Ryu bill to fight mortgage fraud signed into law

Friday, April 22, 2011

State Rep. Cindy Ryu
Gov. Chris Gregoire agrees with state Rep. Cindy Ryu that a mainstay of mortgage-fraud prosecutions in Washington needs to continue for at least five more years.

On Wednesday, Gregoire signed into law Ryu’s HB 1191, which extends the life of Washington’s mortgage lending fraud prosecution account for at least five more years.

“The criminals who engage in mortgage fraud are often extremely sophisticated and ruthless, and county prosecutors need this tool to take on complex scams and bring the criminals to justice,” said Ryu (D-Shoreline).

The Legislature created the mortgage lending fraud prosecution account in 2003 to help pay for prosecutions of mortgage fraud, which often involve complicated schemes that are expensive to investigate and prosecute. The funding is provided by a $1 surcharge on county recording fees for deeds of trust. Both the fraud-fighting account and its revenue source were scheduled to sunset on June 30.

Ryu’s legislation ensures the account and its funding will help prosecutors through June 2016.

“The Ryu fraud-fighting bill is great news for homeowners and very, very bad news to the con artists who scam unwary homeowners,” said Rep. Steve Kirby (D-Tacoma), who chairs the House Business and Financial Services Committee.

Instead of balking at the $1 fee, the mortgage industry strongly supported Ryu’s proposal in public hearings and helped to secure nearly unanimous bipartisan support for the measure, which passed the Senate 47-1 after clearing the House 97-0.

“We do not want the bad actors in the industry,” Steve Buckner said on behalf of the Washington Association of Mortgage Professionals. “We want them out.”

King County Prosecutor Dan Satterberg emphasized the importance of preserving the fraud-fighting account in a letter to the state Department of Financial Institutions last summer.

“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,” Satterberg wrote. “It is extraordinarily important that we continue to pursue this class of offenders, which we will be able to do following renewal of the relevant statutes by the state legislature.”

“Homeowners must still be wary of mortgage schemes,” said Ryu. “But families can breathe a little easier knowing that one of Washington’s main defenses against mortgage fraud will continue to work on their behalf.”

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