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Committee hears bill to raise deed surcharge to fund mortgage‑fraud prosecutions

Appropriations Committee · February 18, 2026

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Summary

The Appropriations Committee heard testimony on Senate Bill 5,109 to raise the deed‑of‑trust recording surcharge from $1 to $5, remove its sunset, and direct the increased funds to the mortgage lending fraud prosecution account to expand local prosecutors’ capacity.

The Appropriations Committee received a staff briefing and public testimony on Senate Bill 5,109, which would increase the $1 surcharge collected on each recorded deed of trust to $5 and remove the bill’s current 06/30/2027 sunset. Jessica Van Horn, staff to the committee, said the Department of Financial Institutions uses revenue from the mortgage lending fraud prosecution account to contract with county prosecutors for investigation and prosecution of mortgage‑related fraud.

Patrick Hynes, chief deputy of the Economic Crimes and Wage Theft Division at the King County Prosecutor’s Office, testified in support, saying funding has not kept pace with need: "The fund has not been adjusted since 2003 ... As of this year, the funding only supports half of an investigator and less than half of a deputy prosecutor." Hynes told the committee SB 5,109 "will address this by finally adjusting the surcharge to $5." Russell Brown, executive director of the Washington Association of Prosecuting Attorneys, said local prosecutors are underfunded and urged passage.

Van Horn summarized the fiscal note: roughly $1,100,000 in new revenue is expected in fiscal year 2027 (a one‑time difference between a $1 and $5 surcharge) and about $2,600,000 per biennium thereafter. Of those totals, Van Horn said county auditors could retain about $55,000 in FY27 and $130,000 per biennium thereafter to cover administrative costs; the remainder would deposit into the mortgage lending fraud prosecution account for contracting with prosecutors’ offices. The Department of Financial Institutions anticipates additional spending on prosecutorial contracts beginning in later biennia.

Representative Penner questioned whether a $2.5 million mitigation allocation in the governor’s budget under Commerce might cover similar work; witnesses replied the surcharge fund creates a direct link between the recording event and prosecution funds and is restricted for investigation and prosecution purposes. The committee concluded the hearing without further questions and moved on to the next agenda item.