Mortgage brokers would be expressly prohibited from compensating, coercing or intimidating real estate appraisers to obtain inflated appraisals under legislation proposed by the Colorado attorney general.
The legislation, targeted at mortgage fraud, would also prohibit appraisers from knowingly submitting a false home valuation, and subject violators to misdemeanor criminal prosecution for a first offense and felony charges for those with prior convictions.
Attorney General John Suthers said in a press release that two state representatives — one a Republican, one a Democrat — will sponsor the legislation this session. The bill would also give the state’s Division of Real Estate the authority to revoke or deny the registration of mortgage brokers who have been prohibited by any court from engaging in deceptive conduct relating to brokering a mortgage loan.
According to RealtyTrac, Colorado had the highest foreclosure rate in the nation for eight months in 2006, before Nevada surpassed it in November. One of every 362 homes in Colorado was in default, in the process of trustee sale, or real estate owned in November, RealtyTrac reported.
In May 2006, Colorado enacted stiffer penalties for those convicted of mortgage fraud and provided consumer protections for families facing foreclosure. The Colorado Foreclosure Protection Act requires that all transactions between homeowners and foreclosure consultants or equity purchasers be in writing, prohibits consultants who provide advice or assistance from acquiring any interest in the homeowner’s property, and calls for a three-day “cooling off” period.