Washington State Department of Financial Institutions

News Release

Tuesday, April 26, 2011

Contact

Lyn Peters, Director of Communications
PH (360) 349-8501 lyn.peters@dfi.wa.gov

Deb Bortner, Director Division of Consumer Services
PH (360) 902-0511 deb.bortner@dfi.wa.gov

FOR IMMEDIATE RELEASE:


Extension Of Mortgage Lending Fraud Prosecution Account Five More Years Enhances State's Ability To Pursue Convictions

Mortgage fraud continues in WA, extension means more will pay a price for committing fraud

OLYMPIA – The Washington State Department of Financial Institutions (DFI) is pleased to announce the five-year extension of the Mortgage Fraud Prosecution fund with the Governor’s signature earlier this week of HB1191, signing it into Chapter 129, Laws of 2011 62nd Legislature 2011 Regular Session. http://apps.leg.wa.gov/documents/billdocs/2011-12/Pdf/Bills/Session%20Law%202011/1191.SL.pdf.

The legislature created the Mortgage Lending Fraud Prosecution Account in 2003 with the passage of legislation initially brought by industry leaders. The account is a specific fund to aid in the prosecution of consumer fraud in the mortgage lending process. The account, administered by DFI, is funded with a $1 surcharge, assessed at the recording of a deed of trust. DFI uses the account to reimburse county prosecutors for costs related to the investigation and prosecution of mortgage fraud cases. It was set to expire June 30, 2011. The passage with an emergency clause means the fund is now extended until June 30, 2016.

“It is crucial to the protection of Washington consumers, and prosecution of those committing mortgage lending fraud, this account continue to be funded,” DFI Consumer Services Director Deb Bortner explains. “Mortgage fraud hasn’t ceased, despite DFI’s vigilant examinations and aggressive pursuit of those who take advantage of homeowners in Washington.”

In the past few years, there have been 38 felony convictions — and there are certain to be more in the coming years.

King County Prosecuting Attorney Daniel T. Satterberg expressed his support for the account extension in an Aug. 17, 2010 letter:

"…The prosecution of these crimes is extremely important due to their impact on the local economy and the well-being of our communities…."

“The lending industry is evolving following the collapse of the real estate ‘bubble.’ Much of the collapse was precipitated by fraud. While measures have been taken to tighten some of the gaps that made fraud unusually easy to perpetrate during the boom years, it has long been our experience that criminals simply adapt to a new environment rather than abandon their ways. Due to the scale of the potential illicit profits that can be generated by defrauding lenders and homeowners, we have little doubt that mortgage fraud will persist as a threat to the financial well-being of our local communities, our county, the State of Washington, and the nation as a whole.”

Numerous legislators recognized the importance of this account and the need for its continuance. Senators worked on this issue via SB 5707, Representatives via HB 1191. DFI would like to acknowledge the extraordinary efforts of bill sponsors Representatives Ryu, Kirby, Buys, Fitzgibbon and Bailey, and Senators Fain, Hobbs, Benton, Litzow, Keiser and Tom, especially Committee Chairs Senator Hobbs and Representative Kirby.

“We are grateful for the support received by legislators and prosecutors for this bill,” DFI Director Scott Jarvis added. “Their sponsorship and acknowledgement of the importance of the work done with funds from this account validates the hard work of many individuals fighting to bring those who defraud Washington consumers to justice.”


About the Division of Consumer Services
www.dfi.wa.gov/cs ▪ 360.902.8703
The mission of the Division of Consumer Services is to protect consumers from illegal and fraudulent lending practices. The division accomplishes its mission through licensing, licensee examinations, investigations, and enforcing selected state and federal statutes and rules. Consumer Services regulates the business activities of consumer loan companies, mortgage brokers, money transmitters and currency exchangers, as well as check cashers and sellers, also known as "payday lenders." The Division is entirely self-supporting, with funding provided by licensing, auditing, and policing of regulated businesses and individuals. No money is received from the state General Fund or other public revenue source.

About DFI
www.dfi.wa.gov ▪ 360.902-8700 ▪ 877.746-4334
The Washington State Department of Financial Institutions regulates a variety of financial service providers such as banks, credit unions, mortgage brokers, consumer loan companies, payday lenders and securities brokers and dealers. The department also works to improve financial education throughout Washington through its outreach programs and online clearinghouse www.dfi.wa.gov/financial-education. In addition to posting information about licensees and administrative actions, DFI uses the Web and social media to provide financial education information: http://www.twitter.com/FinEd4All, www.twitter.com/DFIConsumers, www.finlit.blogspot.com, www.youtube.com/user/WADFI, www.homeownership.wa.gov.

[Top]

DFI