Court Upholds $500,000 Penalty Against Mortgage Broker

SEATTLE - August 15, 1997 - The State Court of Appeals this week upheld a $500,000 penalty imposed in 1995 on a former Bellevue mortgage broker who used customer deposits to pay his personal rent. The penalty was part of a $2.3 million judgment against a series of mortgage brokers. This is the largest contested judgment ever entered in a consumer protection action brought by the Washington Attorney General.

In 1995, the King County Superior Court entered a $2.3 million judgment against William W. Johnson, formerly of Bellevue, and three other mortgage brokers for committing 1,151 violations of state mortgage laws. Johnson, who committed 250 of the violations including 249 trust account violations, owned the WWJ Corporation, which did business as Mountain Pacific Mortgage in Bellevue in 1991 and 1992. He also managed offices in Bellevue, Kent and Federal Way until June 1994 for DMG Mortgage, Inc., an Indiana-based mortgage company.

The AG investigation of Johnson determined that his firm took customer deposits meant for appraisals and credit reports and used the money, among other purposes, to pay the rent on Johnson's apartment, fees for his personal attorney, Domino's pizza, a car rental, and several large cash withdrawals.

According to Assistant Attorney General Dave Horn, the case filed against Johnson was part of an Attorney General crackdown on mortgage brokers that led to sweeping changes in 1993 and 1994 in state law governing mortgage brokers.

"The days when you could buy a simple software package and start calling yourself a mortgage broker are gone," said Horn. "The law now requires brokers to be trained, licensed and bonded."

"We hope the Court's decision will remind brokers that trust account violations are taken very seriously," said Horn. "And remind consumers to be careful who they give their money to."

Consumers should shop around for home loans, ask for several written good faith estimates, and if they use a mortgage broker, check with the Department of Financial Institutions to make sure they are licensed and bonded, according to Horn.

Consumers who want to file a complaint or get more information about mortgage brokers should call the Attorney General's Office at 1-800-551-4636 or visit the AG homepage at www.atg.wa.gov.

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