SB 5109
In CommitteeSenate
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 adds a $5 surcharge on new mortgage deeds of trust to fund criminal prosecution of mortgage fraud. Funds are collected by county auditors, sent to the state, and managed by the Department of Financial Institutions—with input from prosecutors—to investigate and prosecute fraud in the mortgage lending process.
- Imposes a $5 surcharge on each new deed of trust recorded by county auditors (e.g., at closing for new mortgages or refinances).
- County auditors may keep up to 5% of collected funds to cover administrative costs; the rest goes to the state.
- Creates or continues the Mortgage Lending Fraud Prosecution Account in the state treasury, funded solely by the surcharge (minus auditor retention).
- Requires the Department of Financial Institutions to manage the account and, with the Attorney General and local prosecutors, develop rules for using funds to pursue criminal prosecution of mortgage fraud.
- Exempts assignments or substitutions of already-recorded deeds of trust from the surcharge (e.g., loan transfers between lenders without new recording).
- Removes the prior sunset date (June 30, 2027), making the surcharge and account permanent unless future legislation changes them.
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; this does not apply to simple loan transfers or substitutions of already-recorded deeds.
- County auditors — County auditors will collect the $5 surcharge, keep up to 5% to cover administrative costs, and send the rest to the state each month.
- Department of Financial Institutions, Attorney General, and local prosecutors — The Department of Financial Institutions will manage the account and, with input from the Attorney General and local prosecutors, decide how to use the funds to investigate and prosecute mortgage fraud crimes.
- General public / homeowners — Residents and communities may benefit from increased enforcement against mortgage fraud, which can protect homeowners from scams, predatory lending, and financial loss.
Pro/Con Analysis
Potential Benefits (5)
The $5 surcharge funds dedicated criminal prosecution of mortgage fraud—a crime that disproportionately harms low- and middle-income homeowners, seniors, and communities of color. Prosecuting fraud deters predatory practices and helps recover losses for victims, directly protecting vulnerable Washingtonians.
Public SafetyPeopleRef: Sec. 1(1); RCW 36.22.181(1)By making the surcharge and account permanent, the bill ensures long-term funding for mortgage fraud enforcement, reducing the risk of funding cliffs and enabling strategic investment in staffing, technology, and interagency task forces—critical for sustained impact.
Public SafetyPeopleRef: Sec. 2; RCW 43.320.140The bill creates a dedicated, transparent funding source for fraud prosecution, avoiding reliance on general fund appropriations that compete with other priorities. This improves budget predictability and accountability for how enforcement dollars are spent.
FinancialPeopleRef: Sec. 1(1); RCW 36.22.181(1)Allowing county auditors to retain up to 5% for administration acknowledges their role in implementation and may improve collection efficiency—though this is capped and modest, limiting overall benefit to counties.
Local GovernmentRef: Sec. 1(1); RCW 36.22.181(1)Excluding assignments and substitutions of already-recorded deeds of trust prevents unnecessary duplication and administrative burden on lenders and title companies, supporting efficient mortgage processing without adding cost to existing loans.
Business & EmploymentPeopleRef: Sec. 1(2); RCW 36.22.181(2)
Potential Concerns (5)
Homebuyers and refinancers pay a $5 surcharge at closing on every new mortgage, adding a direct out-of-pocket cost to homeownership. While modest per transaction, this accumulates across thousands of annual transactions and disproportionately affects low- and middle-income borrowers who are less able to absorb even small closing-cost increases.
FinancialPeopleRef: Sec. 1(1); RCW 36.22.181(1)County auditors may retain up to 5% of collected surcharges for administrative costs, but this creates new administrative burden without guaranteed state reimbursement—potentially straining county budgets, especially in rural or under-resourced counties with limited staff and technology.
Local GovernmentPeopleRef: Sec. 1(1); RCW 36.22.181(1)The bill dedicates funds to criminal prosecution of mortgage fraud, which may improve deterrence and accountability. However, mortgage fraud is often complex, cross-jurisdictional, and under-prosecuted regardless of funding—additional resources alone may not significantly increase conviction rates without structural reforms (e.g., interagency coordination, specialized training).
Public SafetyRef: Sec. 1(1); RCW 36.22.181(1)The bill removes the 2027 sunset, making the surcharge and account permanent. While this ensures stable funding, it also locks in a dedicated revenue stream that cannot be reallocated to higher-priority public safety or consumer protection needs if future assessments show the program is ineffective or redundant.
Public SafetyRef: Sec. 2; RCW 43.320.140Exempting assignments and substitutions of already-recorded deeds of trust avoids double-counting, but this carve-out may create complexity in determining when a new recording triggers the surcharge—potentially increasing legal and compliance costs for title companies and lenders.
Business & EmploymentRef: Sec. 1(2); RCW 36.22.181(2)
Who Is Most Affected
Homebuyers and refinancers face a $5 per-transaction cost at closing; while small individually, this adds up across thousands of loans annually and may be regressive for low- and middle-income borrowers.
County auditors gain modest administrative flexibility (up to 5% retention) but face new collection responsibilities without full state reimbursement—net effect is neutral to slightly negative for most counties.
DFI, AG, and local prosecutors gain dedicated, predictable funding to pursue mortgage fraud cases, potentially increasing enforcement capacity and victim restitution—especially beneficial for under-resourced prosecution units.
The general public benefits from reduced mortgage fraud (e.g., fake appraisals, identity theft, predatory loan schemes), which protects household wealth and community stability—particularly in historically targeted neighborhoods.