Individual State Agency Fiscal Note - Mortgage lending fraud acct, 1104 HB (Department of Financial Institutions)
Summary
An Individual State Agency Fiscal Note from the Department of Financial Institutions on bill number 1104 HB, titled Mortgage lending fraud acct, with an OFM review date of January 14, 2021 and Request # 21-006-1. Part I lists cash receipts of 520,074 in FY 2022 and 519,567 in FY 2023 to the Mortgage Lending Fraud Prosecution Account-Non-Appropriated, and operating expenditures of 421,296 in each of those years. The narrative says the proposed legislation changes the account's expiration date to June 30, 2027 from June 30, 2021. It states the account is funded by a surcharge that the county auditor collects when each deed of trust is recorded.
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“Individual State Agency Fiscal Note - Mortgage lending fraud acct, 1104 HB (Department of Financial Institutions).”
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Individual State Agency Fiscal Note
Bill Number: 1104 HB Title: Mortgage lending fraud acct Agency: 102-Department of
Financial Institutions
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
ACCOUNT FY 2022 FY 2023 2021-23 2023-25 2025-27
Mortgage Lending Fraud Prosecution 520,074 519,567 1,039,641 1,008,930
Account-Non-Appropriated 07A-6
Total $ 520,074 519,567 1,039,641 1,008,930
Estimated Operating Expenditures from:
FY 2022 FY 2023 2021-23 2023-25 2025-27
Account
Mortgage Lending Fraud Prosecution 421,296 421,296 842,592 842,592 0
Account-Non-Appropriated
07A-6
Total $ 421,296 421,296 842,592 842,592 0
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact. Factors impacting the precision of these estimates,
and alternate ranges (if appropriate), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete entire fiscal note
X
form Parts I-V.
If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete this page only (Part I).
Capital budget impact, complete Part IV.
Requires new rule making, complete Part V.
Legislative Contact: Heidi Cao Phone: 360-786-7157 Date: 01/11/2021
Agency Preparation: Emily Fitzgerald Phone: (360) 902-8780 Date: 01/13/2021
Agency Approval: Levi Clemmens Phone: (360) 902-8818 Date: 01/13/2021
OFM Review: Ramona Nabors Phone: (360) 902-0547 Date: 01/14/2021
Form FN (Rev 1/00) 161,878.00 Request # 21-006-1
FNS063 Individual State Agency Fiscal Note 1 Bill # 1104 HB
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe by section number, the significant provisions of the bill, and any related workload or policy assumptions, that have revenue or
expenditure impact on the responding agency.
The proposed legislation changes the expiration date of the Mortgage Lending Fraud Prosecution Account
(MLFPA) to June 30, 2027. The current expiration date of the account is June 30, 2021. The legislature
established the MLFPA in 2003 (RCW 43.320.140) in order to fund criminal prosecution of fraudulent activities
related to mortgage lending. The original legislation had an expiration date of June 30, 2006, which was
amended in 2006, 2011, and again in 2016. The Department of Financial Institutions (DFI) has administered the
MLFPA since its creation in 2003.
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency, identifying the cash receipts provisions by section
number and when appropriate the detail of the revenue sources. Briefly describe the factual basis of the assumptions and the method by which the
cash receipts impact is derived. Explain how workload assumptions translate into estimates. Distinguish between one time and ongoing functions.
The MLFPA is funded by a $1 surcharge collected by the county auditor at the time of recording each deed of
trust. The proposed legislation permits the continued funding of the MLFPA by changing the expiration date of
this $1 surcharge to June 30, 2027. The County Auditor is permitted to retain up to 5% of the funds collected to
administer the process of collecting the surcharge; therefore the MLFPA receives at least 95% of the total
collected surcharges. The estimated cash receipts reflect the Department's portion of the gross surcharge
collections as projected quarterly by the Office of Financial Management. Variances from quarter to quarter are
covered by existing fund balance.
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation), identifying by section
number the provisions of the legislation that result in the expenditures (or savings). Briefly describe the factual basis of the assumptions and the
method by which the expenditure impact is derived. Explain how workload assumptions translate into cost estimates. Distinguish between one time
and ongoing functions.
DFI administers the Mortgage Lending Fraud Prosecution Account (MLFPA) and authorizes expenditures from
this fund in the form of contracts with prosecutors' offices to fund their costs of prosecution. DFI does not expend
MLFPA funds for its own regulatory activities. Expenditure estimates are based on the volume and complexity of
cases related to mortgage fraud that are moving through the prosecution process.
Since its reauthorization in 2011, Prosecutor's Offices and the Unites States Attorney's Office have continued to
use the MLFPA to prosecute individuals engaged in fraudulent activities that have harmed consumers and
homeowners across Washington. In addition to referrals directly from DFI, the prosecutors take referrals from
state and federal law enforcement. From 2016 to present, DFI has referred eleven cases for either Federal or State
criminal prosecution. Due to the complexity and specialization of mortgage fraud cases, most of these would
unlikely have seen prosecution. The MLFPA provides critical funding to support the costs of pursuing these
cases.
Part III: Expenditure Detail
III. A - Operating Budget Expenditures
Account Account Title Type FY 2022 FY 2023 2021-23 2023-25 2025-27
07A-6 Mortgage Lending Non-Appr 421,296 421,296 842,592 842,592 0
Fraud Prosecution opriated
Account
Total $ 421,296 421,296 842,592 842,592 0
Mortgage lending fraud acct 102-Department of Financial Institutions
Form FN (Rev 1/00) 161,878.00 Request # 21-006-1
FNS063 Individual State Agency Fiscal Note 2 Bill # 1104 HB
III. B - Expenditures by Object Or Purpose
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years
A-Salaries and Wages
B-Employee Benefits
C-Professional Service Contracts 421,296 421,296 842,592 842,592
E-Goods and Other Services
G-Travel
J-Capital Outlays
M-Inter Agency/Fund Transfers
N-Grants, Benefits & Client Services
P-Debt Service
S-Interagency Reimbursements
T-Intra-Agency Reimbursements
9-
Total $ 421,296 421,296 842,592 842,592 0
III. C - Operating FTE Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in
Part I and Part IIIA
NONE
III. D - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
IV. B - Expenditures by Object Or Purpose
NONE
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and describe potential financing methods
NONE
IV. D - Capital FTE Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in
Part IVB
NONE
Part V: New Rule Making Required
Mortgage lending fraud acct 102-Department of Financial Institutions
Form FN (Rev 1/00) 161,878.00 Request # 21-006-1
FNS063 Individual State Agency Fiscal Note 3 Bill # 1104 HB
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