HOUSE BILL REPORT
SB 5109
As Reported by House Committee On:
Appropriations
Title: An act relating to the mortgage lending fraud prosecution account.
Brief Description: Concerning the mortgage lending fraud prosecution account.
Sponsors: Senators Kauffman, Stanford, Lovelett and Nobles.
Brief History:
Committee Activity:
Appropriations: 3/17/25, 3/20/25 [DP], 2/18/26, 2/27/26 [DP].
Brief Summary of Bill
  • Increases the surcharge on recording deeds of trust, which supports the Mortgage Lending Fraud Prosecution Account (Account), from $1 to $5.
  • Removes sunset provisions related to the surcharge and the Account, which are set to expire on June 30, 2027.
HOUSE COMMITTEE ON APPROPRIATIONS
Majority Report: Do pass.Signed by 17 members:Representatives Ormsby, Chair; Gregerson, Vice Chair; Macri, Vice Chair; Berg, Bergquist, Callan, Cortes, Doglio, Fitzgibbon, Lekanoff, Peterson, Pollet, Ryu, Springer, Stonier, Street and Thai.
Minority Report: Do not pass.Signed by 11 members:Representatives Couture, Ranking Minority Member; Connors, Assistant Ranking Minority Member; Penner, Assistant Ranking Minority Member; Schmick, Assistant Ranking Minority Member; Burnett, Corry, Dye, Keaton, Marshall, Rude and Valdez.
Minority Report: Without recommendation.Signed by 2 members:Representatives Leavitt and Manjarrez.
Staff: Jessica Van Horne (786-7288).
Background:

When a county auditor records a document, certain fees and surcharges are collected to support various governmental purposes depending on the type of document recorded.  These surcharges include a $1 surcharge collected at the time of recording each deed of trust.  The $1 surcharge does not apply to assignments or substitutions of previously recorded deeds of trust.  The county auditor may retain up to 5 percent of the surcharge for costs to administer the surcharge.  The remaining revenues are deposited into the Mortgage Lending Fraud Prosecution Account (Account), which is a nonappropriated account administered by the Department of Financial Institutions (DFI).  The DFI may use expenditures from the Account for criminal prosecution of fraudulent activities related to mortgage lending fraud crimes.  Both the $1 surcharge and the Account are set to expire June 30, 2027. 
Summary of Bill:

The surcharge collected on deeds of trust for deposit into the Account is increased from $1 to $5.  The sunset provisions for both the surcharge and the Account are removed.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.
Staff Summary of Public Testimony:

(In support) This bill will sustain and expand resources available to support the prosecution of mortgage fraud.  When the surcharge was initially established in 2003, it was meant to be revenue generating.  However, the surcharge has not been adjusted in two decades, and there is a widening gap in program funding.  In 2011, revenues were sufficient to support two prosecutors and an investigator; now, revenues are only sufficient to support half a prosecutor and half an investigator.  The surcharge is only collected when a deed of trust is recorded, which is a very high value and very rare transaction for most people.  A change from $1 to $5 will be virtually imperceptible to consumers, but in the aggregate, it will make a big difference.  While King County typically receives contract funding from this revenue source, their staff serve as a resource for other prosecutors in other counties, and helps all areas of the state.

 

(Opposed) None. 
Persons Testifying:

Russell Brown, WA Association of Prosecuting Attorneys; and Patrick Hinds, King County Prosecuting Attorney's Office.
Persons Signed In To Testify But Not Testifying: None.