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Aggressive building pushes Colorado and Nevada to nations highest number of foreclosures |
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Wednesday, 10 January 2007 |
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Suthers wants Legislature to crack down on appraisal fraud
Attorney General John Suthers on Monday urged a crackdown on schemes to inflate property values so buyers can borrow more money - a practice he said ultimately makes buying a home more expensive...Experts say inflated appraisals, along with aggressive building, risky loans and mortgage-fraud, have pushed Colorado to the second-highest number of foreclosures in the nation. Colorado led the nation for much of 2006 but has been overtaken by Nevada, Suthers said.
Suthers wants Legislature to crack down on appraisal fraud
DENVER (AP) - Attorney General John Suthers on Monday urged a crackdown on schemes to inflate property values so buyers can borrow more money - a practice he said ultimately makes buying a home more expensive.
Suthers endorsed a bipartisan proposal that will go before the Legislature after it convenes on Wednesday. He said some appraisers have complained of being pressured by mortgage brokers to inflate the value of a property and that sometimes buyers are in on the scheme too.
He said the cost of people defaulting on those bigger loans hurts lenders, but those losses eventually get passed on to homebuyers.
"Everyone is paying the price for this," he said.
Experts say inflated appraisals, along with aggressive building, risky loans and mortgage-fraud, have pushed Colorado to the second-highest number of foreclosures in the nation. Colorado led the nation for much of 2006 but has been overtaken by Nevada, Suthers said.
Last year, the trend led state lawmakers to require mortgage brokers to register and pass stricter penalties for mortgage fraud.
The latest proposal - sponsored by Sen. Jennifer Veiga (D-Denver) and state Rep. Tom Massey (R-Chaffee) - would bar a mortgage broker from pressuring or compensating an appraiser for an inflated appraisal and bar an appraiser from knowingly submitting such a valuation.
Brokers found to have engaged in deceptive practices would lose their registration or be barred from registering in Colorado. Appraisers, real estate agents and investors who participate in an appraisal scheme could be prosecuted or sued and subject to triple damages.
Jan Zavislan, deputy attorney general for consumer protection, said the goal is to go after appraisals that are $50,000 or $100,000 over the realistic value of a property, not disagreements about several thousand dollars difference.
In some cases of fraud, Zavislan said checks are being cut to third parties who have nothing to do with the home sale.
Zavislan said one home in foreclosure can hurt other property owners in a neighborhood because the value of their homes may go down, making it harder for them to refinance.
http://www.9news.com/news/article.aspx?storyid=62814
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