HB 2193
In CommitteeHouse
Mortgage lending fraud acc.
Concerning the mortgage lending fraud prosecution account.
This status may be delayed. See Action History below for the latest updates.
How does a bill become law?
- Introduced: The bill is filed and assigned a number.
- Committee: A subject-matter committee holds hearings, takes public testimony, and decides whether to advance the bill.
- Floor Vote: The full chamber (House or Senate) debates and votes on the bill.
- Opposite Chamber: The bill repeats the committee and floor vote process in the other chamber.
- Governor: The Governor reviews the bill and decides whether to sign or veto it.
- Signed: The bill has been signed into law.
AI Analysis
This bill creates a dedicated fund to support criminal prosecution of mortgage lending fraud by charging a $5 surcharge on new mortgage deeds of trust. Funds collected go to a state account managed by the Department of Financial Institutions, with oversight from prosecutors.
- Imposes a $5 surcharge on each new deed of trust recorded by a county auditor (e.g., at closing for a new mortgage).
- County auditors may retain up to 5% of the surcharge to cover administrative costs.
- Remaining funds go to the Mortgage Lending Fraud Prosecution Account at the state treasurer.
- The Department of Financial Institutions manages the account and authorizes spending, in consultation with the attorney general and local prosecutors.
- Funds may only be used for criminal prosecution of fraud in the mortgage lending process (e.g., fake appraisals, forged documents, identity theft in loan applications).
- The surcharge does not apply to assignments or substitutions of previously recorded deeds of trust (e.g., refinances or transfers between parties without new recording).
Who is affected
- Homebuyers and mortgage borrowers — People who take out new mortgage loans (e.g., homebuyers or refinancers) will pay an additional $5 surcharge at closing when their deed of trust is recorded by the county auditor.
- County auditors — County auditors will collect the $5 surcharge, keep up to 5% to cover administrative costs, and send the rest to the state.
- Department of Financial Institutions — The Department of Financial Institutions will manage the account and decide how funds are used, in coordination with state and local prosecutors.
- Prosecutors (state and local) — State and local prosecutors may use the funds to investigate and prosecute criminal cases involving fraud in the mortgage lending process.
Pro/Con Analysis
Potential Benefits (5)
Dedicated funding for criminal prosecution of mortgage lending fraud — such as fake appraisals, forged documents, and identity theft — helps protect homebuyers (especially vulnerable populations like seniors and low-income buyers) from predatory or deceptive practices that can lead to foreclosure or loss of equity.
Public SafetyPeopleRef: Sec. 2, RCW 43.320.140(1)The surcharge creates a self-funding mechanism for fraud enforcement, reducing reliance on general fund resources and ensuring some dedicated accountability for mortgage fraud — a growing concern in Washington’s high-cost housing market.
Public SafetyPeopleRef: Sec. 1, RCW 36.22.181(1)The $5 surcharge is relatively small and predictable at closing, minimizing disruption to homebuyers while generating stable revenue — especially compared to broader tax increases or fees.
FinancialPeopleRef: Sec. 1, RCW 36.22.181(1)County auditors may retain up to 5% of collected surcharges for administrative costs, providing modest, targeted funding to support local recordkeeping infrastructure without requiring general fund support.
Local GovernmentRef: Sec. 1, RCW 36.22.181(1)The requirement that the Department of Financial Institutions consult with the attorney general and local prosecutors before spending funds helps ensure coordination across enforcement agencies and avoids duplication or misallocation of resources.
Public SafetyLean peopleRef: Sec. 2, RCW 43.320.140(1)
Potential Concerns (5)
Homebuyers and mortgage borrowers face a $5 surcharge at closing on every new mortgage, adding a direct out-of-pocket cost to home purchase — even for low- and moderate-income buyers who may be already cost-burdened.
FinancialRef: Sec. 1, RCW 36.22.181(1)County auditors must absorb administrative work to collect and remit the surcharge, and while they may retain up to 5% for administration, this creates new unfunded state-mandated duties that could strain county resources — especially in smaller counties with limited staff.
Local GovernmentRef: Sec. 1, RCW 36.22.181(1)The $5 surcharge generates modest revenue (estimated in the low millions annually based on ~100,000 new deeds/year), which may be insufficient to meaningfully expand mortgage fraud prosecution capacity — especially since only criminal cases qualify, and many frauds are civil or regulatory matters.
Public SafetyRef: Sec. 2, RCW 43.320.140(1)The surcharge does not apply to refinances or assignments, meaning borrowers who refinance (often lower-income or financially stressed households seeking better terms) are excluded — undermining equity and limiting revenue stability.
FinancialRef: Sec. 1, RCW 36.22.181(2)By requiring the Department of Financial Institutions to manage and distribute funds *in consultation with* prosecutors — rather than direct funding to counties — the bill centralizes decision-making, potentially reducing local prosecutorial autonomy and responsiveness to regional fraud patterns.
Local GovernmentRef: Sec. 2, RCW 43.320.140(1)
Who Is Most Affected
Homebuyers pay a $5 surcharge at closing, which is regressive relative to income — lower-income buyers bear a higher relative burden, though the absolute amount is small. However, they benefit from reduced exposure to mortgage fraud, which disproportionately harms financially vulnerable households.
County auditors gain limited administrative funding (up to 5%) and may see increased workload, but benefit from state reimbursement for collection duties — a net modest gain if staffing is already under strain, but a net cost if new hires are needed.
The Department of Financial Institutions gains expanded authority over fraud enforcement funding, increasing its regulatory influence — but this is a modest expansion of its existing mandate and does not significantly change its budget or staffing without legislative action.
Prosecutors (especially in counties with high mortgage activity) gain access to new, dedicated funding for criminal mortgage fraud cases — but only if the Department of Financial Institutions approves expenditures, limiting autonomy. This could improve enforcement in urban areas but may not reach rural counties without strong DFI coordination.
Mortgage lenders and title companies face a minor administrative cost (passing the $5 to borrowers) but no direct fee. Since the surcharge is small and non-discriminatory, impact is neutral to slightly negative — though fraud enforcement may reduce systemic losses from fraudulent loans over time.