designee may authorize expenditures
     from the account. Expenditures from the account may be used only for criminal
     prosecution of fraudulent activities related to mortgage lending fraud crimes.

     The account contains revenue from a $1 surcharge collected by the county auditor at the
     time of recording of each deed of trust. This surcharge does not apply to assignments or




     This analysis was prepared by non-partisan legislative staff for the use of legislative
     members in their deliberations. This analysis is not part of the legislation nor does it
     constitute a statement of legislative intent.

Senate Bill Report                              -1-                                         HB 1104
     substitutions of previously recorded deeds of trust. The auditor may retain up to 5 percent
     of the surcharge, and the remainder is transmitted monthly to the state treasurer, who
     deposits the funds into the account. The surcharge will expire on June 30, 2021.

     Summary of Bill: The expiration date for the Mortgage Lending Fraud Prosecution
     Account and the $1 surcharge on deeds of trust is extended until June 30, 2027.

     Appropriation: None.

     Fiscal Note: Available.

     Creates Committee/Commission/Task Force that includes Legislative members: No.

     Effective Date: The bill contains an emergency clause and takes effect immediately.

     Staff Summary of Public Testimony: PRO: This account has been renewed repeatedly
     over the years. This bill is needed to keep this account alive. There are funding constraints
     and capacity issues in smaller counties. King County is the only county with a robust
     program, but is willing to help other counties. This fund allows prosecutors to litigate
     complex bills. This funding has allowed for the investigation and prosecution of dozens of
     cases. This account was created in 2003 and has been extended numerous times. The work
     funded by this account has charged over 20 individuals with over 90 felonies. These are not
     simple, straightforward property crimes. This is complex litigation that take time to
     investigate and prosecute. The $1 fee at the recording of a deed of trust sale is
     imperceptible to the parties of a transaction. With uncertainty in the mortgage market
     coming out of the pandemic, it makes sense for the state to continue to support this kind of
     work. The Department of Financial Institutions has reached out to counties other than King
     County to see what they can do to get the other counties more involved in this activity.

     Persons Testifying: PRO: Representative Cindy Ryu, Prime Sponsor; Hugo Torres, King
     County Prosecuting Attorney's Office; Patrick Hinds, King County Prosecuting Attorney's
     Office; Drew Bouton, Washington State Deptartment of Financial Institutions; Cindy Fazio,
     Department of Financial Institutions.

     Persons Signed In To Testify But Not Testifying: No one.




Senate Bill Report                             -2-                                       HB 1104


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