This Article exposes a critical consumer protection flaw in Washington State’s Mortgage Brokers Practices Act. While allowing aggrieved borrowers to bring claims against mortgage brokers at least up to three years from the date of injury, it requires a borrower to bring an action against the mortgage broker’s surety within one year of the injury. This Article posits that the one-year statute of limitations for actions against the mortgage surety is procedurally counterintuitive. Importantly, it also compels filing of possibly frivolous claims, and subverts all other statute of limitations provisions otherwise available to a wronged consumer. The Article explains why any possible rationale for the limitation, e.g., to prevent a run on claims, costs to market entry, are unpersuasive. In light of the implosion of the mortgage industry in the wake of the foreclosure crisis, Washington State maintains this unreasonable and anti-consumer barrier to recourse. Beyond its focus on Washington State law, this Article sets forth an exhaustive state-by-state citation of surety law, comparisons, and deficiencies with state mortgage broker surety bonding provisions in general.
Bryan Adamson, The Homeowners’ Illusory Safety Net: Mortgage Broker Surety Liability, 47 GONZ. L. REV. 165 (2012).